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, 1998

                                       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.( )

        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 25,  1999,  and assuming  solely for
purposes of this  calculation  that all executive  officers and Directors of the
registrant are affiliates, was approximately $13,127,000.  The source of the bid
quotation is the matching service made available by the Registrant.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE
<PAGE>ii
                                    FORM 10-K

                                TABLE OF CONTENTS

                                                                         Page

PART I

Item 1          - Business                                                1

Item 2          - Properties                                              7

Item 3          - Legal Proceedings                                       8

Item 4          - Submission of Matters to a Vote of Security Holders     8

PART II

Item 5          - Market for Partnership's Common Equity
                  and Related Security Holder Matters                     8

Item 6          - Selected Financial Data                                10

Item 7          - Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                    11

Item 7A         - Quantitative and Qualitative Disclosures About 
                  Market Risk                                            11

Item 8          - Financial Statements and Supplementary Data            14

Item 9          - Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure                 33

PART III

Item 10         - Directors and Executive Officers                       33

Item 11         - Executive Compensation                                 34

Item 12         - Security Ownership of Certain Beneficial Owners
                  and Management                                         36

Item 13         - Certain Relationships and Related Transactions         38

PART IV

Item 14         - Exhibits, Financial Statement Schedules, and
                  Reports on Form 8-K                                    39

SIGNATURES                                                               41

<PAGE>1

                                     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.

         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 are 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.

         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.

Investment Real Estate

         On December 31, 1998, the Partnership owned  approximately 359 acres of
investment real estate.  Approximately  277 acres of this investment real estate
are  adjacent to Geist Lake,  and  approximately  82 acres are adjacent to Morse
Lake.  Substantially all of the properties  consist of partially wooded,  gently
rolling land adjacent to the lakes.  Homes and homesite sales revenue  accounted
for 37 percent of the Partnership's  revenues for 1998, 31 percent for 1997, and
44 percent for 1996. Gains on sale of investment land accounted for 4 percent of
the Partnership's revenues for 1998, 7 percent for 1997, and 1 percent for 1996.

         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, 1998, the Partnership's  investment real
estate at Geist Lake  consisted  of  approximately  277  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,  1998,  the  Partnership's  investment
properties  at  Morse  Lake  consisted  of  approximately  82  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 "Marine
Operations" below.

<PAGE>2

         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 two waterfront
homesites  from  Bridgewater  in 1998.  Homesite  revenue  from these  sales was
$270,000.  Homesite  inventory in  Bridgewater  at December 31, 1998 consists of
eight waterfront homesites.

         The  Partnership  sold  three  homesites  in  1998  from  Cambridge,  a
single-family  residential  development located at Geist Lake. In 1998, homesite
revenue  from such  Cambridge  sales was  $197,000.  The Marina I L.P.,  a joint
venture,  sold 28 homesites  from  Cambridge in 1998.  See "Marina I" below.  At
December 31, 1998, the Partnership had eight homesites  remaining to be sold, of
which six are waterfront,  while Marina I had 68 homesites remaining to be sold,
of which 24 are waterfront.  Marina I developed 18 homesites which were finished
in early 1999. When complete,  Cambridge will include more than 400 homesites of
which 305 have been  developed.  Most of the  homesites  owned  entirely  by the
Partnership  have been sold so that future homesite sales will be primarily from
Marina I.

         The Partnership  substantially  completed development of Morse Overlook
in 1996, an upscale  single-family  homesite  project  located at Morse Lake. In
1998, the Partnership  completed  development of an additional  seven waterfront
homesites. Morse Overlook now includes 50 homesites, of which 27 are waterfront.
In 1998,  the  Partnership  sold 11 homesites  from Morse Overlook of which nine
were waterfront homesites. These sales generated homesite revenue of $1,800,000.
At December 31, 1998, the  Partnership had 34 homesites in inventory of which 13
were waterfront.

         During 1998, the Partnership completed development of Sail Place, a new
residential  development  at  Geist  Lake  which  includes  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  spent  approximately
$746,000 for the development of Sail Place in 1997 and an additional $298,000 in
1998. The Partnership spent $363,000 in 1997 and an additional  $410,000 in 1998
for construction of three speculative homes at Sail Place.

         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 1999.  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 1998, 1997 and 1996,  interest rates on homesites sold
on contract  were 9% the first  year,  10% in the second  year,  and 12% for the
remainder.

<PAGE>3

         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, 1998.  There were no
payments made to builders under the builder support program in 1998.

         Investment  Property.  The  Partnership  continues  to acquire and sell
commercial  investment  land near  Geist  and  Morse  Lakes.  During  1998,  the
Partnership  sold  two  parcels  of land for a total  of  $605,000.  Most of the
commercial land near Geist Lake has been sold.

         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  $289,400 in rental income
from Marina Village in 1998. The  Partnership has completed the new Geist Marina
building  (see  "Marine  Operations"  below).  The  waterfront  land  previously
occupied by the service buildings is now available for other uses.

         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.  Marina  I owns 73 acres of land  held  for  development  and has 52
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  $545,000 and $555,000,  respectively,  in  distributions  during 1998.
Additionally,  the  Partnership  recognized  $1,072,000 in equity  earnings from
Marina I for the 28 homesites sold in Cambridge and other related  activities in
1998. 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  $162,000  net loss for 1998,  of which the  Partnership
accounted for its 50% share as a decrease in its investment in the  Corporation.
The  Corporation  expects  minor  operating  losses for the next several  years.
During  1998,  the  Corporation   retired  a  $1,567,000  bank  loan  which  was
outstanding  at December 31, 1997 from the proceeds of a $1,350,000  demand note
borrowing from the  Partnership  with the remainder paid from the  Corporation's
internal funds.

<PAGE>4

         Dockside Cafe. The Partnership sold its limited partnership interest in
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  $120,000 in cash for such
interest.  In addition,  the Partnership  received $61,000 in net  distributions
from Dockside Cafe in 1998. The Partnership  leases the restaurant  buildings to
Dockside Cafe, and realized $231,000 in rental income in 1998.

Marine Operations

         The Partnership  owns two marinas located at Geist and Morse Lakes. The
marinas  consist of  approximately  1,200 boat docks,  three 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  and  an  additional  $200,000  in  1998  for
construction of a new marine building at the Geist Marina, which includes a boat
sales area, an area for marine supplies and four service bays.

         Marine  operations  accounted  for  42  percent  of  the  Partnership's
revenues  in 1998,  43 percent in 1997,  and 41 percent in 1996.  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  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 three pools.  The  operating  season for the
pools begins on Memorial  Day weekend and extends to 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.

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."

<PAGE>5

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  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.

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 approximately 35 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 was 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.

<PAGE>6

         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.

         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.

         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.

<PAGE>7

         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  41,600 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.

Computer Systems and Year 2000 Issues

         The Partnership is currently  upgrading its computer systems to provide
a more complete  management  information  system,  and accordingly  will install
software  that is  anticipated  will  properly  recognize the Year 2000 to avoid
system  failures.  It is anticipated  that this upgrade will be complete by June
30, 1999. The cost of the Year 2000 compliance  within this system change is not
identifiable, but is not deemed material.

         No estimate has been made by the  Partnership  as to any adverse impact
that may result from the failure of the  Partnership's  vendors or  suppliers to
become Year 2000 compliant. If the Partnership or one or more of the third party
vendors or suppliers  fail to complete its Year 2000 program in a timely manner,
there can be no assurance  that such  failure  will not have a material  adverse
effect on the  Partnership's  operations or financial  plan. The Partnership has
not developed a Year 2000  contingency plan that would address Year 2000 related
problems experienced by either the Partnership or one or more of its third party
vendors or suppliers.

         The foregoing  discussion of Year 2000 issues  include  forward-looking
statements  reflecting the Partnership's  current assessment with respect to its
Year  2000  compliance  efforts  and the  impact  of  Year  2000  issues  on the
Partnership's  business  and  operations.  Various  factors  could cause  actual
results to differ  materially  from those  contemplated  by such  assessment and
forward-looking  statements,  including many factors that are beyond the control
of  the   Partnership.   These  factors   include,   but  are  not  limited  to,
representations by vendors and customers,  technological advancements,  economic
conditions and competitive considerations.

ITEM 2.  PROPERTIES.

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

<PAGE>8

         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.

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 1998.


                                     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 1997 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.  The table also
sets  forth  for 1998 the  representative  high  and low bid  quotations  of the
Partnership's  Limited Partner Units as reported through a matching service made
available by the  Partnership.  Such bids represent  non-binding  indications of
interest in buying and not a firm commitment to buy.

                                     1997                   1998
                                     ----                   ----
                                 High      Low         High        Low
       First Quarter Ended       Trade    Trade        Bid         Bid
       -------------------       -----    -----        ---         ---
 March 31 ....................  $28 1/8    $28          --          --
 June 30 .....................   33         28         $30         $28
 September 30 ................   33 1/2     27          30          30
 December 31 .................   33         29 1/8      31 1/2      30 1/2

<PAGE>9

         There is no established  public trading market for the Limited  Partner
Units.  During the 60-day period that ended March 25, 1999, there was one bid to
purchase  at $31.50  per unit.  The  source of the bid  quotation  is  through a
matching  service made  available by the  Partnership,  and such bids  represent
non-binding indications of interest in buying and not a firm commitment to buy.

         During 1998 there were 1,260 units traded through the matching service.
In addition,  the  Partnership  acquired and retired 468 units at a price of $36
per unit through an odd lot tender  whereby an offer was made to acquire any and
all units from partners that held less than 100 units in total.  The Partnership
is aware that  additional  units were  traded  outside of the  matching  service
during 1998. In order to comply with the federal tax rules, the Partnership will
not recognize a transfer  conducted  outside of the matching service unless such
transfer meets a specified  exception  that will not endanger the  Partnership's
continued treatment as a partnership for federal income tax purposes (see Item 1
- Taxation Of Interests In Publicly  Traded  Partnerships).  In such cases,  the
Partnership may at its option recognize such transfers.

         On March 25,  1999  there  were  approximately  411  record  holders of
Limited Partner Units of the Partnership.

     On each of April  2,1998  and April 17,  1997,  the  Partnership  made cash
distributions  of  $3.50  and  $3.25   respectively  per  unit.  No  other  cash
distributions were made during 1997 and 1998.

         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.

<PAGE>10

ITEM 6.  SELECTED FINANCIAL DATA

         The selected  financial data  presented  below for each of the years in
the  five-year  period ended  December  31, 1998 are derived from the  financial
statements of the Partnership,  which have been audited by KPMG LLP, independent
certified  public  accountants.  The  financial  statements  for the years ended
December 31,  1998,  1997,  and 1996,  and the  auditors'  report  thereon,  are
included in Part II, Item 8.

<TABLE>
<CAPTION>
                (In thousands, except per unit or share amounts)
Years Ended December 31

Selected Statement of Earnings Data:                           1998         1997        1996          1995         1994
------------------------------------                           ----         ----        ----          ----         ----
<S>                                                          <C>          <C>         <C>           <C>          <C>   
Homes and homesite sales                                     $4,222       $2,733      $3,387        $4,992       $3,331
Marine revenues                                               4,784        3,791       3,156         3,065        3,062
Gain on land sales                                              498          661          40           498           67
Equity in earnings of investee companies                      1,032          992         386           920          693
Other revenues                                                  862          726         723           602          409
Earnings before income taxes                                  3,809        3,742       3,034         4,391        2,705
Net earnings                                                  3,809        3,742       3,034         4,391        2,705
Earnings per unit 1)                                           5.64         5.54        4.49          6.50         4.01
Cash distribution per unit 1)                                  3.50         3.25        3.25          2.00         1.00

Selected Balance Sheet Data:

Total assets                                                $21,643      $20,038     $18,450       $17,691      $14,459
Debt obligations                                            -             -           -            -             -
Partners' equity                                             20,607       19,178      17,630        16,786       13,744
</TABLE>

     1)Earnings  and cash  distribution  per unit  have been  calculated  on the
following basis:
<TABLE>
<CAPTION>
                                                                   Earnings                       Cash Distributions
                                                           General           Limited          General           Limited
                                                           Partner           Partner          Partner           Partner
                      Period                                Units             Units            Units             Units
<S>                                                          <C>              <C>               <C>              <C>
1998                                                                                            257,952          417,183
     January 1-November 30                                   257,952          417,183
     December 1 - December 31                                257,952          416,715
1997                                                         201,188          473,947           201,188          473,947
1996                                                                                            196,714          478,421
     July 1 - December 31                                    201,188          473,947
     January 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
</TABLE>

<PAGE>11

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 1998 were consistent
with  1997,  and  included  revenue  from  homes  and  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 37 percent in 1998 compared with 31 percent for 1997 and 44
percent in 1996, and marine  operations,  which  accounted for 42 percent of the
Partnership's  revenues in 1998 as compared to 43 percent in 1997 and 41 percent
in 1996. In addition, equity in earnings from investee companies accounted for 9
percent of revenue  in 1998 as  compared  to 11 percent in 1997 and 5 percent in
1996.

         Homesite Sales

         The  following  table  presents  the  total  homesite  sales as well as
dispersion by community:

------------ ------------ ------------- ---------------- --------
    Year     Bridgewater    Cambridge    Morse Overlook    Total
------------ ------------ ------------- ---------------- --------
    1998         2              3               11           16
    1997         7             13                1           21
    1996         4             18                4           26
------------ ------------ -------------- --------------- --------

         Home Sales

         During 1998, the Partnership completed  construction and sold six homes
compared to none in the prior years.

         Marina I L.P.

         The  Partnership  is the  general  partner  of  Marina I which has also
developed  homesites in Cambridge.  During 1998, Marina I sold 28 homesites from
Cambridge  as  compared to 21  homesite  sales in 1997 and 17 in 1996.  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.

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

<PAGE>12

         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, 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 homes and homesite sales, marine operations,  land sales, and
bank loans  will be  sufficient  to satisfy  its  working  capital  requirements
through the end of 1999. On December 31, 1998, the Partnership had cash and cash
equivalents,  including short-term investments,  of $5,961,000.  On December 31,
1998, the Partnership did not have any significant  contractual  commitments for
capital  expenditures  to be made during  1999.  During  1998,  the  Partnership
expended  approximately  $1,845,000 for home and homesite  development costs. In
addition,  approximately  $24,000  was  spent for the  Partnership's  commercial
properties, and $649,000 was expended for marina property and equipment.

         On a long-term  basis,  major  sources of liquidity  are expected to be
revenues from marine  operations,  sales of homes and  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

         1998 Compared to 1997.  Net earnings  increased by $66,000 in 1998 from
1997.  This increase was  primarily due to an increase in earnings  after direct
costs of $167,000  from marine  operations,  an increase in net rental income of
$136,000 and an increase in equity earnings from investee  companies of $40,000.
Such increases were partially  offset by a decrease in earnings from the sale of
homesites  of  $71,000,  a decrease in gains on the sale of  investment  land of
$163,000 and an increase in other expenses of $42,000.

         Earnings from homes and homesite sales were  $1,297,000 in 1998,  which
compares to $1,368,000 in 1997.  Earnings from homesite sales  decreased in 1998
compared  to 1997 due to a shift of homesite  sales to Marina I. This  reduction
was partially  offset by the sale of six completed homes  improving  earnings as
compared to 1997.

         The Partnership recognized $1,072,000 as its share of the earnings from
Marina I in 1998,  compared to  $962,000 in 1997.  Such  increase  results  from
homesite sales of $3,447,000 in 1998 as compared to $3,057,000 in 1997.

<PAGE>13

         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  1998,  the  Partnership  sold  commercial   property  held  for
investment at Geist and Morse Lakes for an aggregate $605,000, which resulted in
a gain of $498,000 compared to a gain of $661,000 in 1997.

         Earnings from marine operations increased in 1998 over 1997 as a result
of an  increase  in  revenues  of  $994,000.  This  results  from  substantially
consistent  increases  in all  significant  areas  of  marine  operations.  Such
increases are primarily  attributable to volume increases stemming from a strong
economic  environment.  The marine business is recreational in nature and a good
economic climate results in more disposable income, some of which is directed to
recreational goods and services.

         The  Partnership is a 50 percent owner in Flatfork Creek Utility,  Inc.
(See Item 1 "Business") As a result,  the Partnership  recognized a loss in 1998
of $81,000  compared  with equity  income of $20,000 in 1997.  Flatfork  expects
minor operating losses for the next several years.

     On April 2, 1998, the Partnership made a cash  distribution to the partners
of record on March 25, 1998, of $3.50 per unit of  partnership  interest,  for a
total of $2,363,000.

         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.

         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.

         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.

<PAGE>14

     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.

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 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Pursuant to Item  305(e) of  Regulation  S-K,  the  Partnership  is not
required to provide information in response to this Item 7A because it satisfies
the requirements for a "Small Business Issuer".

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, 1998,  1997,  and 1996,  and the
independent  auditors'  reports  thereon.  A list of the reports  and  financial
statements appears in response to Item 14 of this report.

<PAGE>15

                          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, 1998 and 1997, and the related statements of
     earnings,  partners'  equity  and cash  flows  for each of the years in the
     three-year  period ended December 31, 1998. 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,  1998 and 1997,  and the  results  of its
     operations  and its  cash  flows  for each of the  years in the  three-year
     period ended  December 31, 1998,  in  conformity  with  generally  accepted
     accounting principles.



     KPMG LLP
     Indianapolis, Indiana
     February 19, 1999

<PAGE>16


                         THE MARINA LIMITED PARTNERSHIP

                                 Balance Sheets

                           December 31, 1998 and 1997
<TABLE>
<CAPTION>


          Assets                                              1998               1997
                                                       ----------------  -----------------

<S>                                                         <C>             <C>      
Cash and cash equivalents                                   $ 5,960,801     5,531,556
Receivables from homesite sales                               1,032,963     1,468,895
Other receivables and assets                                    415,867       519,445

Properties held for sale:
    Homes and homesites available for sale                    3,256,585     3,607,862
    Land and land improvements (note 3)                         941,116       735,678
                                                            -----------   -----------
                                                              4,197,701     4,343,540
                                                            -----------   -----------

Property and equipment (note 2):
    Marine property and equipment, net                        3,014,095     2,630,222
    Recreational facilities, net                                500,741       508,001
    Commercial properties, net                                2,301,370     2,472,045
                                                            -----------   -----------
                                                              5,816,206     5,610,268
                                                            -----------   -----------

Other investments (note 4):
    Marina I                                                  2,930,267     2,404,228
    Investments in and advances to Flatfork Creek Utility     1,289,030        20,482
    Dockside Cafe                                                  --         139,119
                                                            -----------   -----------

                                                            $21,642,835    20,037,533
                                                            ===========   ===========

                          Liabilities and Partners' Equity

Accounts payable                                                649,690       590,865
Accrued bonuses                                                 104,267        66,666
Deferred revenues and sale deposits                             282,161       202,195
                                                            -----------   -----------
        Total liabilities                                     1,036,118       859,726
                                                            -----------   -----------

Partners' equity:
    General partner - 257,952 and 201,188 units
              outstanding                                     7,894,298     5,731,363
    Limited partners - 416,715 and 473,947 units
              outstanding                                    12,712,419    13,446,444
                                                            -----------   -----------
        Total partners' equity                               20,606,717    19,177,807
                                                            -----------   -----------

                                                            $21,642,835    20,037,533
                                                            ===========   ===========
</TABLE>

See accompanying notes to financial statements.

<PAGE>17
                         THE MARINA LIMITED PARTNERSHIP

                             Statements of Earnings

                  Years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                                       1998               1997             1996
                                                                  ----------------   ---------------  ---------------

Revenues:
<S>                                                            <C>                        <C>              <C>      
    Homes and homesite sales                                   $        4,222,041         2,733,459        3,386,508
    Marine operations                                                   4,784,087         3,790,502        3,156,123
    Equity in earnings of investee companies (note 4)                   1,031,830           992,234          386,089
    Interest income                                                       464,216           445,628          428,338
    Rental income, net (note 6)                                           346,649           210,660          202,504
    Recreational facilities, net                                           50,777            69,033           91,754
    Gain on sales of land held for investment (note 3)                    497,853           661,164           39,981
                                                                  ----------------   ---------------  ---------------
                                                                       11,397,453         8,902,680        7,691,297
                                                                  ----------------   ---------------  ---------------

Costs and expenses:
    Cost of homes and homesites sold and related expenses               2,924,726         1,365,040        1,378,868
    Marine operations                                                   3,504,190         2,677,554        2,282,929
    General and administrative                                          1,063,047         1,036,074          919,277
    Management fees paid to general partner (note 1)                       96,759            81,665           76,515
                                                                  ----------------   ---------------  ---------------
                                                                        7,588,722         5,160,333        4,657,589
                                                                  ----------------   ---------------  ---------------

Net earnings                                                            3,808,731         3,742,347        3,033,708

Net earnings attributable to general partner                            1,455,304         1,115,207          894,471
                                                                  ----------------   ---------------  ---------------

Net earnings attributable to limited partners                  $        2,353,427         2,627,140        2,139,237
                                                                  ================   ===============  ===============

Weighted average number of limited
    partner units outstanding                                             417,144           473,947          476,184
                                                                  ================   ===============  ===============

Net earnings per limited partner unit                          $             5.64              5.54             4.49
                                                                  ================   ===============  ===============
</TABLE>

See accompanying notes to financial statements.

<PAGE>18
                         THE MARINA LIMITED PARTNERSHIP

                          Statement of Partners' Equity

                  Years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                              General            Limited            Total
                                                             partner's          partners'         partners'
                                                              equity             equity             equity
                                                          ----------------   ----------------  -----------------

<S>                                                     <C>                       <C>                <C>       
Balance December 31, 1995                               $       4,907,830         11,877,786         16,785,616

    Exchange of 4,474 units, net                                  105,721           (105,721)                --
    Distributions to partners ($3.25 per unit)                   (639,321)        (1,554,868)        (2,194,189)
    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
    Exchange of 56,764 units                                    1,610,463         (1,610,463)                --
    Repurchase of 468 units ($36.00 per unit)                          --            (16,848)           (16,848)
    Distributions to partners ($3.50 per unit)                   (902,832)        (1,460,141)        (2,362,973)
    Net earnings                                                1,455,304          2,353,427          3,808,731
                                                          ----------------   ----------------  -----------------

Balance December 31, 1998                               $       7,894,298         12,712,419         20,606,717
                                                          ================   ================  =================

</TABLE>

See accompanying notes to financial statements.

<PAGE>19
                         THE MARINA LIMITED PARTNERSHIP

                            Statements of Cash Flows

                  Years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                                                       1998               1997              1996
                                                                  ----------------   ----------------  ----------------

Cash flows from operating activities:
<S>                                                             <C>                        <C>               <C>      
    Net earnings                                                $       3,808,731          3,742,347         3,033,708
    Adjustments to reconcile net earnings to net cash
       provided by operating activities:
        Depreciation of properties                                        467,502            403,757           384,128
        Equity in earnings of investee companies                       (1,031,830)          (992,234)         (386,089)
        Receivables on current year's homesite sales                     (310,597)          (723,283)         (586,949)
        Collection of prior years' homesite sales                         746,529            715,378         1,054,228
        Gain on sales of land held for investment                        (497,853)          (661,164)          (39,981)
        Home and homesite development costs                            (1,845,374)        (1,727,510)       (1,164,570)
        Cost of home and homesites sold                                 2,194,850            500,253         1,001,458
        Change in operating assets and liabilities                        279,970            132,553          (122,307)
                                                                  ----------------   ----------------  ----------------
           Net cash provided by operating activities                    3,811,928          1,390,097         3,173,626
                                                                  ----------------   ----------------  ----------------

Cash flows from investing activities:
    Distributions received from Marina I                                  545,463            499,467           397,630
    Advances to Flatfork Creek Utility                                 (1,350,000)                --                --
    Distributions received from Dockside Cafe                             180,899             66,532            37,324
    Additions to marine property and equipment                           (648,764)          (753,541)         (189,402)
    Additions to recreational facilities                                  (23,916)          (174,788)           (8,295)
    Additions to commercial properties                                       (760)           (80,387)         (207,534)
    Land and land development costs                                      (260,369)           (11,127)         (777,770)
    Proceeds from sales of land held for investment                       554,585          1,201,514            44,250
    Maturity (purchase) of U.S. Treasury note                                  --            996,875          (996,875)
                                                                  ----------------   ----------------  ----------------
           Net cash provided (used) by investing activities            (1,002,862)         1,744,545        (1,700,672)
                                                                  ----------------   ----------------  ----------------

Cash flows from financing activities:
    Repurchase of limited partner units                                   (16,848)                 --                 --
    Distributions to partners                                          (2,362,973)        (2,194,189)       (2,194,189)
    Utility refunds received                                                    --                  --             4,514
                                                                  ----------------   ----------------  ----------------
           Net cash used by financing activities                       (2,379,821)        (2,194,189)       (2,189,675)
                                                                  ----------------   ----------------  ----------------

           Net increase (decrease) in cash
              and cash equivalents                                        429,245            940,453          (716,721)

Cash and cash equivalents at beginning of year                          5,531,556          4,591,103         5,307,824
                                                                  ----------------   ----------------  ----------------

Cash and cash equivalents at end of year                        $       5,960,801          5,531,556         4,591,103
                                                                  ================   ================  ================
</TABLE>

See accompanying notes to financial statements.

<PAGE>20

                         THE MARINA LIMITED PARTNERSHIP

                          Notes to Financial Statements

                        December 31, 1998, 1997 and 1996


  (1)   Summary of Significant Accounting Policies

        (a)   General

              The Marina Limited  Partnership  became a publicly  traded limited
              partnership  on December 30, 1986,  and the limited  partner units
              are registered securities and currently represent approximately 62
              percent of the total  Partnership  units.  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 $719,000 at December 31, 1998.  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 were no
              longer publicly traded. 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 and sale of homes and homesites and
              the operation of marine facilities at Geist and Morse Lakes.

        (b)   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.

        (c)   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.

              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,  the
              Marina I L.P. and third parties.

<PAGE>21

              Sales of  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.

              Revenues from homes sales are recognized  upon the closing of each
              residential unit when title is transferred to the homeowner.

        (d)   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.

        (e)   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
              50% corporate  investment in Flatfork  Creek  Utility,  Inc.,  and
              until  sold  on  December  31,  1998,  its  40%  limited   partner
              investment in Dockside Cafe, L.P. The  Partnership's  share of the
              net earnings and losses of these businesses is included  currently
              in earnings.

        (f)   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.

        (g)   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.

        (h)   Marine Revenues

              Revenues  for rental and storage  from the Marine  operations  are
              recognized  on  a  straight-line   basis  over  the  term  of  the
              agreement.

<PAGE>22

        (i)   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.

        (j)   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  routinely  evaluates  all  of  its  real  estate
              investments 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 would be 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 at December 31 as follows:

                                                    1998                1997
                                              --------------     ---------------

Land and land improvements                      $ 1,214,637           1,209,047
Buildings and equipment                           8,516,290           7,848,440
                                                -----------         -----------
                                                  9,730,927           9,057,487
Accumulated depreciation                         (3,914,721)         (3,447,219)
                                                -----------         -----------

                                                $ 5,816,206           5,610,268
                                                ===========         ===========

  (3)   Land and Land Improvements

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

                                                          1998            1997
                                                        ---------      ---------

Unimproved land and residential land
     under development                                   $619,025        620,158
Commercial sites                                          322,091        115,520
                                                         --------       --------

                                                         $941,116        735,678
                                                         ========       ========
<PAGE>23

         In 1998, two parcels of commercial land were sold to unrelated parties.
         In 1997, a 13 acre parcel of farm land and a parcel of commercial  land
         were  sold to  unrelated  parties.  Sales  were for cash  resulting  in
         revenues and gains as follows:

                                    1998                1997                1996
                                   ---------        ----------          --------

Revenue                            $ 605,000         1,307,055            44,250
  Gain                               497,853           661,164            39,981

  (4)   Other Investments

        (a)   Marina I

              The Partnership is a general partner with Irving  Materials,  Inc.
              as limited partner in Marina I which develops homesites near Geist
              Lake.  The  Partnership's  equity  in the  earnings  of  Marina  I
              amounted to $1,071,502  in 1998,  $971,752 in 1997 and $461,405 in
              1996.

              The  following  is  a  summary  of  balance  sheet  and  operating
              information (in thousands) of Marina I as of December 31, 1998 and
              1997 and for the years then ended:

                                           1998       1997
                                        ---------  ----------

Cash and cash equivalents                $ 1,593        553
Homes and homesites available for sale
     and land and land improvements        3,270      3,719
Receivables from homesite sales              860        652
Other assets                                 414        407
Liabilities                                 (119)      (222)
                                         -------    -------

         Partners' equity                $ 6,018      5,109
                                         =======    =======

Homesite sales and other revenues          3,601      3,156
Cost of homesites sold and expenses        1,592      1,311
                                         -------    -------

         Net earnings                    $ 2,009      1,845
                                         =======    =======

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

        (b)   Dockside Cafe

              Through  December 31, 1998, the  Partnership was a limited partner
              in Dockside Cafe, L.P. which operates restaurants at the Geist and
              Morse Lake marinas.  The  Partnership  constructed the restaurants
              and  leases  them to  Dockside  Cafe,  L.P.  The  limited  partner
              investment was sold to the general partner effective  December 31,
              1998. The Partnership continues to lease the restaurants.
<PAGE>24

        (c)   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 own and operate the  wastewater  water
              treatment  plant. The Partnership  transferred  $738,000 of assets
              and  $424,000  of  liabilities  to the  Corporation,  as its  sole
              shareholder.  The Partnership then sold 50% of its interest in the
              Corporation  to  Irving  Materials,  Inc.  for its  book  value of
              $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,  substantially all of the Corporation's 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  a loss of $81,451  in 1998,  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.,  were
              guarantors  of  the   Corporation's   $2,500,000  loan,  of  which
              $1,566,954  was  outstanding  at December 31, 1997.  In 1998,  the
              Partnership advanced $1,350,000 to the Corporation.  This advance,
              which  bears  interest  of 6.6% and is due on  demand,  along with
              additional cash of the Corporation, was used to repay the loan.

  (5)   Notes Payable to Bank

         The Partnership has a $2,000,000 unsecured line of credit which matures
         July 1, 1999 and bears interest at the bank's prime rate. There were no
         borrowings on the line of credit through December 31, 1998.

  (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
         $76,400,   $69,600,   and  $90,000  for  1998,  1997  and  1996  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.  Overage rents of
         $5,100 for 1998 are included in rental  income.  No overage  rents were
         received for 1997 and 1996.

         During  1995,  the  Partnership  began  operating a 20,000  square foot
         retail and office  development  known as Marina  Village.  Included  in
         rental  income is $289,400,  $210,600  and $149,700 for 1998,  1997 and
         1996, respectively, from the retail and office tenants. At December 31,
         1998,  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 operating expenses.

         The  Partnership  also  leases  certain  real estate  under  short-term
         operating  leases for which rental income amounted to $17,800,  $15,200
         and $6,200 in 1998, 1997 and 1996, respectively.

<PAGE>25

         The  minimum  rent  payments  due under  operating  leases in effect at
December 31, 1998 are summarized as follows:

                                                      Marina
                                Restaurants           Village            Total
                               -------------       ------------       ----------

                   1999          $ 150,000            245,100            395,100
                   2000            150,000            207,800            357,800
                   2001            150,000             72,100            222,100
                   2002            150,000             42,800            192,800
                   2003            150,000               --              150,000
                                 ---------          ---------          ---------

                                 $ 750,000            567,800          1,317,800
                                 =========          =========          =========

  (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 1998, 1997 and 1996 is as follows (in thousands):

                                                 1998        1997        1996
                                              ---------   ---------   ----------

Revenues:
    Homes and homesites                        $  4,222       2,733       3,387
    Equity in earnings of homesite
         investee company                         1,072         962         461
                                               --------    --------    --------
                                                  5,294       2,694       3,848
    Marine operations                             4,784       3,791       3,156
    Other                                         1,319       1,417         687
                                               --------    --------    --------

                                               $ 11,397       8,903       7,691
                                               ========    ========    ========

Operating income:
    Homes and Homesites sales,
         including equity in earnings of
         homesite investee company             $  2,370       2,330       2,469
    Marine operations                             1,280       1,113         873
    Other                                         1,319       1,417         688
    Administration                               (1,160)     (1,118)       (996)
                                               --------    --------    --------

                                               $  3,809       3,742       3,304
                                               ========    ========    ========

Assets:
    Homes and homesites sales,
         including investment in
         homesite investee company             $  7,222       7,481       5,501
    Marine operations                             3,087       2,779       2,361
    Cash                                          5,961       5,532       5,588
    Other                                         5,373       4,246       5,000
                                               --------    --------    --------

                                               $ 21,643      20,038      18,450
                                               ========    ========    ========
<PAGE>26

                          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,  1998 and  1997,  and the  related  statements  of  earnings,
     partners'  equity  and cash  flows for each of the years in the  three-year
     period  ended  December  31,  1998.  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, 1998 and 1997,  and the results of its  operations  and its
     cash flows for each of the years in the  three-year  period ended  December
     31, 1998, in conformity with generally accepted accounting principles.



     KPMG LLP
     Indianapolis, Indiana
     February 19, 1999

<PAGE>27
                                THE MARINA I L.P.

                                 Balance Sheets

                           December 31, 1998 and 1997

<TABLE>
<CAPTION>
                Assets                                              1998           1997
                                                                -------------  -------------

<S>                                                              <C>             <C>    
Cash and cash equivalents                                        $1,592,822      553,361
Receivables from homesite sales                                     859,879      651,656
Other receivables and assets                                         48,845       18,238

Prepaid hook-up fees to Flatfork Creek Utility                      365,722      388,930

Properties held for sale:
    Homes and homesites available for sale                        1,680,380    2,623,338
    Land and land improvements                                    1,589,830    1,095,715
                                                                 ----------   ----------

                                                                 $6,137,478    5,331,238
                                                                 ==========   ==========

           Liabilities and Partners' Equity

Accounts payable and accrued expenses                            $   55,761       60,470
Deferred revenues and sale deposits                                  31,700       62,500
Accounts payable to affiliates                                       31,650       99,017
                                                                 ----------   ----------

        Total liabilities                                           119,111      221,987
                                                                 ----------   ----------

Partners' equity:
    General partner                                               2,877,167    2,351,124
    Limited partner                                               3,141,204    2,758,127
                                                                 ----------   ----------

        Total partners' equity                                    6,018,371    5,109,251
                                                                 ----------   ----------

                                                                 $6,137,482    5,331,238
                                                                 ==========   ==========
</TABLE>

See accompanying notes to financial statements.

<PAGE>28
                                THE MARINA I L.P.

                             Statements of Earnings

                  Years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                   1998           1997           1996
                                              -------------  -------------   ------------
Revenues:
<S>                                               <C>           <C>          <C>      
    Homesite sales                                $3,446,500    3,056,941    1,363,884
    Interest income                                  155,021       99,242       80,069
                                                  ----------   ----------   ----------

                                                   3,601,521    3,156,183    1,443,953
                                                  ----------   ----------   ----------

Costs and expenses:
    Cost of homesites sold and related expenses    1,555,695    1,281,591      569,181
    General and administrative                        36,710       29,964        9,599
                                                  ----------   ----------   ----------

                                                   1,592,405    1,311,555      578,780
                                                  ----------   ----------   ----------

        Net earnings                               2,009,116    1,844,628      865,173

Net earnings attributable to general partner       1,071,502      961,813      461,405
                                                  ----------   ----------   ----------

Net earnings attributable to limited partner      $  937,614      882,815      403,768
                                                  ==========   ==========   ==========

</TABLE>

See accompanying notes to financial statements.

<PAGE>29
                                THE MARINA I L.P.

                         Statements of Partners' Equity

                  Years ended December 31, 1998, 1997 and 1996

                                     General       Limited         Total
                                    partner's      partner's      partners'
                                     equity         equity         equity
                                 -------------  --------------  -------------

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

    Distributions to partners         (545,463)      (554,537)    (1,100,000)
    Net earnings                     1,071,502        937,614      2,009,116
                                   -----------    -----------    -----------

Balance December 31, 1998          $ 2,877,163      3,141,204      6,018,367
                                   ===========    ===========    ===========

See accompanying notes to financial statements.

<PAGE>30
                                THE MARINA I L.P.

                            Statements of Cash Flows

                  Years ended December 31, 1998, 1997 and 1996


<TABLE>
<CAPTION>
                                                         1998            1997            1996
                                                     --------------  -------------   -------------

Cash flows from operating activities:
<S>                                                   <C>              <C>              <C>    
  Net earnings                                        $ 2,009,116      1,844,628        865,173
  Adjustments to reconcile net earnings to net cash
     provided by operating activities:
     Receivables on current year's homesite sales        (419,672)      (551,962)      (125,415)
     Collection on prior years' homesite sales            211,449        189,062        489,198
     Homes and homesites development costs               (161,319)      (511,423)      (361,520)
     Cost of homesites sold                             1,104,277        909,068        425,646
     Change in operating assets and liabilities          (110,275)      (326,355)        56,298
                                                      -----------    -----------    -----------

       Net cash provided by operating activities        2,633,576      1,553,018      1,349,380
                                                      -----------    -----------    -----------

Cash flows from investing activities:
  Land and land development costs                        (494,115)      (922,591)      (492,403)
                                                      -----------    -----------    -----------

       Net cash used by investing activities             (494,115)      (922,591)      (492,403)
                                                      -----------    -----------    -----------

Cash flows from financing activities:
  Distributions to partners                            (1,100,000)      (924,263)      (850,000)
                                                      -----------    -----------    -----------

       Net cash used by financing activities           (1,100,000)      (924,263)      (850,000)
                                                      -----------    -----------    -----------

       Net increase (decrease) in cash
          and cash equivalents                          1,039,461       (293,836)         6,977

Cash and cash equivalents at beginning of year            553,361        847,197        840,220
                                                      -----------    -----------    -----------

Cash and cash equivalents at end of year              $ 1,592,822        553,361        847,197
                                                      ===========    ===========    ===========

</TABLE>

      See accompanying notes to financial statements.

<PAGE>31


                               THE MARINA I L. P.

                          Notes to Financial Statements

                        December 31, 1998, 1997 and 1996


Summary of Significant Accounting Policies

 (a)  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  Corporation,  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 partner's tax
      basis. Earnings and distributions are allocated as follows:

o          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.

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

 (b)  Cash and Cash Equivalents

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

 (c)  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  improvements  are
      allocated  to  homesite  sales  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.

      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 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.

      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.

<PAGE>32

                               THE MARINA I L. P.

                          Notes to Financial Statements

                        December 31, 1998, 1997 and 1996


      The Partnership  routinely evaluates all of its real estate investments 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.

 (d)  Financial Instruments

      The  carrying  amounts  of the  receivables  approximate  their fair value
      because 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.

 (e)  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.

  (f) 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>33

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.

<TABLE>
<CAPTION>
                                                                                                           Year of
               Name                                          Principal Occupation                           Birth

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

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

Stanley E. Hunt                     Retired  2)                                                              1930

Allen E. Rosenberg                  President of the General Partner  3)                                     1935

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

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

<FN>

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.
</FN>
</TABLE>

<PAGE>34

     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.

         SECTION 16(a):  BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
General Partner's Directors, executive officers and persons who beneficially own
more than 10 percent of the Partnership's Limited Partner Units to file with the
Securities and Exchange  Commission  reports showing ownership of and changes in
ownership  of  the   Partnership's   Limited  Partner  Units  and  other  equity
securities. On the basis of reports and representations submitted by the General
Partner's Directors,  executive officers, and  greater-than-ten-percent  owners,
the Partnership  believes that all required  Section 16(a) filings for 1998 were
timely made, except that the filing to report a purchase by one Director, Mr.
Bruggeman, was inadvertently not filed on time.

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, 1998, 1997, and 1996.

                           SUMMARY COMPENSATION TABLE

    Name and
Principal Position                                  Year    Salary       Bonus

Allen E. Rosenberg                                  1998    $200,000    $148,541
     President, Director of                         1997     200,000     180,667
     The General Partner                            1996     199,653     187,992

Allen E. Rosenberg II                               1998    $110,000    $100,000
     Vice President, Assistant Treasurer            1997      86,353     103,206
     And Director of the General Partner            1996      18,000      55,000

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.  In  addition  to the  fees  received  as a
Director,  Mr.  Hunt  receives a  quarterly  retainer  of $1,500  for  providing
consulting services to the Partnership.

<PAGE>35

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
                                 ----           ------
                                 1998          $18,150
                                 1997           39,211
                                 1996            1,328

     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
                                ----            ------
                                1998           $130,391
                                1997            141,455
                                1996            186,664

         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 in 1997 and $100,000 in 1998 was
paid to Mr.  Rosenberg  II as the minimum  amounts  payable  under the plan.  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 $97,000 in 1998, 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>36

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 25,
1999.

                                          Number of                   Percent
                                     Limited Partner Units               Of
        Name                           Beneficially Owned              Class

Patrick J. Bruggeman                         15,600                     3.7%
Allen E. Rosenberg                            4,940 1                   1.2%
Allen E. Rosenberg II                         2,665 2                   0.6%
Stanley E. Hunt                               1,000                     0.2%
All Directors and Officers of the
General Partner as a Group (6 Persons)       24,205 3                   5.8%

1. Includes 4,940 Units owned by Mr. Rosenberg's wife.

2. Includes 2,665 Units owned by Mr. Rosenberg II's spouse and children.

3. Includes 7,605 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.

         During 1997, The Board of Directors of the General Partner approved 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 25, 1999 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.

<PAGE>37

         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 25, 1999 is as set forth
in the following table:

        ------------------------------------------- ---------------------
                       Shareholder                   Percentage 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 Mr. Rosenberg                    15.5%
        ------------------------------------------- ---------------------

         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.

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.

<PAGE>38

         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.

         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.

         The required information is inapplicable.

<PAGE>39

                                     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, 1998 and 1997.

         Statements  of Earnings -- Years Ended  December  31, 1998,  1997,  and
1996.

         Statements of Partners'  Equity -- Years Ended December 31, 1998,  1997
and 1996.

         Statements  of Cash Flows -- Years Ended  December 31,  1998,  1997 and
1996.

         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:

<TABLE>
<CAPTION>

Exhibit                                                                        Page No. or
Number                            Exhibit                                       Filed With

<S>     <C>                                                                        <C>
3.1     Certificate of Limited Partnership of The Marina Limited Partnership       (3)

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

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

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

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

<PAGE>40

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

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

99.2    Restated Bylaws of The Marina II Corporation                                (1)

99.3    Shareholders' Agreement                                                     (3)

</TABLE>

--------------------------

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 1998 by the Partnership.

<PAGE>41

                                   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 25, 1999              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

------------------
Patrick J. Bruggeman            Director                      

/s/Lawrence L. Buell
Lawrence L. Buell               Director                      March 25, 1999

/s/Stanley E. Hunt
Stanley E. Hunt                 Director                      March 25, 1999

/s/Allen E. Rosenberg           Director and President
Allen E. Rosenberg              (Principal Executive Officer) March 25, 1999

                                Director,
/s/Allen E. Rosenberg II        Vice President and
Allen E. Rosenberg II           Assistant Treasurer           March 25, 1999

                                Vice President,
/s/Donald J. Calabria           Treasurer, and Secretary
Donald J. Calabria              (Principal Financial Officer) March 25, 1999