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 transaction period from            to

                         Commission File Number 0-15571

                CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)

         North Carolina                              56-1494619
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification No.)

Suite 100, 4000 Blue Ridge Road
Raleigh, North Carolina                                 27612
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code (919) 781-1700

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

Securities registered pursuant to Section 12(g) of the Act: 5,900 Units of
Limited Partnership Interests.

         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 (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K [X].

         Market Value of 5,875 Units held by nonaffiliates as of March 29, 1999
was $2,621,000 (based upon the offering price of $1,000 less the amount
distributed per Unit).

         Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

         5,900 Units outstanding as of March 29, 1999

This Exhibit Index appears on Page 18.


<PAGE>

                                     PART I

Item 1.  Business.

         Carolina Investment Partners, Limited Partnership (the "Registrant") is
a limited partnership organized in 1985 under the North Carolina Uniform Limited
Partnership Act. The Registrant was formed for the purpose of investing in
certain unimproved real properties located in Cary, North Carolina. The
Registrant acquired these properties, commonly known as the Martin Parcel and
the Wellington Parcel, in 1986. See "Properties." The Registrant has the option
to develop the Martin Parcel for office and institutional uses or hold it for
resale. The only option for the Wellington Parcel was to hold it for resale. At
this time the Registrant is not developing the Martin Parcel and is attempting
to sell it. However, the Registrant will consider its options with respect to
development of the Martin Parcel and is formulating a plan for development of
the Martin Parcel. As of April 9, 1998 all of the Wellington Parcel was sold.

Recent Developments

         The Registrant recently submitted a site plan for the development
portion of the Martin Parcel to the town of Cary. The town has failed to approve
the site plan because of traffic concerns. The General Partner and its
representatives are presently meeting with the North Carolina Department of
Transportation representatives and representatives of the town of Cary in an
attempt to alleviate the concerns of town officials. The General Partner
believes that a favorable outcome of these discussions will enhance the
marketability of the property. There can be no assurances that there will be a
favorable outcome of the discussions with the North Carolina Department of
Transportation of the Town of Cary.

         Development of real property in the Research Triangle Area is highly
competitive. Factors which affect competition include price, financing terms,
economics, location, social and demographic conditions in the surrounding areas,
roads, sewers, utilities and other items of infrastructure, zoning and similar
governmental regulations which affect the cost of development and the uses of
the property. Many of these factors are beyond the control of the Registrant.
These competitive conditions may affect the Registrant's ability to locate
purchasers for, or develop, the property at prices acceptable to the Registrant.
The Registrant believes, however, that the proximity of the property to the full
access highway interchange and overpass which connects the Cary Parkway and U.S.
Highway 1 and 64 (the "Interchange") enhances their marketability and minimizes
the effects of competition.

Item 2.  Properties.

         The Martin Parcel is located in the southern portion of Cary, North
Carolina, a rapidly expanding community to the immediate southwest of Raleigh,
North Carolina. Cary is part of a region in central North Carolina known as the
Research Triangle area which includes Raleigh, Durham, Chapel Hill and the
Research Triangle Park. The Martin Parcel is located near the residential single
family subdivisions known as Ridgepath, Wellington Park, MacGregor Downs,
Lochmere, Kildaire Farms, Wimbledon, and McDonald Woods. The map below shows the
location of the Martin Parcel in Cary.


2
<PAGE>

                                   [MAP]

         The Martin Parcel contains approximately 25.1 acres of unimproved land,
which is divided into two tracts by the Cary Parkway. The tract lying tot he
west of the Cary Parkway contains 15.76 acres of land, while the tract lying to
the east of the Cary Parkway contains 9.34 acres of land. The Martin Parcel is
located immediately to the north of the Interchange.

         Upon the sale of the Martin Parcel, the General Partner is entitled to
a broker listing fee under some circumstances. See Item 11 "Executive
Compensation." In addition to the broker listing fee, in the event the parcel is
sold by a broker unaffiliated with the General Partner, the Registrant may pay
the unaffiliated broker a 2.5% broker-reallowance fee.

Item 3.  Legal Proceedings.

         No material legal proceedings are pending against the Registrant or its
properties.

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

         No matters were submitted to a vote by the limited partners of the
Registrant during the fourth quarter of 1998.

                                    PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters.

         (a) The Registrant has no common stock. There is no established public
trading market for the Units.

         (b) The Registrant had 985 Limited Partners holding 5,900 Units as of
March 29, 1999. The number of Limited Partners was determined by the
Partnership's records maintained by the General Partner. An affiliate of the
General Partner owns 25 of these 5,900 units.

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<PAGE>

         (c) Until the Limited Partners have received distributions of cash from
the Registrant of an aggregate amount equal to 100% of the Capital Contributions
of the Limited Partners, plus an additional return equivalent to 10% per annum
simple interest on their "Unreturned Capital Contributions", the Limited
Partners will receive at least 99% of all distributions of cash, which will be
distributed and allocated among them in the ratio which the number of Units
owned by each of them bears to the total number of Units outstanding.
Thereafter, the Registrant's distributions will be allocated 90% to the Limited
Partners and 10% to the General Partner. "Unreturned Capital Contribution" means
the Capital Contribution of a Limited Partner less any distributions of cash
made by the Registrant to such Limited Partner.

Item 6.  Selected Financial Data.

<TABLE>
<CAPTION>
                                 1998         1997         1996         1995          1994
                              ---------    ---------    ---------    ---------     ---------
<S>                          <C>          <C>          <C>           <C>           <C> 
Summary of  Operations:
     Gain on Sale of Land    $  291,596   $  541,269   $1,382,081         $-0-          $-0-

     Other Income               163,090       87,420       12,174       39,158         2,776

     Expenses                    76,565       57,557       58,040       41,455        35,529

     Net Income (Loss)          378,121      571,132    1,336,215       (2,297)      (32,753)

     Net Income (Loss)
     per limited
     partnership unit:
         From gain on sale                                                          
         of land                  48.93        90.82       231.91          -0-           -0-
         From other                                                                      
         operations               14.52         5.01       <7.78>        <.39>        <5.55>
                              ---------    ---------    ---------    ---------     ---------
         Total per unit           63.45        95.83       224.13        <.39>        <5.55>

     Distribution per unit       220.00          -0-       331.53          -0-           -0-

Selected Balances:
     Cash and Short-Term
     Investments                413,165    1,002,868      205,524       33,338         4,065

     Land held for
     Investment               3,594,592    3,850,572    4,001,280    4,822,183     4,822,183

     Total Assets             4,009,786    4,858,132    4,206,804    4,855,624     4,826,351

     Long term obligations          -0-          -0-          -0-          -0-           -0-

     General Partner's
     equity                         865        5,711          -0-          -0-           -0-

     Limited Partners'
     equity                   3,826,723    4,750,383    4,184,962    4,818,568     4,820,865
</TABLE>




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<PAGE>


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

         The Registrant's operations resulted in a net income of $378,121 during
1998, compared to net income of $571,132 during 1997 and a net income of
$1,336,215 in 1996. The primary differences between 1998 in comparison to 1997
and 1996 were:

         1998 vs. 1997

         o  A gain of $291,596 in 1998 from the sale of the remaining 3.4 acres
            of the Registrant's Wellington Parcel compared to a gain of $541,269
            in 1997 from the sale of approximately 2.0 acres of the Registrant's
            Wellington Parcel

         o  Interest of $66,167 and a late closing penalty of $77,605 in 1998
            was received by the Registrant due to the deferral of the closing of
            the remaining 3.4 acres of the Wellington Parcel. Interest of
            $50,608 and a non-refundable extension fee of $20,629 was received
            in 1997.

         o  Property taxes for 1998 are approximately $6,600 lower than 1997 due
            to the sale of property (see discussion below).

         o  Expenses in 1998 increased approximately $29,000 for outside service
            relating to site plans and landscape architect services for the
            Martin Parcel. Expenses in 1997 included a $3,300 adjustment in
            accounting fees for the 1996 audit and tax returns. These fees were
            higher due to additional audit and tax procedures required in
            relation to the land sale and distribution.

         1998 vs. 1996

         o  A gain of $291,596 in 1998, from the sale of the remaining 3.4 acres
            of the Registrant's Wellington Parcel (see discussion below),
            compared to a gain of $1,382,081 in 1996 from the sale of the main
            site at Wellington (10.9 acres)

         o  Interest of $66,167 and a late closing penalty of $77,605 in 1998
            was received by the Registrant due to the deferral of the closing of
            the remaining 3.4 acres of the Wellington Parcel. There was no
            similar income in 1996.

         o  During 1996 the Registrant received $11,300 in non-refundable
            deposits on the sale of the Wellington Parcel. There were no
            non-refundable deposits in 1998.

         o  In 1998 expenses for property taxes were approximately $16,000 lower
            than 1996 due to the sales of property.

         o  Expenses in 1998 increased approximately $3,000 from 1996 due to
            outside service relating to site plans and landscape architect
            services for the Martin Parcel.

         o  Expenses in 1998 in comparison to 1996 increased approximately
            $10,000 for additional accounting and administrative services
            provided by related parties of the Registrant's General Partner.
            These additional services included (1) assistance with

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<PAGE>

            closing on the sales of property, (2) follow-up procedures performed
            when checks from the April, 1998 distribution were not received by
            some limited partners and had to be replaced, and (3) preparation of
            the Registrant's annual Form 10-K and financial statements.

         The Registrant, Churchill & Banks, Ltd. ("Churchill & Banks")
(predecessor to Wellington Center Associates, LLC ("WCA")), and ADA Corporation
of North Carolina ("ADA"), which is affiliated with the General Partner,
executed an agreement (the "Agreement") for Churchill & Banks to purchase
certain tracts of real property owned by the Registrant (the Wellington Parcel)
and ADA. The Agreement was amended on various dates in 1995 and 1996, and in
September 1997. In addition to other matters, the amendments to the Agreement
provided for 10.96 acres (the "Main Site"), of which 10.91 acres were owned by
the Registrant, to close in September 1996 and closing on the remaining 6.21
acres, consisting of four outparcels (the "Outparcels"), of which 5.40 acres is
owned by the Registrant, to occur by March 10, 1997, with an additional 6 month
extension possible on the Outparcels. The September 1997 amendment extended
closing on the Remaining Outparcels to January 30, 1998. The purchase price for
the land was $5.25 per net square foot, which yielded a sales price to the
Registrant and ADA of $3,927,750.

         On March 3,1998, and April 9, 1998 the Registrant sold .61 acres, and
2.79 acres, respectively, of the Wellington Parcel to WCA under the terms of the
amended Agreement for gross sales prices of $227,655, and $365,603,
respectively, or an aggregate of $593,258. The Registrant's net sale proceeds
with respect to these sales were as follows:

                           March 3, 1998  April 9, 1998
                               Sale           Sale

Gross sales price            $ 227,655    $ 365,603
Commissions and broker re-
  allowance fee                (17,074)     (27,427) 
                             
Deed stamps                       (455)        (732) 
                             ---------    ---------  
     Net sales proceeds      $ 210,126    $ 337,451  
                             =========    =========  
                             
         Additionally, the Registrant received interest of $25,930, and $40,237,
and later closing penalty of $22,765 and $54,840 respectively, from WCA at the
closings under the terms of the Agreement. Upon completion of the April 9, 1998
sale, no portions of the Wellington Parcel remained for sale by the Registrant.

         The Registrant's Partnership Agreement calls for the General Partner to
be allocated, at a minimum, 1% of any gain from the sale of property. To the
extent the General Partner is allocated gain, it also receives a distribution.
Accordingly, the General Partner's share of the 1998 gain is (net sales proceeds
of less the Registrant's basis in the property sold, $255,980, equals a gain of
$291,596; 1% of which is $2,916).

         The Registrant's proceeds from the 1998 sales have been invested in a
money market account.

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<PAGE>

         As of March 29, 1999, the Registrant has $310,578 in cash and
short-term investments, which is sufficient to meet its needs during the next
year. The Registrant expects to retain these.

         The Registrant maintains its excess funds in money market account at
Triangle Bank. The General Partner believes the account is an appropriate
investment of the Registrant's funds. Until the Martin Parcel is sold, placed
into development and/or refinanced, the Registrant anticipates deficits from
operations and administrative expenses.

Year 2000

         The Registrant has assessed the potential impact of the Year 2000 issue
on the Registrant's operations. The Registrant believes that the Registrant does
not need to take any significant actions to address the Year 2000 issue and that
the impact of the Year 2000 issue will not materially affect the Registrant of
the Registrant's business, results of operations or financial condition. The
Registrant does not believe that the Year 2000 issue will materially affect the
Martin Parcel.

         Due to the infrequent transfer of the Registrant's partnership
interests and the Registrant's use of paper records regarding the accounts of
its partners (as a supplement to the Registrant's computer systems), the
Registrant does not believe that the Year 2000 issues will materially affect the
Registrant's internal accounting or management systems. The Registrant will not
make any significant expenditures for computer equipment or software upgrades.

         After brief discussion with Triangle Bank regarding the Year 2000
issue, the Registrant does not believe that the Year 2000 issue will materially
affect its excess funds held at Triangle Bank. After brief discussions with the
Registrant's General Partner regarding the Year 2000 issue, the Registrant does
not believe that the Year 2000 issue will materially affect the General
Partner's ability to perform any of its duties in connection with the
Registrant. The Registrant does not believe that the Registrant is vulnerable to
any other third party failures to remedy their own Year 2000 issues.

CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE THE
REGISTRANT'S ACTUAL RESULTS TO DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING
STATEMENTS.

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, readers of this document, and any document
incorporated by reference herein, are advised that this document and documents
incorporated by reference into this document contain both statements of
historical facts and forward looking statements. Forward looking statements are
subject to certain risks and uncertainties, which could cause actual results to
differ materially from those indicated by the forward looking statements.
Examples of forward looking statements include, but are not limited to (i)
projections of revenues, income or loss, earnings or loss per share, capital
expenditures, dividends, capital structure and other financial items, (ii)
statements of the plans and objectives of the Registrant or its management,
including the introduction of new products, or estimates or predictions of
actions by customers, suppliers, competitors or regulatory authorities, (iii)
statements of future economic performance, and (iv) statements of assumptions
underlying other statements and statements about the Registrant or its business.

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<PAGE>

This document and any documents incorporated by reference herein also identify
important factors which could cause actual results to differ materially from
those indicated by the forward looking statements. These risks and uncertainties
include uncertainties about whether real estate sales under contract will close,
the ability of the Registrant to sell its other real estate assets, the price of
real estate sales, environmental and similar liabilities, future operating
expenses and the adequacy of capital resources to meet future operating
expenses, which are described herein and/or in documents incorporated by
reference herein.

The cautionary statements made pursuant to the Private Securities Litigation
Reform Act of 1995 above and elsewhere by the Registrant should not be construed
as exhaustive or as any admission regarding the adequacy of disclosures made by
the Registrant prior to the effective date of such Act. Forward looking
statements are beyond the ability of the Registrant to control and in many cases
the Registrant cannot predict what factors would cause actual results to differ
materially from those indicated by the forward looking statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

         Not applicable.

Item 8.  Financial Statements and Supplementary Data.

         Registrant's financial statements are included elsewhere herein. See
"List of Financial Statements."

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

         None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

         The Registrant has no directors or executive officers. The Registrant
is managed, and its investment decisions are made, by the general partners of
the General Partner. The General Partner is Walsmith Associates Two, a North
Carolina general partnership. Except as expressly provided in the Partnership
Agreement, the General Partner has the power to do any and all things necessary
or incident to the conduct of the Registrant's business. The general partners of
the General Partner are:

<TABLE>
<CAPTION>
                                                     ------------------------------------------------------------------------
                                                                           Business Experience During
                                                                             Past Five Years, Family
                                                                         Relationships and Directorships
NAME                             AGE                                           in Public Companies
                                                     ------------------------------------------------------------------------
<S>                              <C>                 <C>                                                
Donald F. Walston                57                  President since 1982, and founder of Howard Perry & 


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<PAGE>

                                                     Walston Realty, Inc., a residential real estate brokerage company 
                                                     located in the Research Triangle area of North Carolina.

Alton L. Smith, III              50                  Mr. Smith is an officer and director of Trademark Properties, Inc.
                                                     Mr. Smith is the brother of C. Stephen Smith

C. Stephen Smith                 49                  Mr. Smith is an independent commercial real estate broker.  Mr. Smith
                                                     is the brother of Alton L. Smith, III

</TABLE>

   To the knowledge of the Registrant, no person is the beneficial owner of more
than 590 units, 10% of the outstanding Units.






Item 11. Executive Compensation.

         The Agreement of Limited Partnership of the Registrant (the
"Partnership Agreement") governs the amount of compensation payable to Walsmith
Associates, Two, the General Partner of the Registrant.

         Each year any portion of the properties of the Registrant remain
undeveloped, the Registrant pays the General Partner an annual $3,000 management
fee. This fee was paid to the General Partner by the Registrant during 1998.

         If any portion of the Registrant's properties are developed by the
Registrant, the Registrant will pay the General Partner a 3% development fee
based upon the cost of improvements, net of land. No amounts were paid to the
General Partner as a development fee during the year ended December 31, 1998.

         The Registrant may also pay personnel engaged by or on its behalf to
coordinate or supervise development, construction and operational activities,
including partners and employees of its General Partner. During the year ended
December 31, 1998, the Registrant paid affiliates of the General Partner $9,455
for record keeping, securities law filings and other administrative services.

         The Partnership Agreement calls for the General Partner to be allocated
a minimum of 1% of the gain from the sale of property. The General Partner
receives cash to the extent it is allocated income. The General Partner has been
allocated $3,781 of net income for 1998. (See Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations.")

         Upon the sale of the Martin Parcel the General Partner will be paid a
broker listing fee of up to five (5%) percent of the sales price if the sale is
to a party unaffiliated with the General Partner. If the property is sold by a
broker unaffiliated with the General Partner, the Registrant may also pay the
unaffiliated broker a two and one-half (2 1/2%) percent broker-reallowance fee.
The Registrant paid broker listing fees of $14,831 (2 1/2 % of $593,258) to the
General Partner

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<PAGE>

during the year ended December 31, 1998. Additionally, broker
listing fees of $11,947 were paid to an affiliate of the General Partner during
the year ended December 31, 1998.

         No other amounts were paid for services during the year ended December
31, 1998 to the General Partner or any of its partners or employees.

         If the Registrant operates developed projects, the General Partner will
receive standard leasing commissions and standard property management fees. No
amounts were paid during the year ended December 31, 1998.

         The General Partner receives cash to the extent it is allocated income.
Pursuant to the Partnership Agreement, the General Partner is allocated 1% of
each material item of Partnership income, gain, loss, deduction, or credit.
Otherwise all distributions are to the limited partners until such time as these
distributions equal their original capital contributions plus an additional
return of 10% per annum simple interest on their outstanding capital
contribution (original contributions as reduced by any prior distributions).
Thereafter, Partnership distributions will be allocated 10% to the General
Partner and 90% to the limited partners.

         Information about comparative five-year return on investment in the
Registrant compared to market indexes has not been included herein because there
is no public market in Units of the Registrant. The limited partnership
agreement of the Registrant places substantial restrictions on transfer of Units
of the Registrant. Accordingly, the Registrant believes comparisons to indexes
of publicly traded securities would not be meaningful disclosure for investors.

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

         (a) As of March 29, 1999, no person was known by the Registrant to
beneficially own more than 5% of the Units. The table set forth below indicates
the ownership of units by certain general partners of the General Partner as of
March 29, 1999:

<TABLE>
<CAPTION>
                                                                                 Amount and
         Title               Name & Address                      Nature        Percent of Class
         -----               --------------                      ------        ----------------
<S>                       <C>                                    <C>                  <C>                   
    Limited               Alton L. Smith III                     25 units (1)           *
Partnership Unit          4000 Blue Ridge Road, Suite 100 
                          Raleigh, NC  27612              
</TABLE>


* Indicates less than 1%.
(1) Held in trust for Mr. Smith's children. Mr. Smith serves as trustee of the
    trust.

         (b) As a limited partnership, the Registrant has no officers and
directors, although Alton L. Smith, III, a general partner of the General
Partner, serves the Registrant in the role of its principal financial "officer".
The General Partner has contributed $1,000 to the Registrant's capital account;
however, this contribution is not treated as the equivalent of a Unit of limited
partnership interest. The General Partner's contribution constitutes less than
1% of the total capital contributed to the Registrant. Messrs. Walston, Smith
and Smith are general partners of the General Partner. Alton L. Smith III
beneficially owns 25 units through a trust, for which he serves as trustee.
Neither Mr. Walston nor Mr. C. Stephen Smith beneficially owns any units of


10
<PAGE>

the Registrant.

Item 13. Certain Relationships and Related Transactions.

         See Item 11 "Executive Compensation."


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<PAGE>




                                     PART IV

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

         (a)      The following documents are filed as part of this report:

                  (1)      List of Financial Statements: See "List of Financial
                           Statements."

                  (2)      List of Financial Statement Schedules: All schedules
                           are omitted as they are not applicable or the
                           required information is shown in the financial
                           statements or the notes thereto.

                  (3)      Exhibit Index. All exhibits are incorporated by
                           reference.

         (b) No Current Report on Form 8-K was filed during the quarter ended
December 31, 1998.

         (c) The following exhibits have been filed by the Registrant with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
(File Number 0-15571) and are incorporated herein by reference:

<TABLE>
                   <S>                       <C>
                   Exhibit No. 3.1           Amended Agreement of Limited Partnership of the  
                                             Registrant (incorporated by reference to Exhibit 
                                             4.1 to the Registrant's Annual Report filed on   
                                             Form 10-K for the year ended December 31, 1986). 
                                             
                   Exhibit No. 10.1          Purchase Agreement between Registrant and Walsmith 
                                             Associates regarding the Martin Parcel             
                                             (incorporated by reference to Exhibit 10.1 to the  
                                             Registrant's Annual Report filed on Form 10-K for  
                                             the year ended December 31, 1986).                 
                                             
                   Exhibit No. 10.2          Offer to Purchase and Contract for the Sale and  
                                             Purchase of Real Estate, dated as of January 24, 
                                             1986, between Wellington Park Associates and the 
                                             Registrant (incorporated by reference to Exhibit 
                                             6A to the Registrant's Quarterly Report filed on 
                                             Form 10-Q for the period ended June 30, 1989).   
                                             
                   Exhibit No. 10.3          Agreement between the North Carolina Department of
                                             Transportation and Walsmith Associates            
                                             (incorporated by reference to Exhibit 10.3 to the 
                                             Registrant's

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<PAGE>

                                             Annual Report on Form 10-K for the year ended 
                                             December 31, 1986).                    

                   Exhibit No. 10.4          Assignment and Assumption Agreement between the  
                                             Registrant and Walsmith Associates (incorporated 
                                             by reference to Exhibit 10.4 to the Registrant's 
                                             Annual Report on Form 10-K for the year ended    
                                             December 31, 1986).                              
                                             
                   Exhibit No. 10.5          Amendment to Offer to Purchase and Contract for  
                                             the Sale and Purchase of Real Estate, dated as of
                                             February 1, 1990, between Wellington Park        
                                             Associates and the Registrant (incorporated by   
                                             reference to Exhibit 10.6 to the Registrant's    
                                             Annual Report filed on Form 10-K for the period  
                                             ended December 31, 1989).                        
                                             
                   Exhibit No. 10.6          Agreement for the Purchase and Sale of Real       
                                             Estate, dated as of April 20, 1995, between       
                                             Churchill & Banks, Ltd., ADA Corporation of North 
                                             Carolina, and the Registrant (incorporated by     
                                             reference to Exhibit C to the Registrant's Current
                                             Report filed on Form 8-K, dated April 20, 1995 ). 
                                             
                   Exhibit No. 10.7          First Amendment to the Agreement for the Purchase 
                                             and Sale of Real Estate, dated as of August 9,    
                                             1995, between Churchill & Banks, Ltd., ADA        
                                             Corporation of North Carolina, and the Registrant 
                                             (incorporated by reference to Exhibit C to the    
                                             Registrant's Current Report filed on Form 8-K,    
                                             dated August 9, 1995).                            
                                             
                   Exhibit No. 10.8          Second Amendment to the Agreement for the Purchase
                                             and Sale of Real Estate, dated as of April 19,    
                                             1996, between Churchill & Banks, Ltd., ADA        
                                             Corporation of North Carolina, and the Registrant 
                                             (incorporated by reference to Exhibit 28.5 to the 
                                             Registrant's Quarterly Report filed on Form 10-Q  
                                             for the period ended March 31, 1996).             
                                             
                   Exhibit No. 10.9          Third Amendment to the Agreement for the Purchase 
                                             and Sale of Real Estate, dated as of September 10,
                                             1996, between Churchill & Banks, Ltd., ADA        
                                             Corporation of North Carolina, and the Registrant


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<PAGE>

                                             (incorporated by reference to Exhibit 10.1 to the 
                                             Registrant's Current Report filed on Form 8-K,    
                                             dated September 25, 1996).                        
                                             
                   Exhibit No. 10.10         Fourth Amendment to the Agreement for the Purchase
                                             and Sale of Real Estate, dated as of September __,
                                             1996, between Churchill & Banks, Ltd., ADA        
                                             Corporation of North Carolina, and the Registrant 
                                             (incorporated by reference to Exhibit 10.2 to the 
                                             Registrant's Current Report filed on Form 8-K,    
                                             dated September 25, 1996).                        
                                             
                   Exhibit No. 10.11         Fifth Amendment to the Agreement for the Purchase  
                                             and Sale of Real Estate, dated as of September 27, 
                                             1996, between Wellington Center Associates, LLC,   
                                             ADA Corporation of North Carolina, and the         
                                             Registrant (incorporated by reference to Exhibit   
                                             10.3 to the Registrant's Current Report filed on   
                                             Form 8-K, dated September 25, 1996).               
                                             
                   Exhibit No. 10.12         Sixth Amendment to the Agreement for the Purchase  
                                             and Sale of Real Estate, dated as of September 12, 
                                             1997, between Wellington Center Associates, LLC,   
                                             ADA Corporation of North Carolina, and the         
                                             Registrant (incorporated by reference to Exhibit   
                                             10.12 to the Registrant's Quarterly Report filed   
                                             on Form 10-Q for the period ended September 30,    
                                             1997).                                             

                   Exhibit No. 27            Financial Data Schedule
</TABLE>

         (d) All financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial statements
attached hereto or notes thereto.


14
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 30, 1999.

                                                CAROLINA INVESTMENT PARTNERS

                                                By:  WALSMITH ASSOCIATES TWO,
                                                     General Partner

                                                By:  /s/ Alton L. Smith, III
                                                ---------------------------
                                                Alton L. Smith, III
                                                General Partner and
                                                Principal Financial Officer

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

<TABLE>
<CAPTION>
Signature                                            Capacity                   Date
---------                                            --------                   ----
<S>                                      <C>                                    <C> 
/s/Donald F. Walston                     General Partner of Walsmith            March 30, 1999
------------------------------------     Associates Two, general partner of
                                         the Registrant                    
                                         

/s/Alton, L. Smith, III                  General Partner of Walsmith            March 30, 1999
-----------------------------------      Associates Two, general partner of                   
                                         the Registrant                                       
</TABLE>

Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.

No annual report or proxy statement has been or will be sent to the Limited
Partners of the Registrant.


15
<PAGE>


                           ANNUAL REPORT ON FORM 10-K

                             ITEMS 8 AND 14 (a) (1)

                              FINANCIAL STATEMENTS

                          LIST OF FINANCIAL STATEMENTS

                          YEAR ENDED DECEMBER 31, 1998

                CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP

                             RALEIGH, NORTH CAROLINA








16
<PAGE>



Form 10-K--Items, 8, 14 (a) (1) and (2) and (d)

CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP

December 31, 1998

LIST OF FINANCIAL STATEMENTS

The following financial statements of Carolina Investment Partners, Limited
Partnership are included in Item 8:

Independent Auditors Report                                            F-1

Balance Sheets--December 31, 1998 and 1997                             F-2

Statements of Operations--Years Ended
 December 31, 1998, 1997 and 1996                                      F-3

Statements of Changes in Partners' Equity--Years Ended
 December 31, 1998, 1997, and 1996                                     F-4

Statements of Cash Flows--Years Ended December 31, 1998,
 1997, and 1996                                                        F-5

Notes to Financial Statements                                          F-6

Schedules to the financial statements for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are
inapplicable or the required information is included in the financial statements
or the notes thereto.




17
<PAGE>

                     [Letterhead of Lynch & Howard, P.A.]


                          INDEPENDENT AUDITOR'S REPORT

         To the Partners

         Carolina Investment Partners Limited Partnership
         Raleigh, North Carolina

         We have audited the accompanying balance sheets of Carolina Investment
         Partners Limited Partnership as of December 31, 1998 and December 31,
         1997, and the related statements of operations, changes in partners'
         equity and cash flows for each of the three years in the 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 Carolina
         Investment Partners Limited Partnership as of December 31, 1998 and
         December 31, 1997, and the results of its operations and its cash flows
         for each of the three years in the period ended December 31, 1998 in
         conformity with generally accepted accounting principles.

         /s/ Lynch & Howard, P.A.
         February 10, 1999
         

                                                                             F-1
<PAGE>
                                                                       EXHIBIT A

                          CAROLINA INVESTMENT PARTNERS
                              LIMITED PARTNERSHIP
                            RALEIGH, NORTH CAROLINA
                                 BALANCE SHEETS



<TABLE>
<CAPTION>
                                     ASSETS

                                                      December 31
                                                -----------------------
                                                    1998         1997
                                                ----------   ----------
<S>                                                 <C>          <C>       
ASSETS:
    Cash                                            $  110,033   $    7,553    
    Short-term investments                             303,132      995,315    
    Land held for investment  (Note 5)               3,594,592    3,850,572    
    Accounts receivable - related party                  2,029        4,692    
                                                    ----------   ----------    
                                                                               
                                                                               
                                                    $4,009,786   $4,858,132    
                                                    ==========   ==========    
                                                                               
                 LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:
    Accounts payable - trade                        $   14,637   $   29,755    
    Accounts payable - related party                     1,639        1,337    
    Distributions not claimed by limited partners      165,922       70,946    
                                                    ----------   ----------    
                                                                               
                 Total Liabilities                  $  182,198   $  102,038    
                                                    ----------   ----------    
                                                                               
    
PARTNERS' EQUITY
     General Partner's equity                        $      865   $    5,711    
     Limited partners' equity; 5,900 units                                      
       authorized, issued and outstanding             3,826,723    4,750,383    
                                                     ----------   ----------    
                                                                                
                  Total Partners' Equity             $3,827,588   $4,756,094    
                                                     ----------   ----------    
                                                                                
                                                                                
                                                     $4,009,786   $4,858,132    
                                                     ==========   ==========    
</TABLE>

The Notes to Financial Statements are an integral part of this statement.

                                                                             F-2
<PAGE>
                                                                       EXHIBIT B

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                             Year Ended December 31
                                                                       ------------------------------------
                                                                          1998         1997         1996
                                                                       ----------   ----------   ----------
<S>                                                                    <C>          <C>          <C>
REVENUES:
      Gain on sale of land - net of related party                      $  291,596   $  541,269   $1,382,081
         commissions paid of $26,778, $33,737 and $107,460
         in 1998, 1997, and 1996, respectively  (Note 6)
      Interest and other income                                           163,090       87,420       12,174
                                                                       ----------   ----------   ----------
           Total Revenues                                              $  454,686   $  628,689   $1,394,255
                                                                       ----------   ----------   ----------
OPERATING EXPENSES:

      General and administrative expenses                              $   64,110   $   43,310   $   49,219
      Related party expenses                                               12,455       14,247        8,821
                                                                       ----------   ----------   ----------
           Total Operating Expenses                                    $   76,565   $   57,557   $   58,040
                                                                       ----------   ----------   ----------
NET INCOME                                                             $  378,121   $  571,132   $1,336,215
                                                                       ==========   ==========   ==========
ALLOCATION OF NET INCOME (NOTE 2):
      To General Partner:
         From gain on sale of land                                     $    2,916   $    5,413   $   13,821
         From operations                                                      865          298            0
                                                                       ----------   ----------   ----------

           Total to General Partner                                    $    3,781   $    5,711   $   13,821
                                                                       ----------   ----------   ----------
      To Limited partners:
         From gain on sale of land                                     $  288,680   $  535,856   $1,368,260
         From operations                                                   85,660       29,565      -45,866
                                                                       ----------   ----------   ----------
           Total to Limited Partners                                   $  374,340   $  565,421   $1,322,394
                                                                       ----------   ----------   ----------
                                                                       $  378,121   $  571,132   $1,336,215
                                                                       ==========   ==========   ==========


NET INCOME PER LIMITED PARTNERSHIP UNIT:
      (Based on 5,900 weighted average limited
      partnership units outstanding during each year)
         From gain on sale of land                                     $    48.93   $    90.82   $   231.91
         From other operations                                              14.52         5.01        (7.78)
                                                                       ----------   ----------   ----------
                                                                       $    63.45   $    95.83   $   224.13
                                                                       ==========   ==========   ==========
</TABLE>




The Notes to Financial Statements are an integral part of this statement.



                                                                             F-3
<PAGE>
                                                                       EXHIBIT C

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

<TABLE>
<CAPTION>
                                                Limited      General       Limited
                                              Partnership   Partner's     Partners'
                                                 Units       Equity         Equity         Total
                                              ----------   -----------    ----------     ---------- 
<S>                                           <C>          <C>           <C>            <C>        
BALANCE AT JANUARY 1, 1996                         5,900   $        --   $ 4,818,568    $ 4,818,568

NET INCOME FOR 1996                                   --        13,821     1,322,394      1,336,215

DISTRIBUTIONS FOR 1996
       General Partner                                --       (13,821)           --        (13,821)
       Limited partners ($331.53 per unit)            --            --    (1,956,000)    (1,956,000)
                                              ----------   -----------    ----------     ---------- 
BALANCE AT DECEMBER 31, 1996                       5,900   $        --   $ 4,184,962    $ 4,184,962

NET INCOME FOR 1997                                   --         5,711       565,421        571,132
                                              ----------   -----------    ----------     ---------- 

BALANCE AT DECEMBER 31, 1997                     749,300   $     5,711   $ 4,750,383    $ 4,756,094

NET INCOME FOR 1998                                   --         3,781       374,340        378,121

DISTRIBUTIONS FOR 1998
       General Partner                                --        (8,627)           --         (8,627)
       Limited partners ($220.00 per unit)            --            --    (1,298,000)    (1,298,000)
                                              ----------   -----------    ----------     ---------- 

BALANCE AT DECEMBER 31, 1998                     749,300   $       865   $ 3,826,723    $ 3,827,588
                                              ==========   ===========   ===========    ===========
</TABLE>
















The Notes to Financial Statements are an integral part of this statement.

                                                                             F-4
<PAGE>

                                                                       EXHIBIT D

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31
                                                                       -----------------------------------------
                                                                              1998           1997           1996
                                                                       -----------------------------------------
<S>                                                                    <C>            <C>            <C>
OPERATING ACTIVITIES:
      Net income                                                       $   378,121    $   571,132    $ 1,336,215
      Adjustments to reconcile net income to
        net cash used in operating activities:
          Changes in operating assets and liabilities:
               Land held for investment                                    255,980        150,708        820,903
               Accounts receivable - related party                           2,663         (4,692)           103
               Accounts payable - trade                                    (15,118)        15,857         (6,050)
               Accounts payable - related party                                302         (6,607)         6,900
               Distributions not claimed by limited partners                94,976         70,946              0
                                                                       -----------    -----------    -----------
               Net Cash Provided By Operating Activities               $   716,924    $   797,344    $ 2,158,071
                                                                       -----------    -----------    -----------
FINANCING ACTIVITIES:
      Repayment of note payable - related party                        $         0    $         0    $   (16,064)
      Distribution to General Partner                                       (8,627)             0        (13,821)
      Distribution to limited partners                                  (1,298,000)             0     (1,956,000)
                                                                       -----------    -----------    -----------
               Net Cash Provided By (Used In)
                 Financing Activities                                  $(1,306,627)   $         0    $(1,985,885)
                                                                       -----------    -----------    -----------
NET INCREASE (DECREASE) IN CASH                                        $  (589,703)   $   797,344    $   172,186
CASH AND CASH EQUIVALENTS -
  BEGINNING OF YEAR                                                      1,002,868        205,524         33,338
                                                                       -----------    -----------    -----------
CASH AND CASH EQUIVALENTS -
  END OF YEAR                                                          $   413,165    $ 1,002,868    $   205,524
                                                                       ===========    ===========    ===========
</TABLE>










The Notes to Financial Statements are an integral part of this statement.

                                                                             F-5
<PAGE>

                                                                       EXHIBIT D
                                                                          PAGE 2

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   Year Ended December 31
                                                            ------------------------------------
                                                                1998         1997         1996
                                                            ----------   ----------   ----------
<S>                                                         <C>          <C>          <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
      Cash paid during the year for interest                $        0   $        0   $    1,127
                                                            ==========   ==========   ==========
      Cash and cash equivalents:
          Cash                                              $  110,033   $    7,553   $  194,254
          Short-term investments                               303,132      995,315       11,270
                                                            ----------   ----------   ----------
                                                            $  413,165   $1,002,868   $  205,524
                                                            ==========   ==========   ==========
</TABLE>











The Notes to Financial Statements are an integral part of this statement.

                                                                           F-5.1
                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

(1)      ORGANIZATION AND NATURE OF OPERATIONS

         Carolina Investment Partners Limited Partnership (the "Partnership")
         was organized in 1985 to invest in real property which it will sell or
         lease undeveloped or develop into office or commercial projects.
         Walsmith Associates Two, a North Carolina General Partnership, is the
         general partner ("General Partner"). The Partnership has invested in
         two parcels of real estate located in Cary, North Carolina.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         STATEMENT OF CASH FLOWS
         For the purposes of reporting cash flows, the Partnership considers
         cash equivalents to be cash on hand, cash in banks, and all highly
         liquid debt instruments with a maturity of less than three months.

         LAND HELD FOR INVESTMENT
         Land held for investment is stated at contract cost plus highway
         interchange construction costs and capitalized appraisal, survey, and
         closing costs and adjusted for impairments as required by Financial
         Accounting Standards Board Statement No. 121. Management compares the
         cost of land held to sales of similar property to determine the
         potential for impairment. There are no material differences between the
         book and federal tax cost basis of the property.

         INCOME TAXES
         No provision has been made for income taxes since income or loss is
         includable in the partners' returns as they report to tax authorities
         in their respective capacities as partners.

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

                                                                             F-6
<PAGE>
                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         CONCENTRATIONS OF CREDIT RISK
         The Partnership maintains cash deposits in banks in excess of the
         federally insured amounts.

         ALLOCATION OF NET INCOME OR NET LOSS
         Pursuant to the Partnership Agreement, the General Partner is allocated
         1% of each material item of Partnership income, gain, loss, deduction
         or credit. The limited partners receive 99% of each material item of
         Partnership income, gain, loss, deduction or credit until their
         original capital contributions plus interest have been distributed (see
         CASH DISTRIBUTION POLICY below). Thereafter, the net income is
         allocated 10% to the General Partner and 90% to the limited partners.

         Net loss is allocated 10% to the General Partner and 90% to the limited
         partners. The Partnership Agreement provides that no partner's capital
         account balance shall be less than zero. Thus, no loss from operations
         was allocated to the General Partner for the year ended December 31,
         1996. For purposes of the allocation, net income or net loss is the
         amount recognized by the Partnership for federal income tax purposes,
         excluding gains or losses from the disposition of land. For the years
         ended December 31, 1998, 1997 and 1996 there were no material
         differences between net income (loss) as reported for financial
         statement and federal income tax purposes.

         CASH DISTRIBUTION POLICY
         The General Partner receives cash to the extent it is allocated income.
         Otherwise, all distributions are to the limited partners until such
         time as these distributions equal 100% of their original capital
         contributions plus an additional return of 10% per annum simple
         interest on their outstanding capital contribution (original
         contributions as reduced by any prior distributions). Thereafter,
         Partnership distributions will be allocated 10% to the General Partner
         and 90% to the limited partners.

         SHORT-TERM INVESTMENTS 
         Short-term investments consisted of certificates of deposit and money
         market funds.

                                     Page 2
<PAGE>
                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         RECLASSIFICATIONS
         Certain items in the 1997 report have been reclassified to conform to
         current year classifications. Such reclassifications had no effect on
         previously reported net income.

(3)      RELATED PARTY TRANSACTIONS

         The Partnership Agreement allows the General Partner to receive a
         broker listing fee of 5% of the sales price for all properties sold by
         the Partnership to unaffiliated buyers. An affiliate of the General
         Partner received a broker listing fee of $11,947, $14,994, and $47,760
         in 1998, 1997 and 1996, respectively and the General Partner received a
         broker listing fee of $14,831, $18,743 and $59,700 in 1998, 1997 and
         1996, respectively (SEE NOTE 6).

         The Partnership Agreement allows the Partnership to pay the General
         Partner a $3,000 annual management fee while the properties are in an
         undeveloped state. In addition, affiliates of the General Partner
         performed Partnership accounting, SEC reporting, administrative
         services and engineering consulting totaling $9,455, $11,247 and $5,821
         during 1998, 1997 and 1996, respectively. Amounts payable to related
         parties at December 31, 1998 and 1997 were $1,639 and $1,337,
         respectively.

(4)      NOTE PAYABLE - RELATED PARTY

         On February 2, 1995 the General Partner made a loan to the Partnership
         of $55,000. The purpose of this loan was to fund the current operating
         expenses of the Partnership. The note was payable upon the sale of
         Partnership properties or other sources of funds that become available
         but was to be paid in full no later than June 1, 1996. As of June 1,
         1996 the Partnership had not closed on the pending land sale;
         therefore, the General Partner made another loan to the Partnership of
         $16,064, the balance of the first loan. This loan was paid off on
         September 30, 1996 (SEE NOTE 6). Both notes accrued interest at prime
         plus one percent and the interest was payable quarterly. Interest
         expense for the years ended December 31, 1998, 1997 and 1996 was $0, $0
         and $1,127, respectively.

                                     Page 3
<PAGE>
                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


(5)      LAND HELD FOR INVESTMENT AND RELATED COMMITMENTS

         MARTIN PARCEL
         In June 1986, the Partnership purchased for approximately $3,080,200 an
         undeveloped 26.7 acre parcel of land in Cary, North Carolina, known as
         the Martin Parcel, from an affiliate of the General Partner.

         WELLINGTON PARCEL
         In July 1986, the Partnership purchased for $1,223,175 an undeveloped
         16.3 acre parcel of land in Cary, North Carolina, known as the
         Wellington Parcel, from an affiliate of the General Partner. The
         purchase contract provides that the Partnership will share evenly with
         the affiliate in any profits resulting from the sale of the Wellington
         Parcel. The Partnership may, at its option, require the affiliate to
         repurchase the Wellington Parcel for $225,000 per acre (the "Put
         Option"). A 75% vote of the limited partners is required for this Put
         Option to be exercised.

         At a meeting of the limited partners held in March 1990, fewer than 75%
         of the partners voted to exercise the Put Option discussed above. A new
         agreement was entered into called the Put Option Agreement Amendment.
         Under the terms of the Put Option Agreement Amendment, the Partnership
         will retain a greater percentage of the property appreciation upon sale
         of the Wellington Parcel to an unaffiliated third party than would be
         retained if the Put Option were exercised. If the limited partners
         elect to exercise the Put Option at a later date, the Put Option
         Agreement Amendment will be void.

         The Partnership sold approximately 3.4, 2.0 and 10.9 acres of the
         Wellington Parcel during 1998, 1997 and 1996, respectively (SEE NOTE
         6).

                                     Page 4
<PAGE>

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


(6)      GAIN ON SALE OF LAND

         YEAR 1998

         During 1998 the Partnership sold the remaining 3.4 acres of the
         Wellington Parcel to an unrelated party. The total sales price for the
         property, a portion of which was owned by an affiliate of the General
         Partner, was $597,352. This sales price was allocated among the
         Partnership and the affiliate based upon acreage sold by each, with
         $593,258 to the Partnership and $4,094 to the affiliate. The
         Partnership's proceeds were as follows:

                                          3/3/98       4/9/98        Total
                                        ---------    ---------    ---------
Gross sales price                       $ 227,655    $ 365,603    $ 593,258
Commissions                               (11,383)     (18,280)     (29,663)
Commissions - related party                (5,691)      (9,140)     (14,831)
Deed stamps                                  (455)        (732)      (1,187)
                                        ---------    ---------    ---------
Net Sale Proceeds                       $ 210,126    $ 337,451    $ 547,577
                                        =========    =========    =========

         The Partnership agreement calls for the General Partner to be allocated
         a minimum of 1% of any gain from the sale of property. To the extent
         the General Partner is allocated gain, it also receives a distribution.
         Accordingly, the General Partner's share of the gain is $2,916 (net
         sale proceeds of $547,577 less the Registrant's basis in the property
         sold of $255,980 equals a gain of $291,596; 1% of this amount is
         $2,916).

         On April 30, 1998 the Registrant distributed a total of $1,306,627,
         with $1,298,000 going to the limited partners ($220.00 per unit) and
         $8,627 to the General Partner.



                                     Page 5
<PAGE>

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


(6)      GAIN ON SALE OF LAND - CONTINUED

         YEAR 1997

         During 1997 the Partnership sold approximately 2 acres of the
         Wellington Parcel to an unrelated party. The total sales price for the
         property, a portion of which was owned by an affiliate of the General
         Partner, was $930,284. This sales price was allocated among the
         Partnership and the affiliate based upon acreage sold by each, with
         $749,705 to the Partnership and $180,579 to the affiliate. The
         Partnership's proceeds were as follows:

<TABLE>
<CAPTION>
                                       5/5/97      8/26/97      11/17/97      Total
                                     ---------    ---------    ---------    ---------
<S>                                  <C>          <C>          <C>          <C>      
Gross sales price                    $ 250,917    $ 243,359    $ 255,429    $ 749,705
Commissions                             (7,528)      (7,301)      (7,662)     (22,491)
Commissions - related party            (11,291)     (10,951)     (11,495)     (33,737)
Deed stamps                               (502)        (487)        (511)      (1,500)
                                     ---------    ---------    ---------    ---------
Net sale proceeds                    $ 231,596    $ 224,620    $ 235,761    $ 691,977
                                     =========    =========    =========    =========
</TABLE>


         The Partnership agreement calls for the General Partner to be allocated
         a minimum of 1% of any gain from the sale of property. To the extent
         the General Partner is allocated gain, it also receives a distribution.
         Accordingly, the General Partner's share of the gain is $5,413 (net
         sale proceeds of $691,977 less the Registrant's basis in the property
         sold of $150,707 equals a gain of $541,269; 1% of this amount is
         $5,413).

                                     Page 6
<PAGE>
                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             RALEIGH, NORTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


(6)      GAIN ON SALE OF LAND - CONTINUED

         YEAR 1996

         In September 1996 the Partnership sold approximately 10.9 acres of the
         Wellington Parcel to a third party. The total sales price for the
         property, a portion of which was owned by an affiliate of the General
         Partner, was $2,400,000. This sales price was allocated among the
         Partnership and the affiliate based upon acreage sold by each, with
         $2,388,000 to the Partnership and $12,000 to the affiliate. The
         Partnership's proceeds were utilized as follows:


                  Gross sales price                           $ 2,388,000
                  Commissions                                     (71,640)
                  Commissions - related party                    (107,460)
                  Deed stamps and attorney fees                    (5,916)
                                                              -----------
                  Net sales proceeds                          $ 2,202,984
                  Wellington Parcel property taxes                (16,511)
                  Repayment of note payable and accrued
                     interest to General Partner                  (16,819)
                  Funds reserved for future operating needs      (199,833)
                                                              -----------
                  Funds distributed to partners               $ 1,969,821
                                                              ===========

         The Partnership Agreement calls for the General Partner to be allocated
         a minimum of 1% of any gain from the sale of property. To the extent
         the General Partner is allocated gain, it also receives a distribution.
         Accordingly, the General Partner's share of the gain is $13,821 (net
         sales proceeds of $2,202,984 less the Registrant's basis in the
         property sold of $820,903 equals a gain of $1,382,081; 1% of this
         amount is $13,821).

         On November 4, 1996 the Registrant distributed a total of $1,969,821,
         with $1,956,000 going to the limited partners ($331.53 per unit) and
         $13,821 to the General Partner.



                                     Page 7
<PAGE>
                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>
       Exhibit No.                          Description
       -----------                          -----------
                <S>                         <C>
                3.1                         Amended Agreement of Limited Partnership of
                                            the Registrant (incorporated by reference
                                            to Exhibit 4.1 to the Registrant's Annual
                                            Report filed on Form 10-K for the year
                                            ended December 31, 1986).

                10.1                        Purchase Agreement between Registrant and
                                            Walsmith Associates regarding the Martin
                                            Parcel (incorporated by reference to
                                            Exhibit 10.1to the Registrant's Annual
                                            Report filed on Form 10-K for the year
                                            ended December 31, 1986).

                10.2                        Offer to Purchase and Contract for the Sale
                                            and Purchase of Real Estate, dated as of
                                            January 24, 1986, between Wellington Park
                                            Associates and the Registrant (incorporated
                                            by reference to Exhibit 6A to the
                                            Registrant's Quarterly Report filed on Form
                                            10-Q for the period ended June 30, 1989).

                10.3                        Agreement between the North Carolina
                                            Department of Transportation and Walsmith
                                            Associates (incorporated by reference to
                                            Exhibit 10.3 to the Registrant's Annual
                                            Report on Form 10-K for the year ended
                                            December 31, 1986).

                10.4                        Assignment and Assumption Agreement between
                                            the Registrant and Walsmith Associates
                                            (incorporated by reference to Exhibit 10.4
                                            to the Registrant's Annual Report on Form
                                            10-K for the year ended December 31, 1986).

                10.5                        Amendment to Offer to Purchase and Contract
                                            for the Sale and Purchase of Real Estate,
                                            dated as of February 1, 1990, between
                                            Wellington Park Associates and the

<PAGE>

                                            Registrant (incorporated by reference to
                                            Exhibit 10.6 to the Registrant's Annual
                                            Report filed on Form 10-K for the period
                                            ended December 31, 1989).

                10.6                        Agreement for the Purchase and Sale of Real
                                            Estate, dated as of April 20, 1995, between
                                            Churchill & Banks, Ltd., ADA Corporation of
                                            North Carolina, and the Registrant
                                            (incorporated by reference to Exhibit C to
                                            the Registrant's Current  Report filed on
                                            Form 8-K, dated April 20, 1995 ).

                10.7                        First Amendment to the Agreement for the
                                            Purchase and Sale of Real Estate, dated as
                                            of August 9, 1995, between Churchill &
                                            Banks, Ltd., ADA Corporation of North
                                            Carolina, and the Registrant (incorporated
                                            by reference to Exhibit C to the
                                            Registrant's Current Report filed on Form
                                            8-K, dated August 9, 1995).

                10.8                        Second Amendment to the Agreement for the
                                            Purchase and Sale of Real Estate, dated as
                                            of April 19, 1997, between Churchill &
                                            Banks, Ltd., ADA Corporation of North
                                            Carolina, and the Registrant (incorporated
                                            by reference to Exhibit 28.5 to the
                                            Registrant's Quarterly Report filed on Form
                                            10-Q for the period ended March 31, 1997).

                10.9                        Third Amendment to the Agreement for the
                                            Purchase and Sale of Real Estate, dated as
                                            of September 10, 1997, between Churchill &
                                            Banks, Ltd., ADA Corporation of North
                                            Carolina, and the Registrant (incorporated
                                            by reference to Exhibit 10.1 to the
                                            Registrant's Current Report filed on Form
                                            8-K, dated September 25, 1997).

                10.10                       Fourth Amendment to the Agreement for the
                                            Purchase and Sale of Real Estate, dated as
                                            of September __,  1997, between 


<PAGE>

                                            Churchill & Banks, Ltd., ADA Corporation of 
                                            North Carolina, and the Registrant (incorporated
                                            by reference to Exhibit 10.2 to the Registrant's 
                                            Current Report filed on Form 8-K, dated 
                                            September 25, 1997).

                10.11                       Fifth Amendment to the Agreement for the
                                            Purchase and Sale of Real Estate, dated as
                                            of September 27, 1997, between Wellington
                                            Center Associates, LLC,  ADA Corporation of
                                            North Carolina, and the Registrant
                                            (incorporated by reference to Exhibit 10.3
                                            to the Registrant's Current Report filed on
                                            Form 8-K, dated September 25, 1997).

                10.12                       Sixth Amendment to the Agreement for the
                                            Purchase and Sale of Real Estate, dated as
                                            of September 12, 1997, between Wellington
                                            Center Associates, LLC,  ADA Corporation of
                                            North Carolina, and the Registrant
                                            (incorporated by reference to Exhibit 10.12
                                            to the Registrant's Quarterly Report filed
                                            on Form 10-Q for the period ended September
                                            30, 1997).


                27                          Financial Data Schedule
</TABLE>