SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

            (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                   For the fiscal year ended December 31, 1997

                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

        For the transition period from ________ to ________

                         Commission file number 0-13174
                         THE MARINA LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)

              INDIANA                                  35-1689935
    (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                 Identification No.)


    11691 Fall Creek Road, Indianapolis, IN                 46256
   (Address of principal executive offices)              (Zip Code)

        Registrant's telephone number, including area code (317) 845-0270

                   Name of each exchange on which registered:
                                      None

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

           Securities registered pursuant to Section 12(g) of the Act:

                  Limited Partner Units and Depositary Receipts
                                (Title of class)

     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  (or for such  shorter  period  that the
registrant was required to file such reports),  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 (229.405 of this chapter) 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)

The aggregate  market value of the Limited Partner Units held by  non-affiliates
of the registrant, based upon the average bid prices of such units during the 60
day period  ended  March 23,  1998,  and  assuming  solely for  purposes of this
calculation  that all  executive  officers and Directors of the  registrant  are
affiliates,  was approximately  $12,613,000.  The source of the bid quotation is
the matching service made available by the Registrant.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE
<PAGE>


                                    FORM 10-K

                                TABLE OF CONTENTS

                                                                         Page
PART I

Item 1  - Business...........................................................

Item 2  - Properties.........................................................

Item 3  - Legal Proceedings..................................................

Item 4  - Submission of Matters to a Vote of Security Holders................

PART II

Item 5  - Market for Partnership's Common Equity
          and Related Security Holder Matters...............................

Item 6  - Selected Financial Data...........................................

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

Item 8  - Financial Statements and Supplementary Data.......................

Item 9  - Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure............................

PART III

Item 10 - Directors and Executive Officers.................................

Item 11 - Executive Compensation...........................................

Item 12 - Security Ownership of Certain Beneficial Owners
          and Management...................................................

Item 13 - Certain Relationships and Related Transactions...................

PART IV

Item 14 - Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K..............................................

SIGNATURES.................................................................


<PAGE>


                                     PART I
ITEM 1.   BUSINESS.

General

     The Marina  Limited  Partnership  (the  "Partnership")  was organized as an
Indiana limited partnership under the laws of the State of Indiana on October 7,
1986 for the purpose of reorganizing the business of The Marina Corporation (the
"Company").   The  Company  was  reorganized  into  a  publicly  traded  limited
partnership in order to eliminate the "double"  federal income tax on its future
earnings and  distributions.  The  Partnership  is the  successor-issuer  to the
Company. On December 29, 1986, the shareholders of the Company approved the plan
to reorganize the Company into the Partnership.  On December 30, 1986,  pursuant
to the plan of reorganization,  all of the assets and liabilities of the Company
were  transferred  to the  Partnership  in  exchange  for a  number  of units of
interest  ("Units") in the Partnership equal to the number of outstanding shares
of the Company's Common Stock,  and the Company  distributed the Units to or for
the  benefit  of  its  shareholders.  Units  represent  either  general  partner
interests  ("General  Partner  Units") or limited  partner  interests  ("Limited
Partner Units"). See Item 5, "Market for Partnership's Common Equity and Related
Security Holder  Matters."  Following the distribution of the Units, the Company
was dissolved.

     The  Partnership's  principal  executive  offices are located at 11691 Fall
Creek  Road,   Indianapolis,   Indiana  46256,   and  its  telephone  number  is
317/845-0270. The affairs of the Partnership are managed by its general partner,
The Marina II Corporation (the "General Partner"),  an Indiana corporation.  The
General Partner's  principal executive offices and telephone number are the same
as those of the Partnership.

     Effective as of the close of business on December 19, 1997, the Partnership
requested  that the  Limited  Partner  Units  cease  being  listed on The NASDAQ
SmallCap tier of The NASDAQ Stock Market.  After that date, transfers of Limited
Partner  Units  will be  recognized  by the  Partnership  only if they  are made
through the matching service that has been  established by the Partnership.  The
Partnership  determined  that these  actions  were  necessary to ensure it would
continue to be treated as a partnership  for federal  income tax  purposes.  See
"Taxation of Interests in Publicly Traded Partnerships," below.


Investment Real Estate


     On December 31, 1997,  the  Partnership  owned  approximately  342 acres of
investment real estate.  Approximately  278 acres of this investment real estate
are  adjacent to Geist Lake,  and  approximately  64 acres are adjacent to Morse
Lake.  Substantially all of the properties  consist of partially wooded,  gently
rolling land  adjacent to the lakes.  Homesite  sales  revenue  accounted for 31
percent of the  Partnership's  revenues  for 1997,  44 percent for 1996,  and 50
percent for 1995.  Gains on sale of investment  land  accounted for 7 percent of
the Partnership's revenues for 1997, 1 percent for 1996, and 5 percent for 1995.


<PAGE>

     Geist Lake. Geist Lake is an artificially  created reservoir located within
15  to  20  miles  driving  distance  of  the  downtown   business  district  of
Indianapolis,  Indiana. On December 31, 1997, the Partnership's  investment real
estate at Geist Lake  consisted  of  approximately  278  acres,  which are zoned
either  for  single-family   residential  use,  multi-family   residential  use,
commercial use, recreational use, or agricultural use. Approximately 18 acres of
the land at Geist Lake is being used for Geist  Marina and Marina  Village.  See
"Marine  Operations"  and  "Investment  Real Estate --  Commercial  Development"
below.
     Morse Lake. Morse Lake is an artificially  created reservoir located within
25  to  30  miles  driving  distance  of  the  downtown   business  district  of
Indianapolis,  Indiana.  On December  31,  1997,  the  Partnership's  investment
properties  at  Morse  Lake  consisted  of  approximately  64  acres  zoned  for
single-family  residential,  commercial,  and agricultural use. Approximately 18
acres of the land at Morse Lake is being used for the Morse Marina.  See "Marina
Operations" below.

     Residential  Development.  Bridgewater,  located near Geist Marina, was the
Partnership's  first single-family  project. It includes 81 homesites,  of which
development is  substantially  complete.  The Partnership  sold seven waterfront
homesites  from  Bridgewater  in 1997.  Homesite  revenue  from these  sales was
$1,427,000.  Homesite  inventory in Bridgewater at December 31, 1997 consists of
10 waterfront homesites.

     The Partnership  sold 13 homesites in 1997 from Cambridge,  a single-family
residential  development  located at Geist Lake. In 1997,  homesite revenue from
such Cambridge sales was $983,000.  Marina I, a joint venture, sold 21 homesites
from  Cambridge  in 1997.  See  "Marina I" below.  At  December  31,  1997,  the
Partnership had 10 homesites  remaining to be sold, of which six are waterfront,
while  Marina  I had  83  homesites  remaining  to be  sold,  of  which  34  are
waterfront.  Marina I developed 39 waterfront  homesites  which were finished in
mid-1997. When complete, Cambridge will include more than 400 homesites of which
287 have been developed. Most of the homesites owned entirely by the Partnership
have been sold so that future homesite sales will be from The Marina I L.P.

     The Partnership  substantially  completed  development of Morse Overlook in
1996, an upscale single-family  homesite project located at Morse Lake. In 1997,
the  Partnership   completed  development  of  an  additional  seven  waterfront
homesites. Morse Overlook now includes 50 homesites, of which 27 are waterfront.
In 1997, the Partnership sold one waterfront homesite from Morse Overlook.  This
sale  generated  homesite  revenue  of  $171,000.   At  December  31,  1997  the
Partnership had 45 homesites in inventory of which 22 were waterfront.  In 1997,
the Partnership  spent $206,000 on construction  costs for a speculative home at
Morse Overlook.


<PAGE>


     During 1997,  the  Partnership  commenced  development of Sail Place, a new
residential  development  at  Geist  Lake.  This  development  will  include  30
homesites.  The  Partnership  intends  to build  specially  designed  homes with
smaller  homesites  and a unique  package of services to appeal to a more mature
customer.  The  Partnership  intends  to build all of the homes in Sail Place to
better  control  placement and the design of each home.  The  Partnership  began
construction  in fall 1997,  but the sale of finished homes will not occur until
spring 1998. The Partnership spent approximately $746,000 for the development of
Sail Place, and an additional $363,000 for construction of two speculative homes
at Sail Place in 1997.  One home is complete with the second  approximately  50%
complete. A third home has been started and it is anticipated that an additional
$400,000 will be expended for completion of these homes in 1998.

     The  Partnership's  current land  ownership  and the land owned by Marina I
will  take a number  of years  to  develop  and  sell  under  reasonable  market
conditions.  However,  due to a sand and gravel mining  project in Geist Lake by
Irving  Materials,  Inc.  ("Irving"),  the  availability of some of the land for
residential  development  by Marina I may be delayed for six years or more.  The
Partnership may acquire  additional  land for development  during this period to
properly balance the mix of off-water  homesites to waterfront  homesites and to
continue  development  until the  balance of the Irving land is  available.  The
Partnership  expects to have a sufficient  inventory of homesites for 1998.  See
"Investment Real Estate -- Marina I," below.

     Homesite   Financing   Arrangements.   The  Partnership  sells  residential
homesites for cash or contract. The Partnership finances homesite purchases, and
requires a minimum down payment of 10% of the price of the homesite. The balance
of the contract  price,  plus  interest,  is payable over seven years,  although
typically most  contracts are paid in full within two years.  When a homesite is
sold to an individual  purchaser on contract, a warranty deed is conveyed to the
purchaser,  and the  purchasers  execute an  installment  promissory  note and a
purchase money real estate mortgage to the Partnership. However, when a homesite
is sold to a builder pursuant to the terms of a builder  contract,  the warranty
deed conveying title of the homesite is not executed until the builder  contract
has been paid in full. In 1997, 1996 and 1995,  interest rates on homesites sold
on contract  were 9% the first  year,  10% in the second  year,  and 12% for the
remainder.

     Marketing.  The  Partnership  has a builder  support  program  with limited
financial  incentives  for builders who build in the  Partnership's  residential
projects. The portion of the homesite sales price, which may be refundable under
builder  programs  if the home  remains on the  market for four to eight  months
after  completion,  is deferred  until the refund period  expires.  There was no
deferral for the builder  support  program at December  31, 1997.  There were no
payments made to builders under the builder support program in 1997.


<PAGE>

     Commercial Development.  The Partnership continues to develop and sell land
at Geist  Crossing,  a shopping  center site near Geist Lake.  During 1997,  the
Partnership  sold three parcels of land for a total of $1,098,000.  There is one
outlot left to sell at Geist Crossing.

     Marina Village. The Partnership began operating a 21,000 square foot retail
and office  development  known as Marina Village in 1995. This building includes
15,000  square feet of retail space for and 6,000  square feet of office  space,
all of which has been leased except for 2,000 square feet which is the office of
the Partnership.  The Partnership realized $210,600 in rental income from Marina
Village  in  1997.  The  Partnership  spent  approximately  $80,000  for  tenant
finishings in 1997. When the Partnership  completes the new service  building at
Geist Marina (see "Marine  Operations"  below),  the  waterfront  land currently
occupied by the service  buildings  will be  available  for either  apartment or
retail development.

     Marina I. The  Partnership is the general  partner of The Marina I L.P., an
Indiana limited partnership ("Marina I"), and Irving Materials,  Inc. ("Irving")
is the sole  limited  partner.  Marina I has a right to receive and develop more
than 150 acres of Irving land in the vicinity of Geist Lake. Irving continues to
mine and extract sand and gravel from the remaining property, and it contributes
parcels of the land to Marina I when it has completed the  extraction.  In 1997,
Irving  increased its  investments in Marina I with a  contribution  of land for
section eight in Cambridge.  Marina I owns 73 acres of land held for development
and has 83 finished  homesites  available.  The  Partnership is responsible  for
developing and selling the property for residential use.

     The  Partnership,  as general  partner,  and  Irving,  as limited  partner,
received  $495,000 and $429,000,  respectively,  in  distributions  during 1997.
Marina I received  $104,600 from the Partnership in 1997 as its share of revenue
on  homesites  sold by the  Partnership  in  section  5 of  Cambridge  that were
partially owned by Marina I. Additionally,  the Partnership  recognized $962,000
in equity  earnings  from Marina I for the 21 homesites  sold in  Cambridge  and
other related  activities in 1997.  See  "Investment  Real Estate -- Residential
Development" above.

     Flatfork  Creek  Utility.  The  Partnership  and Irving are each 50 percent
shareholders  of Flatfork  Creek  Utility,  Inc.,  an Indiana  corporation  (the
"Corporation.")  The Corporation was formed to complete the  construction of and
operate the wastewater  treatment plant and  interceptor  sewer lines to service
land in the northeast Geist area. Construction of the interceptor sewer line and
the first phase of the  wastewater  treatment  plant was completed in 1994.  The
first phase of the plant will serve  approximately 430 homes. The Corporation is
subject  to  regulation  by  the  Indiana  Utility  Regulatory  Commission.  The
Corporation  recorded a $41,000  net income for 1997,  of which the  Partnership
accounted for its 50% share as an increase in its investment in the Corporation.
The Corporation  expects minor operating  losses for the next several years. The
Corporation has a $1,567,000 bank loan outstanding at December 31, 1997 that the
Partnership  and Irving have each  guaranteed.  In January 1997, the Partnership
and  Marina I  contributed  $197,000  and  $590,000,  respectively,  as  advance
payments for future utility hookups. The Corporation applied $700,000 from these
advance  payments  against the outstanding bank loan in 1997 to reduce it to the
present balance.

<PAGE>

     Dockside Cafe. The  Partnership is a limited partner of Dockside Cafe L.P.,
an Indiana limited partnership  ("Dockside Cafe"), which operates the Blue Heron
restaurant in Marina Village at Geist Lake and Carrigan  Crossing at Morse Lake.
The Partnership  received $67,000 in  distributions  from Dockside Cafe in 1997.
The  Partnership  has leased the  restaurants  to Dockside  Cafe,  and  realized
$220,000 in rental income in 1996.

Marine Operations

     The  Partnership  owns two marinas  located at Geist and Morse  Lakes.  The
marinas  consist of  approximately  1,200 boat  docks,  two public  access  boat
launching ramps,  and several storage and other buildings.  The operating season
for the marinas  depends upon  weather  conditions,  but is  typically  from the
middle  of  April  through  the  middle  of  October.   The  Partnership   spent
approximately  $270,000 in 1997 for construction of a new marine building at the
Geist Marina,  which will include a boat sales area, an area for marine supplies
and four service  bays.  An estimated  $230,000 in  additional  expenditures  is
anticipated to complete the building for occupancy in early 1998.

     Marine operations accounted for 43 percent of the Partnership's revenues in
1997,  41 percent in 1996,  and 30 percent  in 1995.  The  principal  sources of
revenues are from the rental of boat docks,  boat  launching  fees,  boat sales,
service repair work and, to a lesser extent,  from winter boat storage,  and the
sale of  gasoline,  boating  supplies,  boat  docks and  lifts,  food  items and
miscellaneous services.

     The marine  operations  are affected by inclement  weather,  which tends to
discourage boating and reduce revenues.  Also, because Geist and Morse Lakes are
reservoirs for the Indianapolis  area water supply,  the levels of the lakes may
fall during drought periods,  making boating hazardous and reducing recreational
use.


Recreational Facilities

     In March 1995, the  Partnership  purchased the  recreational  facilities at
Geist  Lake  for   $425,000   from  The  New   Shorewood   Limited   Partnership
("Shorewood"),  the successor to The  Shorewood  Corporation.  The  recreational
facilities  include a clubhouse and two separate  pools located near Geist Lake.
The  Partnership  removed  a pool  in the  fall  of  1996  to  prepare  for  the
development  of  Sail  Place,   see   "Investment   Real  Estate  -  Residential
Development"  above. The Partnership built a new pool near the clubhouse in 1997
for approximately  $188,000 to replace the former pool. The operating season for
the pools  begins on the  Memorial  Day  weekend  and  extends  to the Labor Day
weekend but the  clubhouse  is available  for rental  throughout  the year.  The
Partnership's   residential  developments  have  access  to  these  recreational
facilities, as do residents of Shorewood developments at Geist Lake.

<PAGE>

Future Operations

     The General Partner expects that the Partnership will continue to: (1) sell
investment  real estate from time to time  depending  on market  conditions  and
other  factors;  (2) pursue  development  activities,  including the building of
homes on the  Partnership's  real  estate;  (3) seek to enhance the value of the
Partnership's  investment  real  estate by making  certain  improvements  and by
acquiring additional surrounding real estate; (4) acquire additional real estate
for investment;  and (5) operate the marine business.  See Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Competition

     Investment Real Estate.  Although there are numerous real estate properties
in the  Indianapolis  metropolitan  area available for development of homesites,
there are only a limited number of  water-oriented  properties.  The Partnership
believes  that,  of  those  water-oriented   properties  that  are  or  will  be
economically suitable for development of homesites, the Partnership's properties
are among those with the greatest  long-term  development  potential,  primarily
because of the character of the lakes to which the Partnership's  properties are
adjacent  and the  extent and types of  development  at such  lakes.  There are,
however,  water-oriented properties owned by other developers that are available
for  development  of  homesites  that  are  equally  desirable.  There  is a new
residential  project  currently  under  development by a local  developer at the
north end of Geist Lake which will include approximately 300 homesites, of which
approximately 30 to 40 will be waterfront  homesites.  Competition in commercial
development has become more  significant due to the increased zoning of land for
commercial use in the area of Geist Lake.

     Marine Operations. The Geist Marina provides the only boat docks, gas pumps
and  launching  ramps on Geist Lake  available to the general  public.  At Morse
Lake, the Town of Cicero  operates boat docks and gas pumps in competition  with
the Morse Marina.

     There are numerous marine dealers in the Indianapolis  market and therefore
competition is significant in the boat sales and service area.

<PAGE>

Regulation

     The  Partnership's  real  estate is  subject to  governmental  regulations,
particularly zoning  regulations,  restrictions on construction in flood plains,
wetlands protection, and restrictions on water and septic systems. To the extent
applicable, any developer of the property must comply with such regulations,  as
well as the Federal  Interstate  Land Sales Full Disclosure Act, water pollution
and  water  quality  control  regulations,  and other  miscellaneous  regulatory
requirements.  The  Partnership  cannot  predict  the cost or  effect  of future
regulations on the development potential of its real estate.

Employees

     The  Partnership  has 30 full-time  employees  (most of whom are  primarily
engaged in marine operations) and a number of part-time  employees who work on a
seasonal  basis.  The General  Partner is responsible  for the management of the
Partnership's  affairs.  There are three officers of the General Partner, all of
whom devote their full-time  duties to activities of the General Partner and the
Partnership.

Taxation Of Interests In Publicly Traded Partnerships

     Until the close of business on December 19,  1997,  the  Partnership  was a
publicly  traded  partnership  (PTP) under the definitions set forth in Internal
Revenue Code Section  7704.  Section 7704 provides that a PTP will be treated by
the Internal  Revenue  Service as a  corporation,  and thus be subject to double
taxation instead of the usual "pass-through  taxation" of a partnership,  unless
the PTP meets  certain  income  requirements,  which are  discussed  below.  The
Partnership is not subject to these  requirements  until January 1, 1998 because
it was a PTP at the time Section 7704 was adopted and,  therefore,  was exempted
from the application of Section 7704 through 1997 as long as it did not engage
in a substantial new line of business.

     A PTP is treated as a corporation for federal income tax purposes unless 90
percent  or  more  of the  partnership's  gross  income  for  each  tax  year is
"passive-type  income." In general,  income from the  Partnership's  real estate
activities  qualifies as passive-type income, while income from the operation of
the two  marinas  and the  recreational  facilities  and from the  Partnership's
interests  in Flatfork  Creek  Utility,  Inc. and  Dockside  Cafe L.P.  does not
qualify as  passive-type  income.  The General  Partner  believed  that,  unless
actions were taken during 1997 to cease being classified as a PTP, it was likely
the  Partnership  would be taxed as a  corporation  commencing  January  1, 1998
because it was  expected  that less than 90 percent of the  Partnership's  gross
income would be passive-type income.

<PAGE>

         The General Partner believed it was desirable to continue to be treated
as a partnership for federal income tax purposes.  As a result,  the Partnership
elected to de-list from NASDAQ effective as of the close of business on December
19, 1997, in order to avoid  continuing  to be  classified as a PTP.  After that
date,  transfers of Limited Partner Units are recognized by the Partnership only
if they are made through the matching  service  established by the  Partnership.
The only  exceptions  to this  restriction  are certain  transfers  among family
members and transfers by reason of death.

     In order to ensure that the  Partnership  will  continue to be treated as a
partnership for federal income tax purposes,  the matching service will strictly
follow rules and regulations  created by the Internal Revenue Service. To buy or
sell under the matching service, a person will need to contact the Partnership's
office and  express  an  interest  to either (i) buy or sell at a certain  price
determined by the person (a "non-firm price quote"), or (ii) buy or sell without
an  accompanying  price (a  "non-binding  indication  of  interest").  Neither a
non-firm price quote nor a non-binding  indication of interest  commits a person
to buy or sell. The Partnership will record the person's  information on a quote
sheet,  including the number of units to be bought or sold if  appropriate,  and
send  that  person  a copy  of  the  quote  for  confirmation.  All  information
concerning  quotes and  indications  of interest will be made known to inquiring
partners and potential buyers.

     If a person has expressed a desire to sell, the  Partnership is required to
wait at least 15 calendar days from the "contact date" (the date the Partnership
receives written confirmation from the listing person that Limited Partner Units
are available for sale) before information is made available to potential buyers
or to the seller.

     The  closing of a sale may not occur less than 45  calendar  days after the
contact  date.  A seller may  specify a time  period  after  which the  seller's
information  is removed from the list. In no event may the seller's  information
be made  available  to potential  buyers  after 120 days from the contact  date.
After the seller's  information is removed from the matching service, the seller
may not list with the  matching  service for at least 60 calendar  days. A buyer
may specify a time after which the buyer's information is removed from the list.
The buyer's  information  will be deleted  from the list after 120 days from the
contact date, unless the buyer specifies a shorter time period.  However, unlike
a seller, a buyer may immediately  enter another quote or indication of interest
onto the list.

<PAGE>

     If a match or  potential  match is made,  both the buyer and seller will be
notified. Each such party will be notified of the other party's quote, and if no
exact  match is made,  either  party may submit a written  offer,  which will be
conveyed to the other party. Once a match is reached between a buyer and seller,
the  Partnership  will  notify  both  parties  and  indicate  a closing  date in
accordance  with  IRS  rules  and   regulation.   The  seller  will  submit  the
certificates  for the Limited  Partner Units being sold on or before the closing
date,  and the buyer will submit a check,  made out in the seller's name, to the
Partnership or its transfer agent. The check will be forwarded to the seller and
the transfer  agent will prepare a new  certificate in the buyer's name. In some
circumstances,  the  Partnership  may  reserve  the right to  postpone  closings
immediately prior to the distribution to the partners.

     The total  number of Limited  Partner  Units that may be sold  through  the
matching  service in any calendar year is limited to 10% of all the  outstanding
units,  which is presently  41,700 units. If that limit is reached,  which seems
unlikely given the past trading volume,  the Partnership will halt sales through
the matching service until the next year.

     Because the matching  service is a new system,  the  Partnership may refine
the procedures for its operation over time. In addition, Congress or the IRS may
adopt  new  laws,  rules  and  regulations   impacting  the  matching  service's
procedures  that would require the Partnership to make changes to the procedures
or adversely affect its ability to offer the matching service.

         The Internal Revenue Code also provides that the  passive-loss  rule of
Section 469 is to be applied separately for the tax attribute items of each PTP,
and that a  partner's  share of net  income  from a PTP  will  generally  not be
treated as income from the passive activity but rather as portfolio  income.  In
general,   under  these  separate   application   rules,  the  income  from  the
Partnership,  while it was a PTP, may not offset  losses from a partner's  other
passive activities.


ITEM 2.  PROPERTIES.

     The Partnership's  properties are substantially described in Item 1 of this
Part I. See "Investment Real Estate" and "Marine Operations."


     The Partnership has title to all of its real estate,  substantially  all of
which has been  covered  by  blanket  title  insurance  commitments.  All of the
properties  are subject to certain  telephone,  highway,  pipeline  and electric
power line  easements.  The Morse and Geist Lake  properties are also subject to
the easements and restrictions of the Indianapolis Water Company ("IWC"),  which
owns  the  reservoirs  for  water  supply  purposes.   In  connection  with  the
maintenance,  protection and operation of its water supply  reservoirs,  IWC has
retained a 20-foot  easement  around the  shoreline of both  reservoirs  and has
imposed  restrictions on the adjacent land. IWC is permitted access to the lakes
for all purposes  reasonably  necessary to their  operation and  maintenance  as
reservoirs, and certain uses of the land that could cause pollution of the lakes
are  prohibited.  There  are no  mortgages  on  the  Partnership's  real  estate
properties.

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

     There is no material proceeding in which any director, officer or affiliate
of the  Partnership,  or any  associate  of any such  director or officer,  is a
party, or has a material interest,  adverse to the Partnership.  The Partnership
is not involved in any administrative or judicial  proceedings arising under any
federal,  state or local  provisions  which  have been  enacted  or  adopted  to
regulate the discharge of materials into the  environment or otherwise  relating
to the protection of the  environment  other than those normally  encountered as
part of the development business.


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

     No matter was submitted to a vote of security holders of the Partnership in
the fourth quarter of 1997.


                                     PART II

ITEM 5.  MARKET FOR PARTNERSHIP'S COMMON EQUITY AND RELATED
         SECURITY HOLDER MATTERS.

     Effective as of the close of business on December 19, 1997 the  Partnership
requested  that the  Limited  Partner  Units  cease  being  listed on The NASDAQ
SmallCap  Market tier of The NASDAQ  Stock Market  under the symbol  MRNCZ.  The
following table sets forth for the periods indicated the representative high and
low trade  prices of the  Partnership's  Limited  Partner  Units as  reported by
NASDAQ through December 19, 1997. Such prices represent actual transactions.



<PAGE>


                                 1996                    1997
                                 ----                    ----
                            High       Low         High      Low
Fiscal Quarter Ended       Trade      Trade        Trade     Trade

         March 31          $32      $31 1/2       $28 1/8    $28
         June 30            30       28            33         28
         September 30       28       28            33 1/2     27
         December 31        28       28            33         29 1/8

     There is no  established  public  trading  market for the  Limited  Partner
Units.  During the 60-day period that ended March 23, 1998,  there were two bids
to purchase at $31.00 per unit.  The source of the bid  quotations  is through a
matching  service made  available  by the  Partnership,  and the bids  represent
non-binding  indications of interest in buying and not a firm commitment to buy.
On March 23, 1998 there were approximately 420 record holders of Limited Partner
Units of the Partnership.

     On each of April  17,1997 and April 18,  1996,  the  Partnership  made cash
distributions  of $3.25 per unit. No other cash  distributions  were made during
1996 and 1997.

     The  General  Partner  intends  to  cause  the  Partnership  to  make  cash
distributions  from its net cash flow as often as the  General  Partner,  in its
discretion, believes it to be feasible and prudent for the Partnership. Although
the number,  amount, and timing of cash distributions in any given year may vary
substantially,  it is currently  anticipated that the Partnership will make cash
distributions  in an amount  sufficient to cover the tax  liability  incurred by
Partners from Partnership  operations.  The preceding  discussion regarding cash
distributions  are forward looking  statements.  There can be no assurance as to
the amount or timing of Partnership cash  distributions,  and the Partnership is
not obligated to make any such distributions.

     Pursuant to the  reorganization of the Company into the Partnership,  Units
in the Partnership received by the Company (and subsequently  distributed to the
shareholders  of the Company)  were divided  between  General  Partner Units and
Limited Partner Units. The economic interests in the Partnership  represented by
a General Partner Unit and Limited  Partner Unit are identical.  General Partner
Units are vested with the  authority  to manage the affairs of the  Partnership.
Limited Partner Units carry no management authority.


ITEM 6.  SELECTED FINANCIAL DATA

     The selected  financial data  presented  below for each of the years in the
five  year  period  ended  December  31,  1997 are  derived  from the  financial
statements of the Partnership, which have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The financial statements for the years
ended December 31, 1997, 1996, and 1995, and the auditors'  report thereon,  are
included in Part II, Item 8.

<PAGE>


                (In thousands, except per unit or share amounts)
                            Years Ended December 31,
Selected Statement of      1997    1996    1995     1994    1993
                           ----    ----    ----     ----    ----
 Earnings Data:

 Homesite sales        $2,733  $3,387  $4,992   $3,331  $2,061
 Marina revenues        3,791   3,156   3,065    3,062   2,451
 Gain on land sales       661      40     498       67     229
 Equity in earnings of
   investee companies     992     386     920      693      45
 Other revenues           726     723     602      409     369
 Earnings before
  income taxes          3,742   3,034   4,391    2,705   1,739
 Net earnings           3,742   3,034   4,391    2,705   1,739
 Earnings per
  unit  (1)              5.54    4.49    6.50     4.01    2.57
 Cash distribution
  per unit (1)           3.25    3.25    2.00     1.00     .85

                                  As of December 31,
Selected Balance Sheet  1997    1996    1995     1994     1993
                        ----    ----    ----     ----     ----
 Data:

 Total assets         $20,038  $18,450  $17,691  $14,459  $12,449
 Debt obligations         -       -        -        -        -
 Partners' equity      19,178   17,630   16,786   13,744   11,708


  1  Earnings  and  cash  distribution  per unit  have  been  calculated  on the
     following basis:

<TABLE>
                                                                        Earnings Cash Distribution
                                                    General        Limited           General          Limited
                      Period                     Partner Units   Partner Units    Partner Units     Partner Units
                      ------                     -------------   ------------     -------------      ------------
              <S>                                <C>             <C>              <C>               <C>
               1997                                 201,188         473,947          201,188           473,947
               1996                                                                  196,714           478,421
               July 1 - Dec.31                      201,188         473,947
               Jan 1 - June 30                      196,714         478,421
               1995                                 196,714         478,421          196,714           478,421
               1994                                 196,714         478,421          196,714           478,421
               1993                                                                  179,949           495,186
               July 1 - Dec. 31                     196,714         478,421
               Jan. 1 - June 30                     179,949         495,186

</TABLE>

<PAGE>

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

     The  following   discussion   and  analysis  is  intended  to  address  the
significant  factors  affecting  the  Partnership's  results of  operations  and
financial  condition.  It is designed to provide a more comprehensive  review of
the  operating  results and  financial  position  than could be obtained from an
analysis of the  financial  statements  alone.  It should,  however,  be read in
conjunction  with the financial  statements and related notes,  and the Selected
Financial  Data,  included  elsewhere  herein.  Also see Item 1 - "Business" for
additional discussion of operations.

General
     The Partnership's principal sources of revenue in 1997 were consistent with
1996, and included  revenue from homesite sales,  marine  operations,  equity in
earnings of investee companies, and interest and rental income.

     The  Partnership's  primary  sources of revenue were from  homesite  sales,
which  accounted for 31 percent in 1997 compared with 44 percent for 1996 and 50
percent in 1995, and marine  operations,  which  accounted for 43 percent of the
Partnership's  revenues in 1997 as compared to 41 percent in 1996 and 30 percent
in 1995. In addition,  equity in earnings from investee companies  accounted for
11 percent of revenue in 1997 as  compared to 5 percent in 1996 and 9 percent in
1995.

Homesite Sales

     During  1997,  the  Partnership  sold 21  homesites  which  compares  to 26
homesites  sold in 1996 and 44 in 1995.  The  following  table  illustrates  the
dispersion of homesite sales by community:


           Year          Bridgewater           Cambridge        Morse Overlook
                         -----------           ---------        --------------
           1997               7                    13                  1
           1996               4                    18                  4
           1995               4                    40                  0

     The Partnership is the general  partner of The Marina I L.P.  ("Marina I"),
which has  developed  homesites  in  Cambridge.  During  1997,  Marina I sold 21
homesites  from  Cambridge  as compared  to 17 homesite  sales in 1996 and 31 in
1995.  Marina I recorded  $104,600 in revenue  during 1997 as its share from the
Partnership's  sale of a  homesite  that was  partially  owned by  Marina  I, as
compared to $151,000 in 1996.

<PAGE>

     The Partnership received distributions of $495,000 from Marina I in 1997 as
compared with $398,000 in 1996 and $810,000 in 1995.

     The  Partnership's  development  or sales of  investment  real  estate  and
residential   homesites  is  affected  by  several   factors  such  as  economic
conditions,  interest rates, zoning,  environmental regulation,  availability of
utilities, population growth in the area, and competition.

Marine Operations

     The principal sources of revenues for the marine business are the rental of
boat docks,  boat  launching  fees,  boat sales,  and service  repair work. To a
lesser extent,  revenues are generated from winter boat storage, and the sale of
gasoline,  boating accessories,  boat docks, lifts, food items and miscellaneous
services.  Most docks at the Morse  Marina  and Geist  Marina are rented for the
April to October  boating  season.  Annual dock rental payments are due prior to
the  beginning  of the boating  season  resulting  in the majority of cash being
received during the first six months of the year; most expenses,  however, occur
during the peak boating  months of the summer.  Boat dock  revenues are deferred
when received and  recognized as earned during the boating  season.  Winter boat
storage  generates  revenues  for the October to April  storage  season,  and is
recognized as earned during the storage season.

     The  Partnership's  marine  operations are affected by weather  conditions,
since inclement weather tends to discourage  boating and reduce revenues.  Also,
because Geist and Morse Lakes are  reservoirs  for the  Indianapolis  area water
supply, the levels of the lakes may fall during drought periods,  making boating
hazardous. Marine operations are also affected by economic conditions, including
inflation.  During  recessionary  periods,  recreational  boating  decreases and
revenues from the operation of the marinas  decrease  accordingly.  Increases in
the cost of boating caused by inflation also adversely affect the Partnership.

Liquidity and Capital Resources

     The General  Partner of the  Partnership  believes  that current  funds and
funds generated by homesite sales, marine operations, land sales, and bank loans
will be sufficient to satisfy its working capital  requirements  through the end
of 1998. On December 31, 1997, the  Partnership  had cash and cash  equivalents,
including  short-term  investments,  of  $5,532,000.  On December 31, 1997,  the
Partnership  did not have any  significant  contractual  commitments for capital
expenditures  to be made during 1998.  During  1997,  the  Partnership  expended
approximately  $1,724,000 for home and homesite  development costs. In addition,
approximately  $255,000 was spent for the Partnership's  commercial  properties,
and $740,000 was expended for marina property and equipment.

<PAGE>

     On a  long-term  basis,  major  sources of  liquidity  are  expected  to be
revenues  from  marine  operations,  sales of  homesites  and  investment  land,
distributions from investee companies,  and if necessary,  bank borrowings.  The
Partnership  currently expects that funds from current reserves,  operating cash
flow, and normal short-term lines of credit will be sufficient to satisfy future
capital needs.

Results of Operations

     1997  Compared to 1996.  Net  earnings  increased  by $709,000 in 1997 from
1996. This increase was primarily due to increased equity earnings from Marina I
of $510,000,  an increase in earnings after direct costs of $240,000 from marine
operations, and an increase in gains on the sale of investment land of $621,000.
Such increases were partially  offset by a decrease in earnings from the sale of
homesites of $640,000.

     Earnings from homesite  sales were  $1,368,000 in 1997,  which  compares to
$2,008,000  in 1996.  There was an increase in net earnings per homesite sale in
1997 as a result of the sale of a higher percentage of waterfront homesites.

     The  Partnership  recognized  $962,000  as its share of the  earnings  from
Marina I in 1997,  compared to $461,000 in 1996.  Such increase is the result of
an increase in homesite sales to $3,057,000 in 1997 as compared to $1,364,000 in
1996.

     The  decrease  in  the   Partnership's   income  from  homesite   sales  is
substantially offset by the increase in equity income from Marina I. This is the
result of the remaining  Cambridge homesites being predominantly owned by Marina
I rather than the Partnership;  therefore,  future homesite sales from Cambridge
will be substantially  from Marina I. The sales by Marina I are not reflected in
homesite  sales  in  the  Partnership's   Statement  of  Earnings,   rather  the
Partnership's  share of net  earnings  is  included as equity in earnings on the
Statement of Earnings.

     During 1997, the Partnership  sold commercial  property held for investment
at Geist  Crossing  for an  aggregate  $1,307,000,  which  resulted in a gain of
$661,000 compared to a gain of $40,000 in 1996.

     Earnings from marine operations  increased in 1997 over 1996 as a result of
an  increase in  revenues  of  $634,000.  This  results  from  increases  in all
significant areas of marine operations.

     The Partnership is a 50 percent owner in Flatfork Creek Utility,  Inc. (See
Item 1 "Business") As a result, the Partnership recognized equity income in 1997
of $20,000  compared with an equity loss of $$90,000 in 1996.  Flatfork  expects
minor operating losses for the next several years.

<PAGE>

     General and administrative  expenses increased by $117,000 in 1997 compared
to 1996.  The  principal  increase  relates to  increases of $28,000 in property
taxes,  $48,000 in professional  fees and $55,000 in employee  costs.  All other
elements of general and administrative expense were generally consistent in 1997
with 1996.

     On April 17, 1997, the Partnership made a cash distribution to the partners
of record on April 3, 1997,  of $3.25 per unit of  partnership  interest,  for a
total of $2,194,000.

     1996  Compared to 1995.  Net earnings  decreased by $1,358,000 in 1996 from
1995.  This  decrease was  primarily  due to a decrease in equity  earnings from
Marina I of  $519,000,  a decrease  in gains on the sale of  investment  land of
$458,000,  and a  decrease  in  homesite  sales  less  related  direct  costs of
$392,000.

     Earnings from homesite  sales were  $2,008,000 in 1996,  which  compares to
$2,004,000  in 1995.  There was an increase in net earnings per homesite sale in
1996  as a  result  of the  sale  of a  premier  homesite  on the  peninsula  in
Bridgewater,  and the sale of a home in Cambridge that the  Partnership had used
as a sales office. In the fourth quarter of 1996, the Partnership  reversed four
homesite sales as a result of two insolvent builders.

     The  Partnership  recognized  $461,000  as its share of the  earnings  from
Marina I in 1996, compared to $980,000 in 1995. Such decrease is the result of a
decrease in homesite  sales to  $1,364,000  in 1996 as compared to $2,947,000 in
1995.

     During 1996, the Partnership  sold commercial  property held for investment
at Geist Crossing for a gain of $40,000, compared to a gain in 1995 of $498,000.

     General and administrative  expenses increased by $117,000 in 1996 compared
to 1995. This increase  primarily results from an increase in salaries and wages
of $53,000, an increase of legal fees of $29,000

     On April 18, 1996, the Partnership made a cash distribution to the partners
of record on April 4, 1996,  of $3.25 per unit of  partnership  interest,  for a
total  of  $2,194,000.  This  compares  to a  cash  distribution  of  $2.00  per
partnership unit on April 17,1995.



<PAGE>


     From time to time, the Partnership may publish  forward-looking  statements
relating  to  such  matters  as  anticipated  financial  performance,   business
prospects,  development  activities and similar matters.  The Private Securities
Litigation  Reform  Act of  1995  provides  a safe  harbor  for  forward-looking
statements.  In  order  to  comply  with  the  terms  of the  safe  harbor,  the
Partnership notes that a variety of factors could cause the Partnership's actual
results and experiences to differ  materially  from the  anticipated  results or
other expectations  expressed in the Partnership's  forward-looking  statements.
The  risks  and  uncertainties  that may  affect  the  operations,  performance,
development and results of the Partnership's business include the following: (i)
the risk of adverse changes in the future level of demand for real estate by the
Partnership's  customers and  prospective  customers  caused by regional or real
estate-specific  economic  downturns,  (ii) the potential for adverse changes in
federal income tax laws or regulations  that might prevent the Partnership  from
continuing to be taxed as a partnership for income tax purposes, and (iii) other
risks  detailed  from  time  to  time  in the  Partnership's  filings  with  the
Securities and Exchange Commission.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The  following  are the financial  statements  of the  Partnership  and The
Marina I L.P. for the years ended  December 31, 1997,  1996,  and 1995,  and the
independent  auditors'  reports  thereon.  A list of the reports  and  financial
statements appears in response to Item 14 of this report.


<PAGE>





                         THE MARINA LIMITED PARTNERSHIP

                              Financial Statements

                           December 31, 1997 and 1996






                   (With Independent Auditors' Report Thereon)


<PAGE>













Independent Auditors' Report


The Partners
The Marina Limited Partnership:

We  have  audited  the  accompanying   balance  sheets  of  The  Marina  Limited
Partnership  as of December  31, 1997 and 1996,  and the related  statements  of
earnings,  partners'  equity  and  cash  flows  for  each  of the  years  in the
three-year  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.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of The Marina Limited Partnership
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997, in
conformity with generally accepted accounting principles.





KPMG Peat Marwick LLP
Indianapolis, Indiana
February 13, 1998


<PAGE>


                         THE MARINA LIMITED PARTNERSHIP

                                 Balance Sheets

                           December 31, 1997 and 1996

<TABLE>

               Assets                                                                      1997            1996
               ------                                                                      ----            ----

<S>                                                                                  <C>                  <C>
Cash and cash equivalents                                                            $   5,531,556        4,591,103
Investment in U.S. Treasury note                                                             -              996,875
Receivables from homesite sales                                                          1,468,895        1,460,990
Other receivables and assets                                                               519,445          612,229

Properties held for sale:
     Homesites available for sale                                                        1,864,770        2,107,566
     Homes available for sale                                                            1,743,092             -
     Land and land improvements (note 3)                                                   735,678        1,537,940
                                                                                      ------------      -----------
                                                                                        11,863,436       11,306,703
                                                                                      ------------      -----------
Property and equipment (note 2):
     Marine property and equipment, net                                                  2,630,222        2,080,772
     Recreational facilities, net                                                          508,001          362,461
     Commercial properties, net                                                          2,472,045        2,562,076
                                                                                       -----------      -----------
                                                                                         5,610,268        5,005,309
                                                                                       -----------      -----------
Other investments (note 4):
     Marina I                                                                            2,404,228        1,931,943
     Dockside Cafe                                                                         139,119          205,651
     Flatfork Creek Utility                                                                 20,482              -
                                                                                      ------------       ----------

                                                                                      $ 20,037,533       18,449,606
                                                                                      ============       ==========
     Liabilities and Partners' Equity

Accounts payable                                                                           590,865          518,651
Accrued bonuses                                                                             66,666           56,305
Deferred revenues and sale deposits                                                        202,195          137,223
Amount payable to Flatfork Creek Utility (note 1)                                              -            107,778
                                                                                      ------------     ------------
              Total liabilities                                                            859,726          819,957
                                                                                      ------------     ------------

Partners' equity:
     General partner - 201,188 units                                                     5,731,363        5,270,017
     Limited partners - 473,947 units                                                   13,446,444       12,359,632
                                                                                        ----------       ----------
              Total partners' equity                                                    19,177,807       17,629,649
                                                                                        ----------       ----------

                                                                                      $ 20,037,533       18,449,606
                                                                                        ==========       ==========
</TABLE>

See accompanying notes to financial statements.


<PAGE>


                         THE MARINA LIMITED PARTNERSHIP

                             Statements of Earnings

                  Years ended December 31, 1997, 1996 and 1995

<TABLE>

                                                                         1997              1996            1995
                                                                         ----              ----            ----

<S>                                                                <C>                 <C>             <C>
Revenues:
     Homesite sales                                                 $  2,733,459         3,386,508        4,992,000
     Marine operations                                                 3,790,502         3,156,123        3,064,744
     Equity in earnings of investee companies (note 4)                   992,234           386,089          919,835
     Interest income445,628                                              428,338           398,497
     Rental income, net (note 6)                                         210,660           202,504          127,231
     Recreational facilities, net                                         69,033            91,754           76,681
     Gain on sales of land held for investment (note 3)                  661,164            39,981          498,373
                                                                      ----------       -----------     ------------
                                                                       8,902,680         7,691,297       10,077,361
                                                                      ----------       -----------     ------------
Costs and expenses:
     Cost of homesites sold and related expenses                       1,365,040         1,378,868        2,591,991
     Marine operations                                                 2,677,554         2,282,929        2,225,179
     General and administrative                                        1,036,074           919,277          802,335
     Management fees paid to general partner (note 1)                     81,665            76,515           66,420
                                                                     -----------       -----------    -------------
                                                                       5,160,333         4,657,589        5,685,925
                                                                     -----------       -----------    -------------

              Net earnings                                             3,742,347         3,033,708        4,391,436

Net earnings attributable to general partner                           1,115,207           894,471        1,279,532
                                                                       ---------        ----------      -----------

Net earnings attributable to limited partners                        $ 2,627,140         2,139,237        3,111,904
                                                                       =========         =========      ===========

Weighted average number of limited
     partner units outstanding                                           473,947           476,184          478,421
                                                                      ==========        ==========     ============

Net earnings per limited partner unit                            $          5.54              4.49             6.50
                                                                      ==========        ==========     ============
</TABLE>


See accompanying notes to financial statements.


<PAGE>


                         THE MARINA LIMITED PARTNERSHIP

                         Statements of Partners' Equity

                  Years ended December 31, 1997, 1996 and 1995

<TABLE>

                                                                  General             Limited             Total
                                                                 partner's           partners'          partners'
                                                                  equity              equity             equity
                                                                  ------              ------             ------
<S>                                                           <C>                    <C>               <C>
Balance December 31, 1994                                      $ 4,021,726            9,722,724         13,744,450

     Distributions to partners ($2.00 per unit)                   (393,428)            (956,842)        (1,350,270)
     Net earnings                                                1,279,532            3,111,904          4,391,436
                                                                 ---------          -----------        -----------

Balance December 31, 1995                                        4,907,830           11,877,786         16,785,616

     Distributions to partners ($3.25 per unit)                   (639,321)          (1,554,868)        (2,194,189)
     Exchange of 4,474 units, net                                  105,721             (105,721)                -
     Utility refunds                                                 1,316                3,198              4,514
     Net earnings                                                  894,471            2,139,237          3,033,708
                                                                ----------          -----------        -----------

Balance December 31, 1996                                        5,270,017           12,359,632         17,629,649

     Distributions to partners ($3.25 per unit)                   (653,861)          (1,540,328)        (2,194,189)
     Net earnings                                                1,115,207            2,627,140          3,742,347
                                                                 ---------          -----------        -----------

Balance December 31, 1997                                      $ 5,731,363           13,446,444         19,177,807
                                                                 =========           ==========         ==========
</TABLE>


See accompanying notes to financial statements.


<PAGE>


                         THE MARINA LIMITED PARTNERSHIP

                            Statements of Cash Flows

                  Years ended December 31, 1997, 1996 and 1995

<TABLE>

                                                                           1997             1996           1995
                                                                           ----             ----           ----
<S>                                                                    <C>               <C>             <C>
Cash flows from operating activities:
    Net earnings                                                        $ 3,742,347       3,033,708       4,391,436
    Adjustments to reconcile net earnings to net cash
       provided by operating activities:
       Depreciation of properties                                           403,757         384,128         279,747
       Equity in earnings of investee companies                            (992,234)       (386,089)       (919,835)
       Receivables on current year=s homesite sales                        (723,283)       (586,949)     (1,680,536)
       Collection of prior years= homesite sales                            715,378       1,054,228         539,734
       Gain on sales of land held for investment                           (661,164)        (39,981)       (498,373)
       Homes and homesite development costs                              (1,727,510)     (1,164,570)     (2,537,941)
       Cost of homesites sold                                               500,253       1,001,458       2,221,466
       Change in operating assets and liabilities                           132,553        (122,307)        297,444
                                                                         ----------      ----------      ----------
          Net cash provided by operating activities                       1,390,097       3,173,626       2,093,142
                                                                          ---------       ---------       ---------

Cash flows from investing activities:
    Distributions received from Marina I                                    499,467         397,630         810,200
    Distributions received from Dockside Cafe                                66,532          37,324          46,000
    Additions to marine property and equipment                             (753,541)       (189,402)       (688,621)
    Additions to recreational facilities                                   (174,788)         (8,295)       (432,653)
    Additions to commercial properties                                      (80,387)       (207,534)     (1,121,341)
    Land and land development costs                                         (11,127)       (777,770)       (593,132)
    Proceeds from sales of land held for investment                       1,201,514          44,250       2,278,000
    Maturity (purchase) of U.S. Treasury note                               996,875        (996,875)             -
                                                                         ----------      ----------       ---------
          Net cash provided (used) by investing activities                1,744,545      (1,700,672)        298,453
                                                                          ---------       ---------      ----------

Cash flows from financing activities:
    Distributions to partners                                            (2,194,189)     (2,194,189)     (1,350,270)
    Utility refunds received                                                    -             4,514              -
                                                                         ----------      ----------       ---------
          Net cash used by financing activities                          (2,194,189)     (2,189,675)     (1,350,270)
                                                                          ---------       ---------       ---------

          Net increase (decrease) in cash
             and cash equivalents                                           940,453        (716,721)      1,041,325

Cash and cash equivalents at beginning of year                            4,591,103       5,307,824       4,266,499
                                                                          ---------       ---------       ---------

Cash and cash equivalents at end of year                                $ 5,531,556       4,591,103       5,307,824
                                                                          =========       =========       =========
</TABLE>


See accompanying notes to financial statements.



<PAGE>



                         THE MARINA LIMITED PARTNERSHIP

                          Notes to Financial Statements

                        December 31, 1997, 1996 and 1995


(1)  Summary of Significant Accounting Policies

     General

     The Marina Limited Partnership became a publicly traded limited partnership
     on December  30, 1986,  and the limited  partnership  units are  registered
     securities and currently  represent  approximately  70 percent of the total
     Partnership  units (62 percent  after the  conversion  of 56,764 units into
     shares of common stock of the general partner in 1998). The remaining units
     are owned by Marina II  Corporation,  the  general  partner,  which has the
     authority to manage the affairs of the Partnership.  The economic interests
     in the Partnership represented by general partner units and limited partner
     units are identical.  The general partner receives management fees equal to
     three  percent  of the  Partnership's  gross  margin on marine  operations,
     rental income and recreational facilities.

     As a partnership,  the allocated share of the Partnership=s  taxable income
     is  includable  in the income tax  returns  of the  partners;  accordingly,
     income taxes are not reflected in the Partnership's  financial  statements.
     The tax basis of assets and liabilities  exceeds the book basis by $441,000
     at December 31, 1997. In order to continue  partnership  tax treatment,  it
     was necessary for the Partnership to restrict public trading of the limited
     partner units,  and as of December 20, 1997,  limited  partner units are no
     longer  traded on NASDAQ.  Buyers and sellers  are  required to contact the
     Partnership to follow a prescribed process to buy or sell units.

     The majority of the Partnership=s  activities and operations are located in
     the Geist Lake area  northeast  of  Indianapolis,  Indiana and in the Morse
     Lake area north of Indianapolis. Its primary activities are the development
     of homes and  homesites  for sale and marine  operations at Geist and Morse
     Lakes.

     Cash and Cash Equivalents

     Cash and cash equivalents  include cash balances,  money market investments
     with  maturities of less than three months,  and U.S.  Treasury  bills with
     maturities of less than twelve months.

     The  Partnership  maintains  a separate  trustee  accounting  of  unclaimed
     limited partner unit distributions.

     Properties Held for Sale

     Properties held for sale are carried at the lower of cost or estimated fair
     value  less  costs  to  sell.  Costs  include   construction,   excavation,
     engineering   and  other  direct   costs   incurred  to  bring  land  to  a
     fully-improved  saleable  condition.  Land and land  improvement  costs are
     allocated to land sales and  homesite  projects  using the  relative  sales
     value and the specific identification methods. Properties are classified as
     available for sale when  marketing of the properties for sale is authorized
     by management.


<PAGE>


     In 1997, the Partnership began a homebuilding division with the acquisition
     of the assets of  Chesapeake  Building  Corporation  for a cash  payment of
     $175,000. The former owner of Chesapeake is related to the president of the
     general partner.  Homes are being built on land development  sites owned by
     the Partnership and the Marina I L.P.

     Sales of residential  homesites are for cash, on builder contract,  or with
     purchase money mortgages. Sales which satisfy a down-payment requirement of
     10% of the  purchase  price are recorded as revenue at the time of closing.
     Receivables  from homesite sales are payable over seven years with interest
     at 9% the first year, 10% the second year and 12%  thereafter.  The portion
     of the sales  price  which may be  refundable  under  builder  programs  is
     deferred  until the refund  period  expires.  Land sales are  generally for
     cash.  Costs of properties  sold are determined by the relative sales value
     of the property to the total project.

     At the time a homesite is sold,  the  Partnership  accrues a fee payable to
     Flatfork  Creek  Utility,  Inc.  for the cost of  certain  utility  hook-up
     charges which is included in the cost of the homesite sold.

     Property and Equipment

     Property and equipment are stated at cost, less  accumulated  depreciation.
     The recreational  facilities are adjacent to homesite developments at Geist
     Lake for which residents of the  developments  pay a fee for the use of the
     facilities.  Commercial properties represent developed restaurant and other
     retail properties which are generally leased under short-term arrangements.
     Depreciation  is  computed  using  the  straight-line  method  based on the
     estimated useful lives of the assets.  Maintenance and repairs are expensed
     as incurred while major additions and improvements  are capitalized.  Since
     the recreational facilities and retail properties are only incidental minor
     operations,  the  results  are  shown on a net basis in the  statements  of
     earnings.

     Other Investments

     The equity  method is used to account  for the  Partnership=s  50%  general
     partner investment in The Marina I L.P. (Marina I), its 40% limited partner
     investment in Dockside  Cafe,  L.P.,  and its 50%  corporate  investment in
     Flatfork Creek Utility,  Inc. The  Partnership's  share of the net earnings
     and losses of these businesses is included currently in earnings.

     Utility Refunds

     When the  Partnership's  predecessor  was formed in April 1982, it acquired
     rights under utility refund agreements which were not recorded at that time
     as future receipts could not be estimated. As such, utility refunds related
     to that period are recorded as capital contributions when received.

<PAGE>

     Rental Income

     All leases are  classified  as  operating  leases,  and  minimum  rents are
     recognized  monthly based on the terms of the lease.  Percentage  rents are
     recognized monthly based on reported sales.

     Financial Instruments

     The carrying amounts of the receivables approximate their fair value as the
     interest rates are consistent  with market rates.  The carrying  amounts of
     all other  financial  instruments  approximate  fair  value  because of the
     short-term maturity of these items.

     Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosures  of  contingent  assets  and  liabilities  at the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     The Partnership  evaluates all of its real estate investments  periodically
     to assess whether any impairment is present,  including recurring operating
     losses and significant adverse changes in legal factors or business climate
     that affect the recovery of recorded value.  If any real estate  investment
     is considered  impaired, a loss is provided to reduce the carrying value of
     the property to its estimated fair value.

(2)  Property and Equipment

     Property and equipment  principally  consisting of land, land improvements,
     marine and retail facilities,  boat docks, and equipment used in the marine
     operations located on Morse and Geist Lakes are summarized following:

<TABLE>

                                                                                 1997           1996
                                                                                 ----           ----
                  <S>                                                        <C>               <C>
                  Land and land improvements                                 $ 1,209,047       1,209,047
                  Buildings and equipment                                      7,848,440       6,853,757
                                                                               ---------       ---------
                                                                               9,057,487       8,062,804
                  Accumulated depreciation                                     3,447,219       3,057,495
                                                                               ---------       ---------

                                                                             $ 5,610,268       5,005,309
                                                                               =========       =========
</TABLE>

<PAGE>

(3)    Land and Land Improvements

       At December 31, land and land improvements consisted of the following:

<TABLE>

                                                                                   1997           1996
                                                                                   ----           ----

                  <S>                                                         <C>             <C>
                  Unimproved land and residential land
                     under development                                         $ 620,158         945,372
                  Commercial sites                                               115,520         592,568
                                                                                 -------      ----------

                                                                               $ 735,678       1,537,940
                                                                                 =======       =========
</TABLE>


<PAGE>

     The Partnership  sold commercial and a 13 acre parcel of farm land in 1997,
     to unrelated parties for cash resulting in revenues and gains as follows:

                                           1997          1996          1995
                                           ----          ----          ----

          Revenue                    $ 1,307,055       44,250       2,278,000
          Gain                          661,164        39,981         498,373

(4)  Other Investments

     Marina I

     The Partnership is a general partner with Irving Materials, Inc. as limited
     partner  in Marina I which  develops  homesites  and other  land near Geist
     Lake.  The  Partnership=s  equity in the  earnings  of Marina I amounted to
     $961,813 in 1997, $461,405 in 1996, and $979,957 in 1995.

     The following is a summary of balance sheet and operating  information  (in
     thousands)  of Marina I as of December  31, 1997 and 1996 and for the years
     then ended:

                                                        1997           1996
                                                        ----           ----

        Cash and cash equivalents                   $    553           847
        Homes and homesites available for sale
           and land and land improvements              3,719         3,071
        Receivables from homesite sales                  652           289
        Other assets                                     407             3
        Liabilities                                     (222)         (145)
                                                       ------        ------
        Partners' equity                             $ 5,109          4,065
                                                       =====          =====
        Homesite sales and other revenues              3,156          1,444
        Cost of homesites sold and expenses            1,311            579
                                                       -----          -----

               Net earnings                          $ 1,845            865
                                                       =====         ======

     The Partnership pays various operational costs incurred for Marina I, which
     are reimbursed at actual or allocated amounts.

     Dockside Cafe

     The  Partnership is a limited  partner with Dockside Cafe,  Inc. as general
     partner  for the  operation  of  restaurants  at the Geist  and Morse  Lake
     marinas.  The  Partnership  constructed  the restaurants and leases them to
     Dockside Cafe, L.P.


<PAGE>


     Flatfork Creek Utility, Inc.

     In 1990,  the  Partnership  acquired  property to  construct  a  wastewater
     treatment  plant to serve  homesites to be developed in the Geist Lake area
     by the Partnership,  Marina I and other developers. In 1993, Flatfork Creek
     Utility, Inc. (the Corporation) was formed to complete the construction of,
     and then operate,  the wastewater water treatment plant (the Utility).  The
     Partnership  transferred  $738,000 of assets and  $424,000  of  liabilities
     related to the Utility to the  Corporation,  as its sole  shareholder.  The
     Partnership  then sold 50% of its  interest  in the  Corporation  to Irving
     Materials,  Inc.  for  $157,000.  The  wastewater  treatment  plant  became
     operational in November  1994. The  Corporation is subject to regulation by
     the Indiana Utility Regulatory Commission.

     To date, the Corporation's only customers are the Partnership, Marina I and
     the resident  homeowners  of homesites  developed  by the  Partnership  and
     Marina I. In January 1997, the  Partnership  and Marina I paid $196,812 and
     $590,436,  respectively,  as advance payments for future utility  hook-ups.
     The Partnership  recognized income of $20,482 in 1997 and a loss of $93,000
     in 1996 as its share of the Corporation=s results of operations.

     The Partnership,  along with Irving Materials, Inc., are both guarantors of
     the  Corporation's  $2,500,000 loan, of which $1,566,954 was outstanding at
     December 31, 1997.

(5)  Notes Payable to Bank

     The  Partnership  has a $2,000,000  unsecured  line of credit which matures
     July 1, 1998 and bears  interest at the bank=s  prime  rate.  There were no
     borrowings on the line of credit through December 31, 1997.

(6)  Rental Income

     The  restaurant  facility  at the Geist Lake  Marina is leased to  Dockside
     Cafe,  L.P. under an operating lease with monthly minimum rentals of $7,500
     plus a percentage  of sales over stated  bases.  Overage  rents of $69,600,
     $90,000  and  $94,200  for 1997,  1996 and 1995  sales,  respectively,  are
     included in rental income.

     The  restaurant  facility  at Morse Lake  Marina is also leased to Dockside
     Cafe,  L.P. under an operating lease with monthly minimum rentals of $5,000
     plus a percentage of sales over stated bases. No overage rents were due for
     1997, 1996 or 1995.

     During 1995, the  Partnership  began  operating a 20,000 square foot retail
     and office  development known as Marina Village.  Included in rental income
     is $210,600,  $149,700 and $29,900 for 1997,  1996 and 1995,  respectively,
     from the retail tenants. At December 31, 1997, occupancy was 100% including
     2,000  square feet which is the office of the  Partnership.  In addition to
     minimum rent, the leases require  reimbursements  of specified  operational
     expenses.


<PAGE>

                         THE MARINA LIMITED PARTNERSHIP

                          Notes to Financial Statements



     The Partnership also leases certain real estate under short-term  operating
     leases for which rental income  amounted to $15,200,  $6,200 and $16,900 in
     1997, 1996 and 1995, respectively.

     The minimum rent payments due under operating  leases in effect at December
     31, 1997 are summarized as follows:



                                                    Marina
                                  Restaurants       Village         Total
                                  -----------       -------         -----
             1998                 $ 149,400         238,900        388,300
             1999                   149,400         245,100        394,500
             2000                   149,400         207,600        357,000
             2001                    12,500          72,100         84,600
             2002                        -           42,800         42,800
                                  ---------        --------      ---------

                                  $ 460,700         806,500      1,267,200
                                  =========         =======      =========

(7)  Segment Information

     The  Partnership  is  engaged  in  two  primary  business   segments,   the
     development and sale of homes and homesites and marine  operations at Geist
     and Morse Lakes.  Summarized financial  information by business segment for
     1997, 1996 and 1995 is as follows (in thousands):

                                                  1997       1996       1995
                                                  ----       ----       ----

          Revenues:
              Homesite sales                     $ 2,733      3,387    4,992
              Equity in earnings of
                homesite investee company            962        461      980
              Marine operations                    3,791      3,156    3,065
              Other                                1,417        687    1,040
                                                   -----      ------  ------
                                                 $ 8,903      7,691   10,077
                                                   =====      =====   ======
            Operating income:
               Homesite sales, including
                 equity in earnings
                 of homesite investee company     2,330       2,469    3,380
               Marine operations                  1,113         873      840
               Other                              1,417         688    1,040
               Administration                    (1,118)       (996)    (869)
                                                  -----       ------   ------
                                                $ 3,742       3,034    4,391
                                                  =====       =====   =======
             Depreciation expenses:
                Homesite sales                      17            4        2
                Marine operations                  171          163      142
                Other                              216          217      136
                                                 -----        -----      ---
                                               $   404          384      280
                                                ======        =====      ===



<PAGE>







                               THE MARINA I L. P.

                              Financial Statements

                           December 31, 1997 and 1996







                   (With Independent Auditors' Report Thereon)


<PAGE>










Independent Auditors' Report


The Partners
The Marina I L. P.:

We have  audited  the  accompanying  balance  sheets of The Marina I L. P. as of
December 31, 1997 and 1996,  and the related  statements of earnings,  partners'
equity  and cash  flows for each of the  years in the  three-year  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.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of The  Marina I L. P. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the years in the  three-year  period ended  December  31,  1997,  in
conformity with generally accepted accounting principles.





KPMG Peat Marwick LLP
Indianapolis, Indiana
February 13, 1998


<PAGE>


                               THE MARINA I L. P.

                                 Balance Sheets

                           December 31, 1997 and 1996
<TABLE>


               Assets                                                                       1997             1996
               ------                                                                       ----             ----
<S>                                                                                   <C>                   <C>
Cash and cash equivalents                                                             $    553,361          847,197
Receivables from homesite sales                                                            651,656          288,756
Other receivables and assets                                                                18,238            3,452

Prepaid hook-up fees to Flatfork Creek Utility                                             388,930               -

Homes and homesites available for sale                                                   2,623,338        2,020,953
Land and land improvements                                                               1,095,715        1,049,568
                                                                                         ---------        ---------

                                                                                       $ 5,331,238        4,209,926
                                                                                         =========        =========
     Liabilities and Partners' Equity

Accounts payable and accrued expenses                                                       60,470           39,426
Deferred revenues and sale deposits                                                         62,500           20,000
Accounts payable to affiliates                                                              99,017           85,200
                                                                                         ---------       ----------
              Total liabilities                                                            221,987          144,626
                                                                                         ---------       ----------

Partners' equity:
     General partner                                                                     2,351,124        1,884,443
     Limited partner                                                                     2,758,127        2,180,857
              Total partners' equity                                                     5,109,251        4,065,300
                                                                                         ---------        ---------

                                                                                       $ 5,331,238        4,209,926
                                                                                         =========        =========
</TABLE>

See accompanying notes to financial statements.


<PAGE>


                               THE MARINA I L. P.

                             Statements of Earnings

                  Years ended December 31, 1997, 1996 and 1995

<TABLE>

                                                                         1997              1996              1995
                                                                         ----              ----              ----
<S>                                                                  <C>                <C>               <C>
Revenues:
     Homesite sales                                                  $ 3,056,941         1,363,884         2,946,813
     Interest income                                                      99,242            80,069            88,530
                                                                       ---------         ---------         ---------
                                                                       3,156,183         1,443,953         3,035,343
                                                                       ---------         ---------         ---------
Costs and expenses:
     Cost of homesites sold and related expenses                       1,281,591           569,181         1,133,518
     General and administrative                                           29,964             9,599             1,976
                                                                       ---------         ---------         ---------
                                                                       1,311,555           578,780         1,135,494
                                                                       ---------         ---------         ---------
              Net earnings                                             1,844,628           865,173         1,899,849

Net earnings attributable to general partner                             961,813           461,405           979,957
                                                                      ----------         ---------         ---------

Net earnings attributable to limited partner                        $    882,815           403,768           919,892
                                                                      ==========        ==========        ==========

</TABLE>


See accompanying notes to financial statements.


<PAGE>


                               THE MARINA I L. P.

                         Statements of Partners' Equity

                  Years ended December 31, 1997, 1996 and 1995

<TABLE>

                                                                       General           Limited          Total
                                                                      partner's         partner's       partners'
                                                                       equity            equity          equity
                                                                       ------            ------          ------
<S>                                                                 <C>                <C>              <C>
Balance December 31, 1994                                           $ 1,650,911        1,806,377        3,457,288

     Distributions to partners                                         (810,200)        (789,800)      (1,600,000)
     Land contributed by partners                                           -            134,961          134,961
     Net earnings                                                       979,957          919,892        1,899,849
                                                                     ----------       ----------        ---------

Balance December 31, 1995                                             1,820,668        2,071,430        3,892,098

     Distributions to partners                                         (397,630)        (452,370)        (850,000)
     Land contributed by partners                                           -            158,029          158,029
     Net earnings                                                       461,405          403,768          865,173
                                                                     ----------       ----------       ----------

Balance December 31, 1996                                             1,884,443        2,180,857        4,065,300

     Distributions to partners                                         (495,132)        (429,131)        (924,263)
     Land contributed by partners                                            -           123,586          123,586
     Net earnings                                                       961,813          882,815        1,844,628
                                                                     ----------       ----------        ---------

Balance December 31, 1997                                           $ 2,351,124        2,758,127        5,109,251
                                                                      =========        =========        =========

</TABLE>

See accompanying notes to financial statements.


<PAGE>


                               THE MARINA I L. P.

                            Statements of Cash Flows

                  Years ended December 31, 1997, 1996 and 1995

<TABLE>


                                                                            1997             1996           1995
                                                                            ----             ----           ----

<S>                                                                    <C>               <C>             <C>
Cash flows from operating activities:
    Net earnings                                                        $ 1,844,628         865,173       1,899,849
    Adjustments to reconcile net earnings to net cash
       provided by operating activities:
       Receivables on current year=s homesite sales                        (551,962)       (125,415)       (448,877)
       Collection on prior years= homesite sales                            189,062         489,198         351,398
       Homes and homesites development costs                               (511,423)       (361,520)       (394,447)
       Cost of homesites sold                                               909,068         425,646         999,480
       Change in operating assets and liabilities                          (326,355)         56,298           7,588
                                                                          ---------       ---------       ---------
          Net cash provided by operating activities                       1,553,018       1,349,380       2,414,991
                                                                          ---------       ---------       ---------

Cash flows from investing activities:
    Land and land development costs                                        (922,591)       (492,403)        (32,699)
                                                                          ---------       ---------         --------
          Net cash used by investing activities                            (922,591)       (492,403)        (32,699)
                                                                          ---------       ---------         --------

Cash flows from financing activities:
    Distributions to partners                                              (924,263)       (850,000)     (1,600,000)
                                                                           --------        --------       ---------
          Net cash used by financing activities                            (924,263)       (850,000)     (1,600,000)
                                                                           --------        --------       ---------

          Net increase (decrease) in cash
             and cash equivalents                                          (293,836)          6,977         782,292

Cash and cash equivalents at beginning of year                              847,197         840,220          57,928
                                                                         ----------       ---------       ---------

Cash and cash equivalents at end of year                               $    553,361         847,197         840,220
                                                                         ==========      ==========       =========

</TABLE>

See accompanying notes to financial statements.


<PAGE>




                        THE MARINA I LIMITED PARTNERSHIP

                          Notes to Financial Statements

                        December 31, 1997, 1996 and 1995


Summary of Significant Accounting Policies

General

The  Marina I L. P.  (Marina I) was  formed by The  Marina  Limited  Partnership
(TMLP) and Irving Materials,  Inc. (Irving) to develop residential homesite land
near Geist  Lake  northeast  of  Indianapolis,  Indiana.  Marina I is managed by
Marina II, the general partner of TMLP.  Certain  expenses and costs incurred by
Marina I are paid by TMLP and then  reimbursed  by  Marina I based on  actual or
allocated amounts.

Contributions  of land by Irving,  the  limited  partner,  are valued at amounts
agreed upon by the partners  which  approximate  the  partners= tax basis in the
land. Earnings and distributions are allocated as follows:

      For earnings from homesite sales on land contributed by Irving,  Irving is
      first  allocated  an amount equal to 20% of the gross sales price less its
      tax basis in the land  contributed,  and TMLP is allocated 5% of the gross
      sales price. Any remaining earnings are allocated 40% to Irving and 60% to
      TMLP.

      For earnings  from all other  homesite  sales,  TMLP is first  allocated a
      Amanagement  fee@  based on  profits  from the  homesite  sales,  with the
      remainder allocated 50% to each partner.

Cash and Cash Equivalents

Cash and cash  equivalents  include cash  balances and money market  investments
with maturities of less than three months.

Homes and Homesites Available for Sale

Properties available for sale are carried at the lower of cost or estimated fair
value less costs to sell.  Properties  are classified as available for sale when
marketing of the properties for sale is authorized by management.

Sales of residential  homesites are for cash, on builder  contract,  or purchase
money  mortgages.  Sales which satisfy a down-payment  requirement of 10% of the
purchase price are recorded as revenue at the time of closing.  Receivables from
homesite  sales are payable over seven years with interest at 9% the first year,
10% the second and 12%  thereafter.  The portion of the sales price which may be
refundable  under builder  programs is deferred until the refund period expires.
Costs of  homesites  sold are  determined  by the  relative  sales  value of the
homesite to the total project.



<PAGE>



                               THE MARINA I L. P.

                          Notes to Financial Statements



At the time a lot is sold,  the  Partnership  accrues a fee  payable to Flatfork
Creek Utility,  Inc.  (whose  partners are also TMLP and Irving) for the cost of
certain  utility hook-up charges which is included in cost of homesites sold. In
January 1997, Marina I paid $590,436 to Flatfork Creek Utility,  Inc. as advance
payments for future utility hook-ups.


Land and Land Improvements

Costs  include  construction,  excavation,  engineering  and other  direct costs
incurred to bring land to a fully-improved  saleable condition.  These costs are
allocated  to homesite  sales using the  relative  sales value and the  specific
identification methods.

Financial Instruments

The carrying amounts of the receivables approximate their fair value because the
interest rates are at market rates.  The carrying amounts of all other financial
instruments  approximate fair value because of the short-term  maturity of these
items.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities  and  disclosures  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

The  Partnership  evaluates all of its real estate  investments  periodically to
assess whether any impairment  indications  are present,  including  significant
adverse changes in legal factors or business climate that affect the recovery of
recorded value. If any real estate investment is considered  impaired, a loss is
provided to reduce the  carrying  value of the  property to its  estimated  fair
value.

Income Taxes

As a  partnership,  the  allocated  share of the  taxable  income of Marina I is
includable in the income tax returns of the partners;  accordingly, income taxes
are not reflected in these financial statements.




<PAGE>


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

     There has been no change in the Partnership's  independent certified public
accountants  within 24 months prior to, or  subsequent  to, the date of the most
recent  financial  statements,  nor has there  been any  disagreements  with the
accountants.


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS.

     The following table presents  certain  information  regarding the Directors
and executive officers of the General Partner.  Each person listed is a Director
of the General Partner except for the Treasurer. Messrs. Rosenberg, Rosenberg II
and Calabria are the executive officers of the General Partner. Unless otherwise
indicated in a footnote,  the principal occupation of each Director or executive
officer has been the same for the last five years.
                                                          Year of
        Name                Principal Occupation           Birth
        ----                --------------------           -----

Patrick J. Bruggeman   President, American Steel            1948
                       Investment Corporation, Ft.
                       Wayne, Indiana  (manufacturer
                       of wire rope)

Lawrence L. Buell      Certified Public Accountant and      1934
                       Member, Indiana House
                       of Representatives  (1)

Stanley E. Hunt        Retired (2)                           1930
Allen E. Rosenberg     President of the General Partner (3)  1935

Allen E. Rosenberg II  Vice President and Assistant          1955
                       Treasurer of the General Partner (4)

Donald J. Calabria     Vice President, Treasurer, and        1939
                       Secretary of the General Partner (5)

1.   Mr. Buell was Executive Director of the Health and Hospital  Corporation of
     Marion  County from January 1984 to February  1994 and its  Treasurer  from
     February 1994 to January 1995.

2.   Mr. Hunt was  President  of The  Shorewood  Corporation  from 1977  through
     December 1994.

3.   Mr.  Rosenberg became President of the General Partner in 1982 and held the
     position of Treasurer from 1984 to June 1989.

4.   Mr. Rosenberg II became Assistant Treasurer of the Company in 1987 and Vice
     President and a Director in 1997.

5.   Mr.  Calabria  became Vice President & CFO,  Treasurer and Secretary of the
     General  Partner in June 1997. He had been Vice President and CFO of Natare
     Corp from 1992 to 1995 and Treasurer and CFO of The Beta Group from 1995 to
     1996.

<PAGE>

     All  Directors  serve annual terms until their  successors  are elected and
have  qualified.  The Directors are elected by the  shareholders  of the General
Partner.  Mr.  Rosenberg  has  served as a  Director  of the  Company or General
Partner since 1982. Mr. Hunt was elected as a Director in 1996 and Mr. Rosenberg
II in 1997. All other  Directors were elected in 1984. All officers serve at the
pleasure of the Board of Directors. Mr. Rosenberg is the father of Mr. Rosenberg
II. There are no other family relationship between any of the executive officers
and Directors of the General Partner.


ITEM 11.  EXECUTIVE COMPENSATION.

Compensation of Executive Officers

     The  following  table sets  forth  aggregate  compensation  for each of the
Partnership's  executive  officers  whose total  annual  salary and bonus exceed
$100,000,  for services rendered to the Partnership in all capacities during the
years ended December 31, 1997, 1996, and 1995.

                           SUMMARY COMPENSATION TABLE

Name and
Principal Position       Year        Salary       Bonus
------------------       ----        ------       -----
Allen E. Rosenberg
President,               1997       $200,000      $180,667
Director of the          1996        199,653       187,992
General Partner          1995        174,462       202,525

Allen E. Rosenberg II
Vice President,          1997       $ 86,353      $103,206
Assistant Treasurer and  1996         18,000        55,000
Director of the          1995         18,000        19,681
General Partner

Each Director except Messrs. Rosenberg and Rosenberg II receives a fee of $5,000
per year, plus $750 for each Board of Directors or Committee  meeting  attended.
If,  however,  more than one  meeting  is held on the same day, a fee of $150 is
paid for the subsequent meetings.


<PAGE>


Bonus Plans

     Allen E. Rosenberg is compensated under a plan whereby three percent of the
proceeds or other revenues from sales of the Partnership's  investment land have
been paid to him for his  stewardship of the  Partnership's  land. The following
payments were made pursuant to that plan:

                                  Year            Amount
                                  ----           -------
                                  1997          $ 39,211
                                  1996          $  1,328
                                  1995          $ 68,340

     In  addition,  five  percent of the gross  profit (net of  development  and
selling costs) on the Partnership's  individual  homesite sales and five percent
of the Partnership's  share of the income from The Marina I L.P. are paid to Mr.
Rosenberg. The following payments were made pursuant to that plan:

                                  Year            Amount
                                  ----           -------
                                  1997          $ 141,455
                                  1996          $ 186,664
                                  1995          $ 134,185

     Allen E. Rosenberg II is compensated under a plan whereby 12 percent of the
profit (before general and administrative expenses) will be paid to him for each
residence  built and sold at Sail Place.  In  addition,  Mr.  Rosenberg  II will
receive 50% of the net profit (before  general and  administrative  expenses) on
each custom home sold. Under this plan,  $75,000 was paid to Mr. Rosenberg II as
the minimum  amount  payable  under the plan.  The minimum bonus payable in 1998
will be $100,000.  In January  1997,  $28,206 was paid to Mr.  Rosenberg II as a
discretionary  bonus  for  construction  completed  in  1996  on  behalf  of the
Partnership.

Management Fees Paid to the General Partner

     In addition to bonuses  that may be paid from the  proceeds of sales of the
Partnership's  land or other  revenues (see " Bonus Plans"  above),  the General
Partner  is  permitted  to receive  management  fees from the  Partnership.  The
General Partner  received  management fees of $82,000 in 1997, which is equal to
three  percent  of  the  Partnership's   gross  margin  on  marine   operations,
recreational  facilities,  and rental income.  The management fee is not paid on
revenues from land sales and investment income.



<PAGE>


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

Security Ownership

     The following  table sets forth the number of Limited  Partner Units of the
Partnership  beneficially  owned by all Directors of the General  Partner and by
all  Directors  and  officers of the General  Partner as a group as of March 23,
1998.

                                   Number of         Percent
                             Limited Partner Units     of
           Name                Beneficially Owned     Class
           ----                ------------------     -----
Patrick J. Bruggeman                 9,300             2.2%

Allen E. Rosenberg                   4,937 (1)         1.2%

Allen E. Rosenberg II                1,665 (2)         0.4%

Stanley E. Hunt                      1,000             0.2%

All Directors and Officers
  of the General Partner
  as a group (6 persons)            16,902 (3)         4.1%

 1.  Includes 4,937 Units owned by Mr. Rosenberg's wife.

 2.  Includes 1,665 Units owned by Mr. Rosenberg II's Children.

 3.  Includes  6,602  Units  owned by  spouses or others.  Also  includes  Units
     described in the above notes.

     The  Partnership has concluded that Limited Partner Units do not constitute
voting securities. Therefore, the Partnership does not report information on the
number of Limited Partner Units  beneficially  owned by persons owning more than
five percent of the Limited Partner Units.

     Upon the  reorganization  of the Company into the Partnership in 1986, five
of the seven  members of the Board of Directors of the Company (the  "Continuing
Directors")  received  all the General  Partner  Units in the  Partnership.  See
"General" under Item 1. The Partnership disclaims that the General Partner Units
are  securities.  General  Partner Units are vested with authority to manage the
affairs of the Partnership.  In exchange for the General Partner Units that they
received  in the  reorganization,  the  Continuing  Directors  became  the  sole
shareholders of the General Partner.



<PAGE>


     During 1997,  The Board of Directors  of the General  Partner  approved the
following transactions: (i) the gift by Mr. Rosenberg to his children, of shares
of the  General  Partner  equilavent  to  60,000  Partnership  Units;  (ii)  the
acquisition  of all of the shares of the General  Partner,  equilavent to 18,400
Partnership Units, owned by John Wooling,  one of the Continuing  Directors,  by
Allen E. Rosenberg II; and (iii) the conversion of 54,000 Limited  Partner Units
acquired in December  1997 by Mr.  Rosenberg,  and 2,764  Limited  Partner Units
owned by Mr.  Rosenberg  II, into a like number of General  Partner  Units.  The
Limited Partner Units were converted into General Partner Units in January 1998,
which  decreased the number of Limited Partner Units by 56,764 units, to 417,183
units,  and increased  the number of General  Partner Units by 56,764 to 257,952
units.

     As of March 23, 1998 the General  Partner owns a 38.2  percent  interest in
the profits,  losses,  capital,  and  distributions  of the  Partnership,  which
percentage is equal to the General Partner percentage of the Common Stock of the
Company owned directly by the  Continuing  Directors at the time the Company was
reorganized into the Partnership plus the net Limited Partner Units subsequently
acquired and converted into General Partner Units.

     Three  of the  Continuing  Directors,  in  addition  to Mr.  Hunt  and  Mr.
Rosenberg  II, are the  current  members of Board of  Directors  of the  General
Partner.  The  Directors of the General  Partner  manage and control the overall
business  and affairs of the General  Partner  and,  consequently,  those of the
Partnership.   The  Directors  of  the  General   Partner  are  elected  by  the
shareholders  of the General Partner (unless there is a vacancy on the Board, in
which  case the  remaining  Board  members  may fill the  vacancy)  without  the
approval  of the Limited  Partners.  Reflecting  the  additional  conversion  of
Limited  Partner Units in January 1998 by Mr.  Rosenberg  and Mr.  Rosenberg II,
ownership of the shares of the General Partner on March 23, 1998 is as set forth
in the following table:

                                                                   Percentage
                          Shareholder                               Ownership
                          -----------                               ---------
                      Allen E. Rosenberg                               47.9%
                      Patrick J. Bruggeman                             17.2%
                      Allen E. Rosenberg II                            16.0%
                      Stanley E. Hunt                                   2.6%
                      Lawrence Buell                                     .8%
                      Other children of                                15.5%
                      Mr. Rosenberg

     Upon the withdrawal or removal of a General Partner,  its  participation in
the General  Partner  Units will cease.  Thereafter,  the General  Partner Units
owned by the withdrawn or removed General Partner will change to Limited Partner
Units.


<PAGE>


Changes in Control

     The Shareholders' Agreement (the "Shareholders'  Agreement") dated December
2, 1986,  among the  shareholders  of the General  Partner,  prescribes  certain
procedures for the sale or other  transfer of shares of the General  Partner and
for the voting of certain  shares,  the  operation  of which may at a subsequent
date result in a change of control of the General Partner and,  consequently,  a
change of control of the Partnership. The Shareholders' Agreement is attached as
an exhibit  to the  Partnership's  1993  Annual  Report on Form  10-K,  which is
incorporated  herein by this reference.  The  Shareholders'  Agreement  provides
certain  restrictions  on  transfer,  rights of first  refusal,  and  options to
purchase  with  respect  to shares of the  General  Partner.  The  Shareholders'
Agreement also provides certain voting arrangements in the event of the death or
disability  of Allen E.  Rosenberg,  the  majority  shareholder  of the  General
Partner.

     The  following  is a brief  summary of the  Shareholders'  Agreement.  This
summary is not  intended to be complete  and is qualified in all respects by the
more detailed provisions of the Shareholders' Agreement.

     In general,  the  Shareholders'  Agreement  provides that a shareholder may
transfer all or part of his shares of the General  Partner to a party who is not
a party to the  Shareholders'  Agreement only upon prior written approval by the
General  Partner  and  subject  to any  limitations  that may be  imposed by the
General  Partner.  If, for any  reason,  a  shareholder  who is also a Director,
ceases to be a Director of the General  Partner,  the shareholder and his heirs,
executors,  administrators,  successors,  or  assigns,  subject to the rights of
first refusal  described  below,  has the right,  but not the  obligation,  upon
surrender  of all of his shares of the  General  Partner,  to cause the  General
Partner to (a) convert that portion of the General Partner Units attributable to
all of such shareholder's  shares into Limited Partner Units on the basis of one
Limited  Partner Unit for one General  Partner Unit, (b) distribute such Limited
Partner Units to the shareholder, and (c) cause the Partnership to register such
Limited  Partner Units under the  Securities  Act of 1933, as amended.  Prior to
such conversion of General Partner Units into Limited Partner Units,  the shares
of the General  Partner the  shareholder  proposes to  surrender in exchange for
Limited  Partner  Units must first be  offered to the  remaining  parties to the
Shareholders' Agreement and the General Partner as provided in the Shareholders'
Agreement.  The exercise of any such rights of first refusal is contingent  upon
the  exercise of rights of first  refusal to  purchase,  in the  aggregate,  all
shares held by the selling shareholder.

<PAGE>

     If a  shareholder  of the  General  Partner  acquires,  from  time to time,
Limited  Partner  Units,  such  Units  shall  be, at the  option of the  General
Partner, changed to General Partner Units and contributed to the General Partner
in return for additional shares of stock of the General Partner.

     The  Shareholders'  Agreement also provides that, in the event of the death
or disability of Allen E.  Rosenberg,  the majority  shareholder  of the General
Partner,  his  shares  of the  General  Partner  will be  voted  by a  committee
consisting  of four  members,  at least one of whom shall be a  Director  of the
General Partner.  The members of the voting committee are Stanley E. Hunt, David
M. Manischewitz,  Allen E. Rosenberg II, and John L. Woolling.  Vacancies on the
voting  committee will be filled by Allen E. Rosenberg,  or, in the event of his
death or  disability,  by a  majority  of the  remaining  members  of the voting
committee.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Chesapeake Building Corporation,  which was owned by Allen E. Rosenberg II,
who is Vice President and Assistant  Treasurer of the Partnership and the son of
Allen E. Rosenberg,  President of the General Partner, sold all of its assets to
the  Partnership in 1997 for the cash price of $175,000.  Such  transaction  was
approved by The Board of Directors of the General Partner.




<PAGE>


                                     PART IV

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

     (a) (1)  Financial Statements:

     The following financial statements of the Partnership and The Marina I L.P.
appear in Part II, Item 8.

     Independent Auditors' Report.

     Balance Sheets -- December 31, 1997 and 1996.

     Statements of Earnings -- Years Ended December 31, 1997, 1996, and 1995.

     Statements of Partners'  Equity -- Years Ended December 31, 1997,  1996 and
     1995.

     Statements of Cash Flows -- Years Ended December 31, 1997, 1996 and 1995.

     Notes to Financial Statements.

     (a)(2)  Financial Statement Schedules:

     All schedules for which provision is made in the applicable  regulations of
the  Commission  have been omitted as the schedules  are not required  under the
related  instructions,  or the  required  information  is  inapplicable,  or the
information is set forth in the financial statements included elsewhere herein.

    (a)(3)  Exhibits:

     The  exhibits  filed as a part of this Annual  Report on Form 10-K,  all of
which are hereby  incorporated  by reference  except  financial  statements  and
schedules and Exhibits 3.1, 3.2, 4.1 and 99.3, are:

Exhibit                                                Page No. or
Number                     Exhibit                      Filed With
-------                   ---------                     ----------

 3.1       Certificate of Limited Partnership of           (3)
           The Marina Limited Partnership

 3.2       Agreement of Limited Partnership of             (3)
           The Marina Limited Partnership

 4.1       Agreement of Limited Partnership of             (3)
           The Marina Limited Partnership defining
           the rights of security holders is filed
           as Exhibit 3.2

<PAGE>

10.1       License Agreement, dated October 19, 1970,      (2)
           between Indianapolis Water Company and
           The Shorewood Corporation

10.2       Conveyances of Easement Rights for the          (2)
           purpose of Installing and Maintaining
           Boat Docks, dated June 30, 1982,
           executed by the Shorewood Corporation
           in favor of The Creek Land Company, Inc.

10.3       Consent to Assignment of License Rights,        (2)
           dated March 11, 1983, between Indianapolis
           Water Company, The Shorewood Corporation
           and The Creek Land Company, Inc.

27         Financial Data Schedule

99.1       Restated Articles of Incorporation of           (1)
           The Marina II Corporation

99.2       Restated Bylaws of The Marina II Corporation    (1)

99.3       Shareholders' Agreement                         (3)



1.   Registration  Statement on Form S-4 (Reg. No.  33-9367) filed by The Marina
     Limited Partnership on October 8, 1986.

2.   Registration  Statement on Form S-14 (Reg. No. 2-03600) filed by The Marina
     Corporation  on October 3, 1984,  as amended  on  November  13,  1984,  and
     November 20, 1984.

3.  Annual Report on Form 10-K filed by The Marina Limited Partnership for 1993.

     (b)  Reports  on Form 8-K.  No reports on Form 8-K were filed in the fourth
quarter of 1997 by the Partnership.


<PAGE>


                                   SIGNATURES

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

                                            The Marina Limited Partnership


Date:  March 23, 1998                       By: /s/ Allen E. Rosenberg
                                               Allen E. Rosenberg,
                                               President of The Marina
                                               II Corporation, the General
                                               Partner of The Marina
                                               Limited Partnership


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

                                       Capacity With
     Signature                     the General Partner            Date
     --------                      -------------------            ----

/s/ Patrick J. Bruggeman           Director                 March 23, 1998
Patrick J. Bruggeman

/s/ Lawrence L. Buell              Director                 March 23, 1998
Lawrence L. Buell


/s/ Stanley E. Hunt                Director                 March 23, 1998
Stanley E. Hunt


/s/ Allen E. Rosenberg       Director and President         March 23, 1998
Allen E. Rosenberg           (Principal Executive
                              Officer)

/s/ Allen E. Rosenberg II    Director,                      March 23, 1998
Allen E. Rosenberg II        Vice President
                             and Secretary

/s/ Donald J. Calabria       Vice President,                March 23, 1998
Donald J. Calabria           Treasurer,
                             and Secretary
                             (Principal Financial Officer)