<PAGE>

                       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, 2001

                                       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 14, 2002 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 14, 2002
--------------------------------------------

This Exhibit Index appears on Page 16.

                                       1

<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.

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
locations of the Martin Parcel in Cary.

                           [MAP]

                                        2

<PAGE>

The Martin Parcel contains approximately 25.1 acres of unimproved land, which is
divided into two tracts by the Cary Parkway. The tract lying to the 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-referral 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 2001.

                           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 988 Limited Partners holding 5,900 Units as
of March 14, 2002. 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.

         (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.

                                        3

<PAGE>

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

<TABLE>
<CAPTION>
                                    2001               2000               1999               1998              1997
                                    ----               ----               ----               ----              ----
<S>                           <C>                <C>                <C>                <C>               <C>
Summary of Operations:
  Gain on Sale of Land        $      -0-         $      -0-         $      -0-         $  291,596        $  541,269

  Other Income                     3,555              8,748             17,471            163,090            87,420

  Expenses                        58,319             56,466             57,129             76,565            57,557

  Net Income (Loss)              (54,764)           (47,718)           (39,658)           378,121           571,132

  Net Income (Loss)
  per limited
  partnership unit:
      From gain on sale
      of land                        -0-                -0-                -0-              48.93             90.82
      From other
      operations                   (9.28)             (8.08)             (6.58)             14.52              5.01
                                    ----               ----               ----              -----              ----
      Total per unit               (9.28)             (8.08)             (6.58)             63.45             95.83

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

Selected Balances:
  Cash and Short-Term
  Investments                    213,842            273,220            347,989            413,165         1,002,868

  Land held for
  Investment                   3,594,592          3,594,592          3,594,592          3,594,592         3,850,572

  Total Assets                 3,812,502          3,871,751          3,946,165          4,009,786         4,858,132

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

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

  Limited Partners'
  equity                       3,685,449          3,740,213          3,787,930          3,826,723         4,750,383
</TABLE>



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

The Registrant's operations resulted in a net loss of $54,764 during 2001,
compared to a net loss of $47,718 during 2000 and a net loss of $39,658 in 1999.
The primary differences between 2001 in comparison to 2000 and 1999 were:

                                       4

<PAGE>

         2001 vs. 2000
         -------------

         .   Property taxes paid in 2001 totaled $23,045 compared to $13,840
             paid in 2000.

         .   Interest received by the Registrant from investment in a money
             market account totaled $3,080 in 2001 compared to $6,798 in 2000
             due to higher balances in the account during 2000.


         2001 vs. 1999
         -------------

         .   Interest received by the Registrant from investment in a money
             market account totaled $3,080 in 2001 compared to $10,833 in 1999
             due to higher balances in the account during 1999.

         .   The Registrant received a property tax refund of $6,113 in 1999.
             There was no such refund received in 2001.

         .   Property taxes paid in 2001 totaled $23,045 compared to $10,196
             paid in 1999.

The Registrant has 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 or 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.

As of March 14, 2002, the Registrant has $213,842 in cash and short-term
investments, which is sufficient to meet its needs during the next year.

The Registrant maintains its excess funds in money market account at RBC
Centura. 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.

                                        5

<PAGE>

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.

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.

                                        6

<PAGE>

                                    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                59                  President since 1982, and founder of Howard Perry & Walston Realty,
                                                     Inc., a residential real estate brokerage company located in the
                                                     Research Triangle area of North Carolina.

Alton L. Smith, III              52                  Mr. Smith is an officer and director of Trademark Properties, Inc.
                                                     Mr. Smith is the brother of C. Stephen Smith

C. Stephen Smith                 51                  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.

If any portion of the Registrant's properties is 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, 2001.

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, 2001, the Registrant paid affiliates of the General Partner $315 for writing
checks and depositing funds. The Registrant has hired an outside accounting firm
for all other record keeping such as securities law filings and maintenance of
the partnership database.

                                       7

<PAGE>

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 no net income for 2001. (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 no broker listing fees during the year ended December 31,
2001.

No other amounts were paid for services during the year ended December 31, 2001
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, 2001.

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 14, 2002, 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 14, 2002:

<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.

                                        8

<PAGE>

         (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 the
Registrant.


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

See Item 11 "Executive Compensation."


                                     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, 2001.

         (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:

                                        9

<PAGE>

         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 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).

                                       10

<PAGE>

         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
                            (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

                                       11

<PAGE>

                            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. 10.13  Letter Agreement to amend the Agreement for the
                            Purchase and Sale of Real Estate, dated December
                            12, 1997 between Churchill & Banks, Ltd., ADA
                            Corporation of North Carolina, and the Registrant
                            (incorporated by reference to Exhibit 10.13 to the
                            Registrant's Quarterly Report filed on Form 10-Q
                            for the period ended March 31, 1998).

         Exhibit No. 10.14  Eighth Amendment to the Agreement for the Purchase
                            and Sale of Real Estate, dated March 24, 1998
                            between Churchill & Banks, Ltd., ADA Corporation of
                            North Carolina, and the Registrant (incorporated by
                            reference to Exhibit 10.14 to the Registrant's
                            Quarterly Report filed on Form 10-Q for the period
                            ended March 31, 1998).

   (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.

                                       12

<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 14, 2002.

                                     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.

Signature                               Capacity                  Date
---------                               --------                  ----

/s/ Donald F. Walston       General Partner of Walsmith           March 14, 2002
------------------------    Associates Two, general partner of
                            the Registrant


/s/ Alton, L. Smith, III    General Partner of Walsmith           March 14, 2002
-----------------------     Associates Two, general partner of
                            the Registrant





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.

                                       13

<PAGE>

                           ANNUAL REPORT ON FORM 10-K

                             ITEMS 8 AND 14 (a) (1)

                              FINANCIAL STATEMENTS

                          LIST OF FINANCIAL STATEMENTS

                          YEAR ENDED DECEMBER 31, 2001

                CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP

                             RALEIGH, NORTH CAROLINA

                                       14

<PAGE>

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

CAROLINA INVESTMENT PARTNERS, LIMITED PARTNERSHIP

December 31, 2001


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, 2001 and 2000                             F-2

Statements of Operations--Years Ended
 December 31, 2001, 2000 and 1999                                      F-3

Statements of Changes in Partners' Equity--Years Ended
 December 31, 2001, 2000, and 1999                                     F-4

Statements of Cash Flows--Years Ended December 31, 2001,
 2000, and 1999                                                        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.

                                       15

<PAGE>

                                INDEX TO EXHIBITS

             Exhibit No.                Description
             ----------                 -----------

                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

                                       16

<PAGE>

                                    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).

                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


                                       17

<PAGE>

                                  Sale of Real Estate, dated as of September,
                                  1997, 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,
                                  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).

                   10.13          Letter Agreement to amend the Agreement for
                                  the Purchase and Sale of Real Estate, dated
                                  December 12, 1997 between Churchill & Banks,
                                  Ltd., ADA Corporation of North Carolina, and
                                  the Registrant (incorporated by reference to
                                  Exhibit 10.13 to the Registrant's Quarterly
                                  Report filed on Form 10-Q for the period ended
                                  March 31, 1998).

                   10.14          Eighth Amendment to the Agreement for the
                                  Purchase and Sale of Real Estate, dated March
                                  24, 1998 between Churchill & Banks, Ltd., ADA
                                  Corporation of North Carolina, and the
                                  Registrant (incorporated by reference to
                                  Exhibit 10.14 to the Registrant's Quarterly
                                  Report filed on Form 10-Q for the period ended
                                  March 31, 1998).

                                                  18

<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, 2001 and December 31, 2000, 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, 2001. 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 auditing standards generally accepted
in the United States of America. 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, 2001 and December 31, 2000, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.


/s/ Lynch & Howard, P.A.

Raleigh, North Carolina
February 28, 2002

                                                                             F-1

<PAGE>

                                                                       Exhibit A

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             Raleigh, North Carolina
                                 BALANCE SHEETS

                                     ASSETS

                                                               December 31
                                                       -------------------------
                                                           2001           2000
                                                       -----------    ----------

 ASSETS:
    Cash                                               $    64,999   $    47,457
    Short-term investments                                 148,843       225,763
    Land held for investment (Note 4)                    3,594,592     3,594,592
    Accounts receivable - related party                      4,068         3,939
                                                        ----------     ---------

                                                       $ 3,812,502   $ 3,871,751
                                                        ==========     =========

                        LIABILITIES AND PARTNERS' EQUITY

 LIABILITIES:
    Accounts payable - trade                           $    12,093   $    10,273
    Accounts payable - related party                           292         6,158
    Distributions not claimed by limited partners          114,668       115,107
                                                        ----------     ---------

             Total Liabilities                         $   127,053   $   131,538
                                                        ----------     ---------

 PARTNERS' EQUITY:
    General Partner's equity                           $         0   $         0
    Limited partners' equity; 5,900 units
     authorized, issued and outstanding                  3,685,449     3,740,213
                                                        ----------     ---------

             Total Partners' Equity                    $ 3,685,449   $ 3,740,213
                                                        ----------     ---------

                                                       $ 3,812,502   $ 3,871,751
                                                        ==========     =========

 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

                                                     Year Ended December 31
                                                 ------------------------------
                                                   2001       2000       1999
                                                 --------   --------   --------
REVENUES:
   Interest and other income                    $   3,555  $   8,748  $  17,471
                                                 --------   --------   --------

OPERATING EXPENSES:
   General and administrative expenses          $  55,161  $  52,151  $  51,314
   Related party expenses                           3,158      4,314      5,815
                                                 --------   --------   --------

        Total Operating Expenses                $  58,319  $  56,465  $  57,129
                                                 --------   --------   --------

NET LOSS                                        $ (54,764) $ (47,717) $ (39,658)
                                                 ========   ========   ========

ALLOCATION OF NET LOSS (Note 2):
   To General Partner                           $       0  $       0  $    (865)
   To limited partners                            (54,764)   (47,717)   (38,793)
                                                 --------   --------   --------

                                                $ (54,764) $ (47,717) $ (39,658)
                                                 ========   ========   ========

NET LOSS PER LIMITED PARTNERSHIP UNIT:
  (Based on 5,900 weighted average limited
  partnership units outstanding during
  each year)
   From other operations                        $   (9.28) $   (8.08) $   (6.58)
                                                 ========   ========   ========

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, 1999              5,900   $         865    $       3,826,723    $       3,827,588

Net loss for 1999                           -            (865)             (38,793)             (39,658)
                                --------------    ------------     ----------------     ----------------

Balance at December 31, 1999            5,900   $           0    $       3,787,930    $       3,787,930

Net loss for 2000                           -               0              (47,717)             (47,717)
                                --------------    ------------     ----------------     ----------------

Balance at December 31, 2000            5,900   $           0    $       3,740,213    $       3,740,213

Net loss for 2001                           -               0              (54,764)             (54,764)
                                --------------    ------------     ----------------     ----------------

Balance at December 31, 2001            5,900   $           0    $       3,685,449    $       3,685,449
                                ==============    ============     ================     ================
</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
                                                                  ----------------------------------------------------------
                                                                      2001                  2000                  1999
                                                                  --------------       ----------------       --------------
<S>                                                             <C>                  <C>                    <C>
OPERATING ACTIVITIES:
    Net loss                                                    $       (54,764)     $         (47,717)     $       (39,658)
    Adjustments to reconcile net loss to
      net cash used in operating activities:
        Changes in operating assets and liabilities:
             Accounts receivable - related party                           (129)                  (355)              (1,555)
             Accounts payable - trade                                     1,820                 (2,237)              (2,127)
             Accounts payable - related party                            (5,866)                 3,158                1,361
             Distributions not claimed by limited partners                 (439)               (27,618)             (23,197)
                                                                  --------------       ----------------       --------------

             Net Cash Used In Operating Activities              $       (59,378)     $         (74,769)     $       (65,176)
                                                                  --------------       ----------------       --------------


NET DECREASE IN CASH                                            $       (59,378)     $         (74,769)     $       (65,176)

CASH AND CASH EQUIVALENTS -
  BEGINNING OF YEAR                                                     273,220                347,989              413,165
                                                                  --------------       ----------------       --------------

CASH AND CASH EQUIVALENTS -
  END OF YEAR                                                   $       213,842      $         273,220      $       347,989
                                                                  ==============       ================       ==============


Supplemental Disclosure of Cash Flows Information:
    Cash and cash equivalents:
        Cash                                                    $        64,999      $          47,457      $        74,024
        Short-term investments                                          148,843                225,763              273,965
                                                                  --------------       ----------------       --------------

                                                                $       213,842      $         273,220      $       347,989
                                                                  ==============       ================       ==============
</TABLE>

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

                                                                             F-5

<PAGE>

                          CAROLINA INVESTMENT PARTNERS
                              LIMITED PARTNERSHIP
                            Raleigh, North Carolina
                         NOTES TO FINANCIAL STATEMENTS
                               December 31, 2001

(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 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. 144. Management compares the
       cost of land held to sales of similar property and obtains an
       independent appraisal 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, 2001

(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. 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, 2001, 2000 and 1999
       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.

       Cash and Short-Term Investments

       Cash and short-term investments consisted of cash in banks and money
       market funds. They are reported at current value.

                                                                             F-7

<PAGE>

                          CAROLINA INVESTMENT PARTNERS
                               LIMITED PARTNERSHIP
                             Raleigh, North Carolina
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001

(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. There were no land sales during
         the years ended December 31, 2001, 2000 and 1999; therefore, no broker
         listing fees were paid.

         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 and administrative
         services totaling $158, $1,314 and $2,815 during 2001, 2000 and 1999,
         respectively. Amounts payable to related parties at December 31, 2001
         and 2000 were $292 and $6,158, respectively.

         Accounts receivable - related party included on Exhibit A consists of
         income taxes paid on behalf of out-of-state partners. This receivable
         will be offset against the next cash distribution.

(4)      LAND HELD FOR INVESTMENT

         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. An
         additional $514,392 was spent for highway interchange construction
         costs, capitalized appraisal, survey, and closing costs.

                                                                             F-8