ALBEMARLE INVESTMENT TRUST/
485B24E, 1995-12-15
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   As filed with the Securities and Exchange Commission on December 15, 1995
                       Securities Act File No. 33-13133
                   Investment Company Act File No. 811-5098


                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM N-1A

            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933      X
                        Post-Effective Amendment No. 25                  X
                                    and/or
        REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940  X
                               Amendment No. 27                          X

                          ALBEMARLE INVESTMENT TRUST
                          105 North Washington Street
                             Post Office Drawer 69
                    Rocky Mount, North Carolina 27802-0069
                           Telephone (919) 972-9922

                              AGENT FOR SERVICE:

                        Frank P. Meadows III, Chairman
                          105 North Washington Street
                             Post Office Drawer 69
                    Rocky Mount, North Carolina 27802-0069

                                With copies to:

         M. Guy Brooks, III, Esq.                John B. Kuhns, Esq.
         Poyner & Spruill, L.L.P.              Boys, Arnold & Company
           3600 Glenwood Avenue               1272 Hendersonville Road
      Raleigh, North Carolina  27612      Asheville, North Carolina  28813

It is proposed that this filing will become effective:

  _    Immediately upon filing pursuant      X  on January 1, 1995 pursuant
       to Rule 485(b)                           to Rule 485(b)

  _    60 days after filing pursuant         _  on              , 1995 pursuant
       to Rule 485(a)(1)                        to Rule 485(a)(1)

  _    75 days after filing pursuant         _  on              , 1995 pursuant
       to Rule 485(a)(2)                        to Rule 485(a)(2)

The Registrant has previously registered an indefinite number of shares of The
North Carolina Tax Free Bond Fund under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended. The
Rule 24f-2 Notice for the year ended August 31, 1995, was filed on October 26,
1995.

               (Facing Page continued on the following page)

                       (Continuation of Facing Page)

     CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

                                        PROPOSED     PROPOSED
                                        MAXIMUM      MAXIMUM
                         AMOUNT OF      OFFERING     AGGREGATE     AMOUNT OF
TITLE OF SECURITIES      SHARES BEING   PRICE        OFFERING      REGISTRATION
BEING REGISTERED         REGISTERED     PER UNIT     PRICE         FEE

Shares of Beneficial
Interest (par value
$0.00 per share)          807,134       $10.64**      $290,000       $100***

*(1)     The calculation of the maximum aggregate offering price is made
         pursuant to Rule 24e-2 under the Investment Company Act of 1940.

 (2)     The total amount of securities redeemed or repurchased during
         Registrant's previous fiscal year ended August 31, 1995 was 1,361,728
         Shares of beneficial interest.

 (3)     An aggregate 581,849 Shares described in (2) above have been used for
         reduction pursuant to Rule 24e-2(a) or Rule 24f-2(c) under the
         Investment Company Act of 1940 in previous filings during Registrant's
         current fiscal year.

 (4)     The remaining 779,879 Shares redeemed during Registrant's previous
         fiscal year are being used for the reduction of the registration fee in
         this amendment to the Registration Statement.

 (5)     The Registrant is currently registering 807,134 Shares of beneficial
         interest, which is equal to such remaining 779,879 Shares redeemed
         during Registrant's previous fiscal year, plus 27,225 Shares.

**       Public offering price as of December 4, 1995 pursuant to Rule 457(d)
         under the Securities Act of 1933.

***      Minimum fee pursuant to Rule 24e-2(a)2 under the Investment Company Act
         of 1940.



                           ALBEMARLE INVESTMENT TRUST
                     The North Carolina Tax Free Bond Fund
                             Cross Reference Sheet
            Pursuant to Rule 481(a) Under the Securities Act of 1933


Form N-1A Item No.                           Prospectus Caption
PART A
Item 1   Cover Page                          Cover Page
Item 2   Synopsis                            Synopsis of Costs and Expenses
Item 3   Condensed Financial Information     Other Information - Calculation
                                              of Performance Data
Item 4   General Description of              Investment Objectives and
          Registrant                          Policies
                                             Risk Factors
                                             Investment Limitations
                                             Appendix A - Description of
                                              Municipal Obligations
Item 5   Management of the Fund              Management of the Fund
Item 6   Capital Stock and Other             Dividends and Distributions
          Securities                         Taxes
                                             Other Information - Description
                                              of Shares
Item 7   Purchase of Securities Being        How Shares May Be Purchased
          Offered                            How Shares Are Valued
Item 8   Redemption or Repurchase            How Shares May Be Redeemed
Item 9   Pending Legal Proceedings           Not Applicable

                                             Statement of Additional
                                             Information Caption

Item 10  Cover Page                          Cover Page
Item 11  Table of Contents                   Cover Page
Item 12  General Information and History     Investment Objectives and
                                              Policies
                                             Investment Limitations
                                             Management of the Fund
                                             Description of the Trust
Item 13  Investment Objectives and           Investment Objectives
          Policies                            and Policies
                                             Investment Limitations
                                             Appendix A - Special
                                              Considerations Regarding
                                              Investment in North
                                              Carolina Municipal Obligations
                                             Appendix B - Description of
                                              Municipal Bond Ratings
Item 14  Management of the Fund              Management of the Fund
Item 15  Control Persons and Principal       Management of the Fund - Trustees
         Holders of Securities                and Officers
                                             Management of the Fund -
                                              Principal Holders of Voting
                                              Securities
Item 16  Investment Advisory and Other       Management of the Fund -
         Services                             Investment Advisor
                                             Management of the Fund -
                                              Administrator and Transfer Agent
Item 17  Brokerage Allocation and Other      Management of the Fund -
         Practices                            Shareholder Servicing Plan
                                             Investment Objectives and
                                              Policies - Investment
                                              Transactions
Item 18  Capital Stock and Other             Description of the Trust
         Securities
Item 19  Purchase, Redemption and            Additional Purchase and
         Pricing of Securities                Redemption Information
         Being Offered                       Net Asset Value
Item 20  Tax Status                          Additional Information
                                              Concerning Taxes
Item 21  Underwriters                        Not Applicable
Item 22  Calculation of Performance Data     Additional Information on
                                              Performance
Item 23  Financial Statements                Annual Report of the Fund for
                                                  the Fiscal Year Ended
                                                  August 31, 1995

PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.


PROSPECTUS                                               Cusip Number 012688701


                             THE NORTH CAROLINA TAX
                                 FREE BOND FUND

               a NO-LOAD Series of the Albemarle Investment Trust

The investment objectives of The North Carolina Tax Free Bond Fund (the "Fund")
are to provide current income exempt from federal income taxes and from the
personal income taxes of North Carolina, to preserve capital, and to protect the
value of the portfolio against the effects of inflation.  Capital appreciation
will be of secondary importance.  While there is no assurance that the Fund will
achieve its investment objectives, it endeavors to do so by following the
investment policies described in this Prospectus.

                               INVESTMENT ADVISOR

                                 LOGO GOES HERE

The Fund is a NO-LOAD non-diversified series of the Albemarle Investment Trust,
a registered open-end management investment company.  This Prospectus provides
you with the basic information you should know before investing in the Fund. The
Prospectus should be read and kept for future reference.

A Statement of Additional Information containing additional information about
the Fund has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus in its entirety.  The Fund's
address is Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069, and
its telephone number is 1-800-525-3863.  A copy of the Statement of Additional
Information may be obtained at no charge by calling the Fund.

Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution, and Fund shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. Investment in the Fund involves risks, including the possible loss of
principal.
   
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

The date of this Prospectus and the Statement of Additional Information is
January 1, 1996.
    
                               TABLE OF CONTENTS
   
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . .  1
SYNOPSIS OF COSTS AND EXPENSES . . . . . . . . . . . . . . . . . .  2
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . .  3
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . .  3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . .  7
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 10
HOW SHARES ARE VALUED. . . . . . . . . . . . . . . . . . . . . . . 10
HOW SHARES MAY BE PURCHASED. . . . . . . . . . . . . . . . . . . . 10
HOW SHARES MAY BE REDEEMED . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . 13
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . 15
APPENDIX A - Description of Municipal Obligations. . . . . . . . . 16
    
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized.  No sales representative, dealer or
other person is authorized to give any information or make any representations
other than those contained in this Prospectus.

                               PROSPECTUS SUMMARY

The Fund    The North Carolina Tax Free Bond Fund (the "Fund") is a NO-LOAD
            non-diversified series of the Albemarle Investment Trust (the
            "Trust"), a registered open-end management investment company
            organized as a Massachusetts business trust.  See "Other
            Information - Description of Shares."
   
Offering    Shares in the Fund are offered at net asset value without a sales
Price       charge.  The minimum initial investment is $1,000.  The minimum
            subsequent investment is $250.  See "How Shares May be Purchased."
    
Investment  The investment objectives of the Fund are to provide current income
Objectives  exempt from federal income taxes and from the personal income taxes
            of North Carolina, to preserve capital, and to protect the value of
            the portfolio against the effects of inflation.  Capital
            appreciation will be of secondary importance.  See "Investment
            Objectives and Policies."
   
Manager     Subject to the general supervision of the Trust's Board of Trustees
            and in accordance with the Fund's investment policies, Boys, Arnold
            & Company, Inc. of Asheville, North Carolina (the "Advisor"),
            manages the Fund's investments.  The Advisor manages over $380
            million in 125 client accounts for individuals and organizations in
            8 states, mainly in the Southeast.  For its advisory services, the
            Advisor receives a monthly fee based on the Fund's daily net assets
            at the annual rate of 0.35%.  See "Management of the Fund -The
            Advisor."

Dividends   Income dividends, if any, are paid monthly; capital gains, if any,
            are paid at least once each year.  Dividends and capital gains
            distributions are automatically reinvested in additional shares at
            net asset value unless the shareholder elects to receive cash.  See
            "Dividends and Distributions."
    
Redemption  There is no charge for redemptions.  Shares may be redeemed at any
of Shares   time at the net asset value next determined after receipt of a
            redemption request by the Fund.  A shareholder who submits
            appropriate written authorization may redeem shares by telephone.
            See "How Shares May Be Redeemed."

Investment  The Fund will invest primarily in intermediate term municipal bonds
Policies    and notes and other debt instruments, the interest on which is
and Risks   exempt from federal income taxes and from the personal income taxes
            of North Carolina.  Some of the Fund's investments may be subject
            to an alternative minimum tax.  The Fund's assets will generally be
            of investment grade or comparable quality, with at least two-thirds
            of the Fund's assets being "A" rated or better (or comparable
            unrated securities).  Some of the securities purchased for the
            portfolio of the Fund may be purchased on a "when-issued" basis,
            which may involve certain risks. The Fund has registered as a non-
            diversified investment company so that it will be able to invest
            more than 5% of its assets in obligations of each of one or more
            issuers.  Prospective investors should also be aware that the net
            asset value of the shares of the Fund will change as the general
            levels of interest rates fluctuate.  When interest rates decline,
            the value of a portfolio invested at higher yields can be expected
            to rise.  Conversely, when interest rates rise, the value of a
            portfolio invested at lower yields can be expected to decline.  See
            "Investment Objectives and Policies," "Risk Factors," "Investment
            Limitations," and "Taxes."

                         SYNOPSIS OF COSTS AND EXPENSES
   
The following tables set forth certain information in connection with the
expenses of the Fund for the current fiscal year.  The information is intended
to assist the investor in understanding the various costs and expenses borne by
the Fund, and therefore indirectly by its investors, the payment of which will
reduce an investor's return on an annual basis.
    
                        Shareholder Transaction Expenses

Maximum sales load imposed on purchases
     (as a percentage of offering price) . . . . . . . . . . . . . . . . . .NONE
Sales load imposed on reinvested dividends . . . . . . . . . . . . . . . . .NONE
Deferred sales load. . . . . . . . . . . . . . . . . . . . . . . . . . . . .NONE
Redemption fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .NONE
Exchange fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .NONE

                        Annual Fund Operating Expenses -
                 After Fee Waivers and Expense Reimbursements1
                    (as a percentage of average net assets)
   
Investment Advisory Fees1. . . . . . . . . . . . . . . . . . . . . . . . . 0.00%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .NONE
Total Other Expenses
     Administrator's Fees1 . . . . . . . . . . . . . . . . . . . . . . . . 0.00%
     Other Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.85%
         Total Fund Operating Expenses1. . . . . . . . . . . . . . . . . . 0.85%


EXAMPLE:  You would pay the following expenses on a $1,000 investment in the
Fund, whether or not you redeem at the end of the period, assuming 5% annual
return:

    1 Year                3 Years              5 Years             10 Years

      $9                    $27                  $47                 $105

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES.  ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

1 The Total Fund Operating Expenses shown above are based upon actual operating
  expenses incurred by the Fund for the fiscal year ended August 31, 1995,
  which, after fee waivers and expense reimbursements, were 0.85% of average net
  assets. Absent such waivers and reimbursements, the percentages shown above
  under Investment Advisory Fees, Administrator's Fees, and Total Fund Operating
  Expenses would have been 0.35%, 0.15%, and 2.76%, respectively, for the fiscal
  year ended August 31, 1995.  The Advisor and the Administrator have
  voluntarily agreed to waive all or a portion of their advisory and
  administrative fees, respectively, and the Advisor has voluntarily agreed to
  reimburse other expenses of the Fund, if necessary, in an amount that limits
  Total Fund Operating Expenses (exclusive of interest, taxes, brokerage fees
  and commissions, and extraordinary expenses) to not more than 0.85% of the
  average daily net assets of the Fund.  There can be no assurance that the
  foregoing voluntary fee waivers and expense reimbursements will continue.

See "Management of the Fund" below for more information about the fees and costs
of operating the Fund.  The example assumes a 5% annual return pursuant to the
requirements of the Securities and Exchange Commission.  The hypothetical rate
of return is not intended to be representative of past or future performance of
the Fund.  The annual rate of return may be greater or lesser than 5%.

                              FINANCIAL HIGHLIGHTS

The financial data included in the table below has been derived from audited
financial statements of the Fund.  The financial data for the fiscal years ended
August 31, 1995 and 1994 has been derived from financial statements audited by
KPMG Peat Marwick LLP, independent auditors, whose reports covering such periods
are included in the Statement of Additional Information.  The financial data for
the prior fiscal period was derived from financial statements audited by another
firm of independent auditors.  This information should be read in conjunction
with the Fund's latest audited annual financial statements and notes thereto,
which are also included in the Statement of Additional Information, a copy of
which may be obtained at no charge by calling the Fund.  Further information
about the performance of the Fund is contained in the Annual Report of the Fund,
a copy of which may be obtained at no charge by calling the Fund.

          (For a Share Outstanding Throughout each Period Represented)

                                                Year        Year        Period
                                                ended       ended       ended
                                                August      August      August
                                                  31,         31,         31,
                                                 1995        1994        1993*

Net Asset Value, Beginning of Period           $10.02      $10.40      $10.00
   Income (loss) from investment operations
       Net investment income                     0.45        0.42        0.24
       Net realized and unrealized gain (loss)
        on investments                           0.34       (0.38)       0.40
           Total from investment operations      0.79        0.04        0.64
   Less distributions from
       Net investment income                    (0.45)      (0.42)      (0.24)
Net Asset Value, End of Period                 $10.36      $10.02      $10.40

Total return                                     8.16%       0.38%     10.43%(a)

Ratios/supplemental data
    Net Assets, End of Period                $4,183,149  $3,929,053  $2,423,995
    Ratio of expenses to average net assets
        Before expense reimbursements
         and waived fees                         2.76%       3.26%      3.50%(a)
        After expense reimbursements
         and waived fees                         0.85%       0.84%      0.77%(a)
    Ratio of net investment income to
     average net assets
        Before expense reimbursements
         and waived fees                         2.65%       1.67%      1.25%(a)
        After expense reimbursements
         and waived fees                         4.56%       4.09%      3.98%(a)

    Portfolio turnover rate                     83.12%      22.82%      0.00%

*   For the period from January 13, 1993 (commencement of operations) to August
    31, 1993.

(a) Annualized.
    
                       INVESTMENT OBJECTIVES AND POLICIES

Investment Objectives.  The investment objectives of the Fund are to provide
current income exempt from federal income taxes and from the personal income
taxes of North Carolina, to preserve capital, and to protect the value of the
portfolio against the effects of inflation.  Capital appreciation will be of
secondary importance.  Any investment involves risk, and there can be no
assurance that the Fund will achieve any of its investment objectives.  The
Fund's investment objectives and fundamental investment limitations discussed
herein may not be altered without the prior approval of a majority of the Fund's
shareholders.

Investment Policies.  As a fundamental policy, the Advisor seeks to achieve the
investment objectives of the Fund by investing the assets of the Fund primarily
(i.e., at least 80% of its assets under normal conditions) in municipal bonds
and notes and other debt instruments, the interest on which is exempt from
federal income taxes and from the personal income taxes of North Carolina. These
obligations are issued primarily by North Carolina, its political subdivisions,
municipalities, agencies, instrumentalities, or public authorities and other
qualifying issuers (including Puerto Rico, the U.S. Virgin Islands, and Guam).
Under normal circumstances, the Fund's average maturity is expected to be of an
intermediate term average maturity.

Although the Advisor seeks to invest all the assets of the Fund in the
obligations described in the preceding paragraph, market conditions may from
time to time limit the availability of such obligations.  During periods when
the Advisor is unable to purchase obligations described in the preceding
paragraph for the portfolio of the Fund, the Advisor will seek to invest the
assets of the Fund in Municipal Obligations (as defined below), the interest on
which would be exempt from federal income taxes, but which would be subject to
the personal income taxes of North Carolina.  Also, as a temporary defensive
measure during times of adverse market conditions, up to 50% of the assets of
the Fund may be held in cash or invested in the short-term obligations described
in paragraphs 4 and 5 below.  All of the investments of the Fund will be made
in:
   
(1)     Tax-exempt securities that are rated AAA, AA, or A by Standard & Poor's
        Ratings Group ("S&P") or are rated Aaa, Aa, or A by Moody's Investors
        Service, Inc. ("Moody's") (or of equivalent rating by any of the
        nationally recognized statistical rating organizations) or which are
        unrated but are considered by the Advisor to have essentially the same
        characteristics and quality as securities having such ratings;
    
(2)     Tax-exempt securities that are rated BBB by S&P or are rated Baa by
        Moody's (or of equivalent rating by any of the nationally recognized
        statistical rating organizations) or which are unrated but are
        considered by the Advisor to have essentially the same characteristics
        and quality as securities having such ratings.  However, not more than
        one-third of the Fund's total assets will be invested in such
        securities;

(3)     Notes of issuers having an issue of outstanding Municipal Obligations
        rated AAA, AA or A by S&P or Aaa, Aa or A by Moody's (or of equivalent
        rating by any of the nationally recognized statistical rating
        organizations) or which are guaranteed by the U.S. Government or which
        are rated MIG-1 or MIG-2 by Moody's (or of equivalent rating by any of
        the nationally recognized statistical rating organizations);

(4)     Obligations issued or guaranteed by the U.S. Government or its agencies
        or instrumentalities (collectively, "U.S. Government Securities")
        (including U.S. Government Securities subject to repurchase agreements);
        and

(5)     Commercial paper that is rated A-1 or A-2 by S&P or  P-1 or P-2 by
        Moody's (or of equivalent rating by any of the nationally recognized
        statistical rating organizations) (or which is unrated but which is
        considered by the Advisor to have essentially the same characteristics
        and qualities as commercial paper having such ratings), obligations
        (including certificates of deposit and bankers' acceptances) of domestic
        branches of U.S. banks with at least $1 billion of assets, and cash.

Interest income from the short-term obligations described in paragraphs 4 and 5
above may be taxable to shareholders as ordinary income for federal and state
income tax purposes.  The Fund may purchase Municipal Obligations the interest
on which may be subject to an alternative minimum tax (for purposes of this
Prospectus, the interest thereon is nonetheless considered to be tax-exempt).
For a general discussion of Municipal Obligations, and the risks associated with
an investment therein, see Appendix A hereto.  For a description of the ratings
of S&P and Moody's of Municipal Obligations and short-term obligations permitted
as investments, see Appendix B to the Statement of Additional Information.  As
used in this Prospectus, the terms "Municipal Obligations" and "tax-exempt
securities" are used interchangeably to refer to debt instruments issued by or
on behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies or
instrumentalities, the interest on which is exempt from federal income taxes
(without regard to whether the interest thereon is also exempt from the personal
income taxes of any State). The term "North Carolina Municipal Obligations" is
used to refer to Municipal Obligations, the interest on which is exempt from
both federal income taxes and the personal income taxes of North Carolina.  In
determining to invest in a particular Municipal Obligation, the Advisor will
rely on the opinion of bond counsel for the issuer as to the validity of the
security and the exemption of interest on such security from federal and
relevant state income taxes, and the Advisor will not make an independent
investigation of the basis for any such opinion.

The Fund's assets will generally be invested in securities of "investment grade"
or comparable quality, with at least two-thirds of the assets being invested in
securities rated in the three highest grades used by the nationally recognized
statistical rating agencies (or comparable unrated securities).  The remaining
one-third of the Fund's assets may be invested in securities rated in the fourth
highest grade used by the nationally statistical securities rating agencies
(generally, BBB by S&P or Baa by Moody's) or comparable unrated securities.
Although considered to be of "investment grade" quality, securities rated BBB by
S&P or Baa by Moody's (or comparable unrated securities), while normally
exhibiting adequate protection parameters, have speculative characteristics, and
changes in economic conditions and other circumstances are more likely to lead
to a weakened capacity to make principal and interest payments than in the case
of higher grade Municipal Obligations.  Securities rated lower than BBB by S&P
or Baa by Moody's (or comparable unrated securities) are considered speculative
and will not be purchased by the Fund.

While the Advisor may refer to ratings issued by established credit rating
agencies, it is not a policy of the Fund to rely exclusively on ratings issued
by these agencies, but rather to supplement such ratings with the Advisor's own
independent and ongoing review of credit quality.  With respect to those
Municipal Obligations which are not rated by a major rating agency, the Fund
will be more reliant on the Advisor's judgment, analysis and experience than
would be the case if such Municipal Obligations were rated.  In evaluating the
creditworthiness of an issue, whether rated or unrated, the Advisor may take
into consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, the operating history of and the
community support for the facility financed by the issue, the ability of the
issuer's management and regulatory matters.

Although higher quality tax-exempt securities may produce lower yields, they are
generally more marketable.  To protect the capital of shareholders of the Fund
under adverse market conditions, the Fund may from time to time deem it prudent
to hold cash or to purchase higher quality securities or taxable short-term
obligations for the Fund with a resultant decrease in yield or increase in the
proportion of taxable income.

The net asset value of the shares of the Fund changes as the general levels of
interest rates fluctuate.  When interest rates decline, the value of a portfolio
invested at higher yields can be expected to rise.  Conversely, when interest
rates rise, the value of a portfolio invested at lower yields can be expected to
decline.

The Fund has registered as a non-diversified management investment company so
that more than 5% of the assets of the Fund may be invested in the obligations
of each of one or more issuers.  Because a relatively high percentage of the
assets of the Fund may be invested in the obligations of a limited number of
issuers, the value of shares of the Fund may be more sensitive to any single
economic, political or regulatory occurrence than the shares of a diversified
investment company would be.

Certain Municipal Obligations may be entitled to the benefits of letters of
credit or similar credit enhancements issued by financial institutions.  In such
instances, the Advisor will take into account in assessing the quality of such
bonds not only the creditworthiness of such bonds but also the creditworthiness
of the financial institution.

The Advisor may invest the assets of the Fund in a relatively high percentage of
municipal bonds issued by entities having similar characteristics.  The issuers
may pay their interest obligations from revenue of similar projects such as
multi- family housing, nursing homes, electric utility systems, hospitals or
life care facilities.  Additional information about these types of investments
and their special risks is contained in the Statement of Additional Information.
This too may make the Fund more sensitive to economic, political, or regulatory
occurrences, particularly because such issuers would likely be located in the
same State.  As the similarity in issuers increases, the potential for
fluctuation of the net asset value of the Fund's shares also increases.  The
Advisor will only invest the assets of the Fund in securities of issuers which
it believes will make timely payments of interest and principal.

The Advisor may invest from time to time a portion of the Fund's assets in
industrial revenue bonds (referred to under current tax law as private activity
bonds), and also may invest a portion of the Fund's assets in revenue bonds
issued for housing, including multi-family housing, health care facilities or
electric utilities, at times when the relative value of issues of such a type is
considered, in the judgment of the Advisor, to be more favorable than that of
other available types of issues, taking into consideration the particular
restrictions on investment flexibility arising from the investment objective of
the Fund of providing current income exempt from personal income taxes of North
Carolina (as well as federal income taxes).  Therefore, investors should also be
aware of the risks that these investments may entail.  Industrial revenue bonds
are issued by various state and local agencies to finance various projects.
Additional information about these types of investments and their special risks
is contained in the Statement of Additional Information.

Municipal Obligations in which the Fund may invest also include zero coupon
bonds and deferred interest bonds.  Zero coupon bonds and deferred interest
bonds are debt obligations that are issued at a significant discount from face
value.  While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds provide for a period of delay before the regular payment
of interest begins.  The discount approximates the total amount of interest the
bonds will accrue and compound over the period until maturity or the first
interest payment date at a rate of interest reflecting the market rate of the
security at the time of issuance.  Zero coupon bonds and deferred interest bonds
benefit the issuer by mitigating its need for cash to meet debt service, but
they also require a higher rate of return to attract investors who are willing
to defer receipt of such cash.  Such investments may experience greater
volatility in market value than debt obligations that make regular payments of
interest.  The Fund will accrue income on such investments for tax and
accounting purposes, which is distributable to shareholders.

The Fund may invest in municipal lease obligations, installment purchase
contract obligations, and certificates of participation in such obligations
(collectively, "lease obligations").  A lease obligation does not constitute a
general obligation of the municipality for which the municipality's taxing power
is pledged, although the lease obligation is ordinarily backed by the
municipality's covenant to budget for the payments due under the lease
obligation.  Certain lease obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease obligation
payments in future years unless money is appropriated for such purpose on a
yearly basis.  Although "non-appropriation" lease obligations are secured by the
leased property, disposition of the property in the event of foreclosure might
prove difficult.  The Advisor will seek to minimize these risks by not investing
more than 10% of the total assets of the Fund in lease obligations that contain
"non-appropriation" clauses.  In evaluating a potential investment in such a
lease obligation, the Advisor will consider:  (1) the credit quality of the
obligor, (2) whether the underlying property is essential to a government
function, and (3) whether the lease obligation contains covenants prohibiting
the obligor from substituting similar property if the obligor fails to make
appropriations for the lease obligation.  Municipal lease obligations may be
determined to be liquid in accordance with the guidelines established  by the
Board of Trustees and other factors the Advisor may determine to be relevant to
such determination.

Money Market Instruments.  Under normal circumstances, money market or
repurchase agreement instruments will typically represent a portion of the
Fund's portfolio, as funds awaiting investment, to accumulate cash for
anticipated purchases of portfolio securities and to provide for shareholder
redemptions and operational expenses of the Fund.  Money market instruments
mature in thirteen months or less from the date of purchase and may include U.S.
Government Securities (including those subject to repurchase agreements),
bankers acceptances and certificates of deposit of domestic branches of U.S.
banks, and commercial paper (including variable amount demand master notes)
rated in one of the two highest rating categories by any of the nationally
recognized statistical rating organizations or, if not rated, of equivalent
quality in the Advisor's opinion.  See the Statement of Additional Information
for a more detailed description of money market instruments.
   
U.S. Government Securities.  The Fund may invest a portion of the portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Administration ("FHA"), Federal Farm Credit Bank ("FFCB"), Federal Home Loan
Bank ("FHLB"), Student Loan Marketing Association ("SLMA"), Resolution Trust
Corporation, and The Tennessee Valley Authority.  U.S. Government Securities may
be acquired subject to a repurchase agreement.  While obligations of some U.S.
Government sponsored entities are supported by the full faith and credit of the
U.S. Government (e.g. GNMA), several are supported by the right of the issuer to
borrow from the U.S. Government (e.g. FNMA, FHLMC), and still others are
supported only by the credit of the issuer itself (e.g. SLMA, FFCB).  The
guarantee of the U.S. Government does not extend to the yield or value of the
Fund's shares.  No assurance can be given that the U.S. Government will provide
financial support to U.S. Government agencies or instrumentalities in the
future, since it is not obligated to do so by law.

Repurchase Agreements.  The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements.  A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date.  The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase.  The Fund will not enter into a repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
which extend beyond seven days. In the event of the bankruptcy of the other
party to a repurchase agreement, the Fund could experience delays in recovering
its cash or the securities lent.  To the extent that in the interim the value of
the securities purchased may have declined, the Fund could experience a loss. In
all cases, the creditworthiness of the other party to a transaction is reviewed
and found satisfactory by the Advisor.  Repurchase agreements are, in effect,
loans of Fund assets.  The Fund will not engage in reverse repurchase
transactions, which are considered to be borrowings under the Investment Company
Act of 1940 (the "1940 Act").

Investment Companies.  In order to achieve its investment objectives, the Fund
may invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objectives.  The Fund will not acquire securities of any one
investment company if, immediately thereafter, the Fund would own more than 3%
of such company's total outstanding voting securities, securities issued by such
company would have an aggregate value in excess of 5% of the Fund's total
assets, or securities issued by such company and securities held by the Fund
issued by other investment companies would have an aggregate value in excess of
10% of the Fund's total assets.  To the extent the Fund invests in other
investment companies, the shareholders of the Fund would indirectly pay a
portion of the operating costs of the underlying investment companies.  These
costs include management, advisory, brokerage, shareholder servicing and other
operational expenses.  Shareholders of the Fund would then indirectly pay higher
operational costs than if they owned shares of the underlying investment
companies directly.
    
                                  RISK FACTORS

Investment Policies.  Reference should be made to "Investment Objectives and
Policies" above for a description of special risks presented by the investment
policies of the Fund and the specific securities and investment techniques that
may be employed by the Fund.  Additional information on these securities and
investment techniques and their associated risks is contained in Appendix A
hereto and in the Statement of Additional Information.  Reference should also be
made to "Investment Objectives and Policies" above and "Investment Limitations"
below for a description of the implications and special risks associated with
the non- diversified status of the Fund.  Because there is risk in any
investment, there can be no assurance that the Fund will meet its investment
objectives.

Fluctuation in Value.  The Fund will be subject to market fluctuation based on
fluctuation in market interest rates.  The value of the Fund's portfolio will
generally vary inversely with the direction of prevailing interest rate
movements. Should interest rates rise, the value of the Fund's portfolio would
decrease in value, which would have a depressing influence on the Fund's net
asset value. Fluctuation in value of the Fund may also be based on changes in
the creditworthiness of issuers, which may result from adverse business and
economic developments or other factors.

Additional Factors to Consider.  Yields on North Carolina Municipal Obligations
depend on a variety of factors, including:  the general conditions of the
municipal bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue.  Further, any adverse economic
conditions or developments affecting North Carolina or its municipalities could
impact the Fund's portfolio.  The ability of the Fund to achieve its investment
objectives also depends on the continuing ability of the issuers of North
Carolina Municipal Obligations and participation interests, or the guarantors of
either, to meet their obligations for the payment of interest and principal when
due. Certain  North Carolina constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives could result
in adverse consequences affecting North Carolina Municipal Obligations.  See
Appendix A of the Statement of Additional Information entitled "Special
Considerations Regarding Investment in North Carolina Municipal Obligations."

Borrowing.  The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 15% of total assets to
meet redemption requests that might otherwise require untimely disposition of
portfolio holdings.  To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated.  If while such borrowing is in effect the value of the Fund's
assets declines, the Fund could be forced to liquidate portfolio securities when
it is disadvantageous to do so.  The Fund would incur interest and other
transaction costs in connection with borrowing.
   
Portfolio Turnover.  The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of investment
opportunities.  Nevertheless, by utilizing the approach to investing described
herein, portfolio turnover in the Fund will generally not exceed 100% annually.
The degree of portfolio activity affects transaction costs of the Fund.  The
degree of portfolio activity may also have an effect on the tax consequences of
any capital gain distributions.  See "Financial Highlights" for the Fund's
portfolio turnover rate for prior fiscal periods.
    
Illiquid Investments.  The Fund may invest up to 10% of its net assets in
illiquid securities.  Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued.  Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments.  The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments.  Disposing of illiquid securities
before maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price.  The Fund will not invest in restricted securities, which generally
cannot be sold to the public without registration under the federal securities
laws.

Forward Commitments and When-Issued Securities.  The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time.  The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets.  Although the Fund
would generally purchase securities on a when-issued or forward commitment basis
with the intention of acquiring securities for its portfolio, the Fund may
dispose of a when-issued security or forward commitment prior to settlement if
the Advisor deems it appropriate to do so.  The Fund may realize short-term
gains or losses upon such sales.

                             INVESTMENT LIMITATIONS

To limit the Fund's exposure to risk, the Fund has adopted certain fundamental
investment limitations which, together with its investment objectives, are
fundamental policies which may not be changed without shareholder approval.
Some of these restrictions are that the Fund will not:  (1) issue senior
securities, borrow money or pledge its assets, except that it may borrow from
banks as a temporary measure (a) for extraordinary or emergency purposes, in
amounts not exceeding 5% of the Fund's total assets or, (b) in order to meet
redemption requests which might otherwise require untimely disposition of
portfolio securities in amounts not exceeding 15% of its total assets.  The Fund
will not make any investments if borrowing exceeds 5% of its total assets; (2)
make loans of money or securities, except that the Fund may invest in repurchase
agreements (but repurchase agreements having a maturity of longer than seven
days, together with other illiquid securities, are limited to 10% of the Fund's
net assets); (3) invest in securities of issuers which have a record of less
than three years continuous operation (including predecessors and, in the case
of bonds, guarantors), if more than 5% of its total assets would be invested in
such securities; (4) write, purchase or sell commodities, commodities contracts,
futures contracts or related options; (5) invest in oil, gas or mineral leases
or exploration or development programs, or real estate or real estate mortgage
loans (except the Fund may invest in readily marketable securities of companies
that own or deal in such things); (6) invest in restricted securities; and (7)
invest more than 10% of its total assets in the securities of one or more
investment companies.  See "Investment Limitations" in the Fund's Statement of
Additional Information for a complete list of investment limitations.

If the Board of Trustees of the Trust determines that the Fund's investment
objectives can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus.  Any limitation that is not specified in the Fund's Prospectus, or
in the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will not constitute a
violation of such limitation.  In order to permit the sale of the Fund's shares
in certain states, the Fund may make commitments that are more restrictive than
the investment policies and limitations described above and in the Statement of
Additional Information.  Such commitments may have an effect on the investment
performance of the Fund.  Should the Fund determine that any such commitment is
no longer in the best interests of the Fund, it may revoke the commitment and
terminate sales of its shares in the state involved.

The Fund is classified as non-diversified within the meaning of the 1940 Act,
which means that the Fund is not limited by the 1940 Act in the proportion of
its assets that it may invest in obligations of a single issuer.  However, the
Fund's investments will be limited so as to qualify as a "regulated investment
company" for purposes of the Internal Revenue Code of 1986, as amended (the
"Code").  See "Taxes".  To qualify, among other requirements, the Trust will
limit the Fund's investments so that, at the close of each quarter of the
taxable year, (i) not more than 25% of the market value of the Fund's total
assets will be invested in the securities of a single issuer, and (ii) with
respect to 50% of the market value of its total assets, not more than 5% of the
market value of its total assets will be invested in the securities of a single
issuer, and the Fund will not own more than 10% of the outstanding voting
securities of a single issuer. For purposes of this restriction, the Fund will
regard each state and each political subdivision, agency or instrumentality of
such state and each multi- state agency of which such state is a member and each
public authority that issues securities on behalf of a private entity, as a
separate issuer, except that if the security is backed only by the assets and
revenues of a non-government entity, then the entity with the ultimate
responsibility for the payment of interest and principal may be regarded as the
sole issuer.  These tax-related limitations may be changed by the Trustees of
the Trust to the extent necessary to comply with changes to the Federal tax
requirements.  A fund that elects to be classified as "diversified" under the
1940 Act must satisfy the foregoing 5% and 10% requirements with respect to 75%
of its total assets.  To the extent that the Fund assumes large positions in the
obligations of a small number of issuers, the Fund's total return may fluctuate
to a greater extent than that of a diversified company as a result of changes in
the financial condition or in the market's assessment of the issuers.

                                     TAXES

Taxation of the Fund.  The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust, including the Fund, as a separate
regulated investment company.  Each series of the Trust, including the Fund,
intends to qualify or remain qualified as a regulated investment company under
the Code by distributing substantially all of its "net investment income" to
shareholders and meeting other requirements of the Code.  For the purpose of
calculating dividends, net investment income consists of income accrued on
portfolio assets, less accrued expenses.  Upon qualification, the Fund will not
be liable for Federal income taxes to the extent earnings are distributed.  The
Board of Trustees retains the right for any series of the Trust, including the
Fund, to determine for any particular year if it is advantageous not to qualify
as a regulated investment company.  Regulated investment companies, such as each
series of the Trust, are subject to a non-deductible 4% excise tax to the extent
they do not distribute the statutorily required amount of investment income,
determined on a calendar year basis, and capital gain net income, using an
October 31 year end measuring period. The Fund intends to declare or distribute
dividends during the calendar year in an amount sufficient to prevent imposition
of the 4% excise tax.

Taxation of Shareholders.  To the extent that the dividends distributed to the
Fund's shareholders are derived from interest income exempt from Federal tax
under Code Section 103(a) and are properly designated as "exempt-interest
dividends" by the Trust, they will be excludable from a shareholder's gross
income for Federal income tax purposes.  Exempt-interest dividends are included,
however, in determining the portion, if any, of a person's social security and
railroad retirement benefits subject to Federal income taxes.  The portion of
exempt- interest dividends paid from interest received by the Fund from North
Carolina Municipal Obligations or from direct obligations of the U.S. Government
is excluded from the North Carolina taxable net income of individuals,
corporations, estates and trusts.  Shareholders subject to income taxation by
states other than North Carolina will realize a lower after-tax rate of return
than North Carolina shareholders since the dividends distributed by the Fund
generally will not be exempt, to any significant degree, from income taxation by
such other states.  The Trust will inform shareholders annually of the portion
of the Fund's distributions that constitutes exempt-interest dividends and the
portion that is exempt from North Carolina income taxes.  Interest on
indebtedness incurred or continued to purchase or carry Fund shares is not
deductible for Federal or North Carolina income tax purposes.  Persons who may
be "substantial users" (or "related persons" of substantial users) of facilities
financed by industrial development bonds or private activity bonds held by the
Fund should consult their tax advisers before purchasing Fund shares.
   
An investment in the Fund by a corporate shareholder would be included in the
capital stock, surplus and undivided profits base in computing the North
Carolina franchise tax.

To the extent that the Fund's distributions are derived from interest on its
taxable investments (including, for North Carolina income tax purposes, interest
on Municipal Obligations of other states) or from an excess of net short-term
capital gains over net long-term capital losses ("ordinary income dividends"),
such distributions are considered ordinary income for Federal and North Carolina
income tax purposes, except, in the case of North Carolina income tax, for
dividends that are directly attributable to interest on obligations of the U.S.
Government or to gains from certain obligations of the State of North Carolina
and its political subdivisions that were issued before July 1, 1995.  The Fund's
distributions are not eligible for the dividends-received deduction for
corporations.  Distributions, if any, of net long-term capital gains from the
sale of securities ("capital gain dividends") are taxable as long-term capital
gains for Federal income tax purposes, regardless of the length of time the
shareholder has owned Fund shares.  Such capital gain dividends are also subject
to North Carolina income taxes, except to the extent attributable to gains from
certain obligations of the State of North Carolina and its political
subdivisions that were issued before July 1, 1995.  All or a portion of the
Fund's gain from the sale or redemption of tax-exempt obligations purchased at a
market discount will be treated as ordinary income rather than capital gain.
This rule may increase the amount of ordinary income dividends received by
shareholders.  Distributions in excess of the Fund's earnings and profits will
first reduce the adjusted tax basis of a holder's shares and, after such
adjusted tax basis is reduced to zero, will constitute capital gains (assuming
such shares are held as a capital asset). Any loss upon the sale or exchange of
Fund shares held for six months or less will be treated as long-term capital
loss to the extent of any capital gain dividends received by the shareholder. In
addition, such loss will be disallowed for both Federal and North Carolina
income tax purposes to the extent of any exempt- interest dividends received by
the shareholder, even, in the case of North Carolina, where all or a portion of
such dividends is not excluded from North Carolina taxable income.  If the Fund
pays a dividend in January that was declared in the previous October, November
or December to shareholders of record on a specified date in one of such months,
then such dividend will be treated for tax purposes as being paid by the Fund
and received by its shareholders on December 31 of the year in which such
dividend was declared.
    
The Code subjects interest received on certain otherwise tax-exempt securities
to an alternative minimum tax.  This alternative minimum tax applies to interest
received on certain "private activity bonds" issued after August 7, 1986.
Private activity bonds are bonds which, although tax-exempt, are used for
purposes other than those generally performed by governmental units and which
benefit non- governmental entities (e.g., bonds used for industrial development
or housing purposes).  Income received on such bonds is classified as an item of
"tax preference," which could subject investors in such bonds, including
shareholders of the Fund, to an alternative minimum tax.  The Fund may purchase
such "private activity bonds," and the Trust will report to shareholders within
60 days after the Fund's taxable year-end the portion of the Fund's dividends
declared during the year that constitutes an item of tax preference for
alternative minimum tax purposes.  The Code further provides that corporations
are subject to an alternative minimum tax based, in part, on certain differences
between taxable income as adjusted for other tax preferences and the
corporation's "adjusted current earnings" (which more closely reflect a
corporation's economic income). Because an exempt-interest dividend paid by the
Fund will be included in adjusted current earnings, a corporate shareholder may
be required to pay alternative minimum tax on exempt-interest dividends paid by
the Fund.

A loss realized on a sale or exchange of shares of the Fund will be disallowed
if other Fund shares are acquired (whether through the automatic reinvestment of
dividends or otherwise) within a 61-day period beginning 30 days before and
ending 30 days after the date that the shares are disposed.  In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.

Under certain provisions of the Code, some shareholders may be subject to a 31%
withholding tax on certain ordinary income dividends and on capital gain
dividends and redemption payments ("backup withholding").  Generally,
shareholders subject to backup withholding will be those for whom no certified
taxpayer identification number is on file with the Fund or who, to the Fund's
knowledge, have furnished an incorrect number.  When establishing an account, an
investor must certify under penalty of perjury that such number is correct and
that such investor is not otherwise subject to backup withholding.

The Code provides that every person required to file a tax return must include
for information purposes on such return the amount of exempt-interest dividends
received from all sources (including the Fund) during the taxable year.

The foregoing is a general and abbreviated summary of the applicable provisions
of the Code, Treasury regulations and North Carolina tax laws presently in
effect. For the complete provisions, reference should be made to the pertinent
Code sections, the Treasury regulations promulgated thereunder and the
applicable North Carolina income tax laws.  The Code and the Treasury
regulations, as well as the North Carolina income tax laws, are subject to
change by legislative, judicial or administrative action either prospectively or
retroactively.

Shareholders are urged to consult their tax advisers regarding the availability
of any exemptions from state or local taxes (other than those imposed by North
Carolina) and with specific questions as to Federal, foreign, state or local
taxes.

                          DIVIDENDS AND DISTRIBUTIONS
   
The Fund distributes substantially all of its net investment income, if any, in
the form of dividends.  The Fund will pay income dividends, if any, monthly, and
will distribute net realized capital gains, if any, at least annually.

Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the Fund at
the net asset value per share next determined.  Shareholders wishing to receive
their dividends or capital gains in cash may make their request in writing to
the Fund at 105 North Washington Street, Post Office Drawer 69, Rocky Mount,
North Carolina 27802-0069.  If cash payment is requested, checks will be mailed
within five business days after the last day of each month or the Fund's fiscal
year end, as applicable.  Each shareholder of the Fund will receive a quarterly
summary of his or her account, including information as to reinvested dividends
from the Fund.  Tax consequences to shareholders of dividends and distributions
are the same if received in cash or in additional shares of the Fund.

In order to satisfy certain requirements of the Code, the Fund may declare
special year-end dividend and capital gains distribution during December.  Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.

There is no fixed dividend rate, and there can be no assurance regarding the
payment of any dividends or the realization of any gains.
    
                             HOW SHARES ARE VALUED

Net asset value is determined at 4:00 p.m., New York Time, Monday through
Friday, except on business holidays when the New York Stock Exchange is closed.
The net asset value of the shares of the Fund for purposes of pricing sales and
redemptions is equal to the total market value of its investments, less all of
its liabilities, divided by the number of its outstanding shares.

Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made.  Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund.  Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the latest quoted sales price, if available, at the time of valuation,
otherwise, at the latest quoted bid price.  Municipal fixed income securities
will ordinarily be traded on the over-the-counter market and will not be listed.
Temporary cash investments with maturities of 60 days or less will be valued at
amortized cost, which approximates market value.  Securities for which no
current quotations are readily available are valued at fair value as determined
in good faith using methods approved by the Board of Trustees of the Trust.
Securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities.

                          HOW SHARES MAY BE PURCHASED

Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-525-FUND, or by writing to the address shown below for
purchases by mail.  Assistance is also available through any broker-dealer
authorized to sell shares in the Fund.  Payment for shares purchased may also be
made through your account at the broker-dealer processing your application and
order to purchase.  Your investment will purchase shares at the Fund's net asset
value next determined after your order is received by the Fund in proper form as
indicated herein.
   
The minimum initial investment is $1,000.  The minimum subsequent investment is
$250.  The Fund may, in the Advisor's sole discretion, accept certain accounts
with less than the stated minimum initial investment.  You may invest in the
following ways:
    
Purchases by Mail.  Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the Fund, to The North Carolina Tax Free Bond Fund, 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069.
   
Subsequent investments in an existing account in the Fund may be made at any
time in minimum amounts of $250 by sending a check payable to the Fund, to The
North Carolina Tax Free Bond Fund, 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069.  Please enclose the stub of
your account statement and include the amount of the investment, the name of the
account for which the investment is to be made and the account number.
    
Purchases by Wire.  To purchase shares by wiring federal funds, the Fund must
first be notified by calling 1-800-525-FUND to request an account number and
furnish the Fund with your tax identification number.  Following notification to
the Fund, federal funds and registration instructions should be wired through
the Federal Reserve System to:

         Wachovia Bank of North Carolina, N.A.
         Winston-Salem, North Carolina
         ABA # 053100494
         For credit to the Rocky Mount Office
         For The North Carolina Tax Free Bond Fund
         Acct #6769-020777
         For further credit to (shareholder's name and SS# or EIN#)

It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit.  A completed
application with signature(s) of registrant(s) must be mailed to the Fund
immediately after the initial wire as described under "Purchases by Mail" above.
Investors should be aware that some banks may impose a wire service fee.

General.  All purchases of shares are subject to acceptance and are not binding
until accepted.  The Fund reserves the right to reject any application or
investment.  Orders become effective, and shares are purchased at, the next
determined public offering price per share after an investment has been received
by the Fund, which is as of 4:00 p.m., New York time, Monday through Friday,
exclusive of business holidays.  Orders received by the Fund and effective prior
to 4:00 p.m. New York time will purchase shares at the public offering price
determined as of that time.  Otherwise, your order will purchase shares as of
4:00 p.m. New York time on the next business day.  For orders placed through a
qualified broker-dealer, such firm is responsible for promptly transmitting
purchase orders to the Fund.  The public offering price of shares of the Fund
equals net asset value without a sales charge.

If checks are returned unpaid due to nonsufficient funds, stop payment or other
reasons, the Trust will charge $20.  To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any Fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.

Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars.  Under certain circumstances the Fund, at its sole discretion, may
allow payment in kind for Fund shares purchased by accepting securities in lieu
of cash.  Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund.  See the
Statement of Additional Information for additional information on purchases in
kind.

The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions and, in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number.  Instructions
to exchange or transfer shares held in established accounts will be refused
until the certification has been provided.  In order to avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Administrator, that your taxpayer identification number is
correct and that you are not currently subject to backup withholding or you are
exempt from backup withholding.  For individuals, your taxpayer identification
number is your social security number.
   
Employees and Affiliates of the Fund.  The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Fund or certain
parties related thereto.  The minimum initial investment for such accounts is
$100.  See the Statement of Additional Information for further details.
    
Automatic Investment Plan.  The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their checking account.  With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($100 minimum), which will be automatically invested in
shares at the net asset value on or about the 21st day of the month.  The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.

Stock Certificates.  Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.

                           HOW SHARES MAY BE REDEEMED
   
Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone.  Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities.  All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, Monday through Friday, except for business holidays, will redeem
shares at the net asset value determined as of that time.  Otherwise, your order
will redeem shares as of 4:00 p.m. New York time on the next business day. There
is no charge for redemptions from the Fund.  You may also redeem your shares
through a broker- dealer or other institution, who may charge you a fee for its
services.

The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $1,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 30 days written notice.  If the
shareholder brings his account net asset value up to $1,000 or more during the
notice period, the account will not be redeemed.
    
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-525-FUND, or write to the address shown below.

Regular Mail Redemptions.  Your request should be addressed to The North
Carolina Tax Free Bond Fund, 105 North Washington Street, Post Office Drawer 69,
Rocky Mount, North Carolina 27802-0069.  Your request for redemption must
include:

1)    Your letter of instruction specifying the account number, and the number
      of shares or dollar amount to be redeemed.  This request must be signed by
      all registered shareholders in the exact names in which they are
      registered;

2)    Any required signature guarantees (see "Signature Guarantees" below); and

3)    Other supporting legal documents, if required in the case of estates,
      trusts, guardianships, custodianships, corporations, partnerships, pension
      or profit sharing plans, and other organizations.

Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request.  However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored.  Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer.  In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for the Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.

Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions.  The Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908).  The confirmation instructions must include:

1)    Shareholder name and account number;

2)    Number of shares or dollar amount to be redeemed;

3)    Instructions for transmittal of redemption funds to the shareholder; and

4)    Shareholder signature as it appears on the application then on file with
      the Fund.
   
The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received.  Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above.  You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum).  Shares of the Fund may not be redeemed by wire on
days in which your bank is not open for business.  You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Fund.  See "Signature Guarantees" below.  The
Fund reserves the right to restrict or cancel telephone and bank wire redemption
privileges for shareholders, without notice, if the Fund believes it to be in
the best interest of the shareholders to do so.

There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon thirty days' written notice,
to make reasonable charges for wire redemptions.  All charges will be deducted
from your account by redemption of shares in your account.  Your bank or
brokerage firm may also impose a charge for processing the wire.  If wire
transfer of funds is impossible or impractical, the redemption proceeds will be
sent by mail to the designated account.

You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-FUND.  Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Fund to be genuine.  The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and, if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions.  The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.
    
Systematic Withdrawal Plan.  A shareholder who owns shares of the Fund valued at
$10,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100.  Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form.  See the Statement of Additional
Information for further details.

Signature Guarantees.  To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your account.
Signature guarantees are required for (1) change of registration requests, (2)
requests to establish or change exchange privileges or telephone redemption
service other than through your initial account application, and (3) requests
for redemptions in excess of $50,000.  Signature guarantees are acceptable from
a member bank of the Federal Reserve System, a savings and loan institution,
credit union (if authorized under state law), registered broker-dealer,
securities exchange or association clearing agency, and must appear on the
written request for redemption, establishment or change in exchange privileges,
or change of registration.

                             MANAGEMENT OF THE FUND

Trustees and Officers.  The Fund is a series of the Albemarle Investment Trust
(the "Trust"), an investment company organized as a Massachusetts business trust
in 1992.  The Board of Trustees of the Trust is responsible for the management
of the business and affairs of the Trust.  The Trustees and executive officers
of the Trust and their principal occupations for the last five years are set
forth in the Statement of Additional Information under "Management of the Fund -
Trustees and Officers."  The Board of Trustees of the Trust is primarily
responsible for overseeing the conduct of the Trust's business.  The Board of
Trustees elects the officers of the Trust who are responsible for its and the
Fund's day-to-day operations.

The Advisor.  Subject to the authority of the Board of Trustees, Boys, Arnold &
Company, Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities, pursuant to an Investment
Advisory Agreement (the "Advisory Agreement") with the Trust.  An investment
committee has been primarily responsible for the day-to-day management of the
Fund's portfolio since the Advisor entered into the Advisory Agreement,
effective April 1, 1994.

The Advisor is registered under the Investment Advisors Act of 1940.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission.  The
Advisor was founded in 1977 as the G. Waring Boys Company.  In 1983, Thomas C.
Arnold joined the firm, and in 1989, the name was changed to Boys, Arnold &
Company.  It is currently controlled by Thomas C. Arnold.  In addition to acting
as Advisor to the Fund, the Advisor focuses on management of balanced, equity
and fixed income portfolios for a limited number of retirement plan sponsors,
non-profit organizations, and high-net worth individuals.  While  it has no
prior experience advising an investment company other than the Fund, the Advisor
has been rendering investment counsel utilizing investment strategies similar to
that of the Fund, to numerous other clients since inception.  The Advisor's
address is 1272 Hendersonville Road, Post Office Drawer 5255, Asheville, North
Carolina 28813.
   
Under the Advisory Agreement with the Fund, the Advisor receives a monthly
management fee equal to an annual rate of 0.35% of the average daily net asset
value of the Fund.  The Advisor may periodically voluntarily waive or reduce its
advisory fee and reimburse expenses of the Fund to increase the net income of
the Fund.  The Advisor voluntarily waived its advisory fee in the amount of
$10,321 for the fiscal year ended August 31, 1995.  The Advisor also voluntarily
reimbursed the Fund the amount of $41,501 for expenses of the Fund incurred
during the fiscal year.
    
The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments.  Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected.  The Advisor
attempts to obtain the best execution for all such transactions.  If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker.  The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker.  For further information, see "Investment
Objectives and Policies - Investment Transactions" in the Statement of
Additional Information.  It is anticipated that most securities transactions of
the Fund will be handled on a principal, rather than agency, basis.  Municipal
Obligations, including North Carolina Municipal Obligations, are normally traded
on a net basis (without commission) through broker-dealers and banks acting for
their own account.  Such firms attempt to profit from buying at the bid price
and selling at the higher asked price of the market, the difference being
referred to as the spread.  The cost of portfolio securities transactions of the
Fund primarily consists of dealer or underwriter spreads.
   
The Administrator.  The Trust has entered into an Administration Agreement with
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.15% of the average daily
net value of the Fund.  In addition, the Administrator currently receives a base
monthly fee of $1,750 for accounting and recordkeeping services for the Fund.
The Administrator also charges the Fund for certain costs involved with the
daily valuation of investment securities and is reimbursed for out-of-pocket
expenses.
    
Subject to the authority of the Board of Trustees, the services the
Administrator provides to the Fund include coordinating and monitoring any third
parties furnishing services to the Fund; providing the necessary office space,
equipment and personnel to perform administrative and clerical functions for the
Fund; preparing, filing and distributing proxy materials, periodic reports to
shareholders, registration statements and other documents; and responding to
shareholder inquiries.
   
The Administrator was incorporated as a North Carolina corporation in 1988 and
converted to a North Carolina limited liability company in 1995.  With its
predecessors and affiliates, the Administrator has been operating as a financial
services firm since 1985.  Frank P. Meadows III, Trustee, Treasurer, and
Chairman of the Trust, is the firm's Managing Director and controlling member.
    
The Custodian, Transfer Agent and Fund Accounting/Pricing Agent.  Wachovia Bank
of North Carolina, N.A. (the "Custodian"), 301 North Main Street, Winston-Salem,
North Carolina 27102, serves as Custodian of the Fund's assets.  The Custodian
acts as the depository for the Fund, safekeeps its portfolio securities,
collects all income and other payments with respect to portfolio securities,
disburses monies at the Fund's request and maintains records in connection with
its duties.

The Administrator also serves as the Fund's transfer agent.  As transfer agent,
it maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
shareholder services functions.

The Administrator also performs certain accounting and pricing services for the
Fund as pricing agent, including the daily calculation of the Fund's net asset
value.
   
Shareholder Serving Plan.  The Trust has adopted a Shareholder Servicing Plan
(the "Plan") with respect to the Fund pursuant to which the Trust may compensate
individuals, firms, banks, or investment advisors directly or indirectly for
personal services and/or the maintenance of accounts of shareholders of the Fund
and other shareholder liaison services not otherwise provided by the
Administrator or the Custodian, including but not limited to responding to
shareholder inquiries, providing information on shareholders' investments in the
Fund, and providing such other shareholder services as the Trust may reasonably
request. The expenditures to be made under the Plan and the basis for payment of
such expenditures must be approved by the Board of Trustees of the Trust and may
not exceed 0.25% of the Fund's average annual net assets.  In addition, in no
event may such expenditures paid to any person who sells Fund shares exceed
0.25% of the average annual net asset value of such shares.  During the fiscal
year ended August 31, 1995, the Fund paid service fees of $1,574 pursuant to the
Plan.

Other Expenses.  The Fund is responsible for the payment of its expenses.  These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Fund's
assets, the fees and expenses of the Custodian, the fees and expenses of the
Administrator, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by the Fund, Securities and
Exchange Commission fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses.  The Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, including
the Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable.  For the fiscal year ended August 31, 1995, the
expense ratio of the Fund was 0.85% of the average daily net assets of the Fund
after expense reimbursements and waived fees.
    
                               OTHER INFORMATION
   
Description of Shares.  The Trust was organized as a Massachusetts business
trust in 1992 under a Declaration of Trust.  The Declaration of Trust permits
the Board of Trustees to issue an unlimited number of full and fractional shares
and to create an unlimited number of series of shares.  The Trust currently has
the number of authorized series of shares, including the Fund, described in the
Statement of Additional Information under "Description of the Trust."  When
issued, the shares of each series of the Trust, including the Fund, will be
fully paid, nonassessable and redeemable.  The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder meetings
for purposes such as changing fundamental policies or electing Trustees.  The
Board of Trustees shall promptly call a meeting for the purpose of electing or
removing Trustees when requested in writing to do so by the record holders of a
least 10% of the outstanding shares of the Trust.  The term of office of each
Trustee is of unlimited duration.  The holders of at least two-thirds of the
outstanding shares of the Trust may remove a Trustee from that position either
by declaration in writing filed with the Custodian or by votes cast in person or
by proxy at a meeting called for that purpose.
    
Shareholders of the Trust will vote by series except as otherwise required by
the 1940 Act.  Matters affecting an individual series, such as the Fund,
include, but are not limited to, the investment objectives, policies and
restrictions of that series.  Shares have no subscription, preemptive or
conversion rights.  Share certificates will not be issued.  Each share is
entitled to one vote (and fractional shares are entitled to proportionate
fractional votes) on all matters submitted for a vote, and shares have equal
voting rights except that only shares of a particular series are entitled to
vote on matters affecting only that series. Shares do not have cumulative voting
rights.  Therefore, the holders of more than 50% of the aggregate number of
shares of all series of the Trust may elect all the Trustees.

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust.  The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability.  See the Statement of Additional
Information for further information about the Trust and its shares.

Reporting to Shareholders.  The Fund will send to its shareholders annual and
semi-annual reports; the financial statements appearing in annual reports for
the Fund will be audited by independent accountants.  In addition, the
Administrator, as transfer agent, will send to each shareholder having an
account directly with the Fund a monthly statement showing transactions in the
account, the total number of shares owned and any dividends or distributions
paid.  Inquiries regarding the Fund may be directed in writing to 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069
or by calling 1-800-525-FUND.

Calculation of Performance Data.  From time to time the Fund may advertise its
yield, tax equivalent yield and average annual total return.  The Fund's
quotations may be used in advertisements, sales literature, shareholder reports,
or other communications.  Yield and total return figures are based on historical
earnings and are not intended to indicate future performance.  Such figures
could be increased to the extent the Advisor or the Administrator may waive all
or a portion of their fees or may reimburse all or a portion of the Fund's
expenses. For further information, see "Additional Information on Performance"
in the Statement of Additional Information.

The "average annual total return" of the Fund refers to the average annual
compounded rates of return over 1, 5 and 10 year periods that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment.  The calculation assumes the reinvestment of
all dividends and distributions, includes all recurring fees that are charged to
all shareholder accounts and deducts all nonrecurring charges at the end of each
period.  The calculation further assumes the maximum sales load is deducted from
the initial payment.  If the Fund has been operating less than 1, 5 or 10 years,
the time period during which the Fund has been operating is substituted.

The "yield" of the Fund is computed by dividing the net investment income per
share earned during the most recent practicable period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends).  For
the purpose of determining net investment income, the calculation includes among
expenses of the Fund all recurring fees that are charged to all shareholder
accounts and any nonrecurring charges for the period stated.  A "tax equivalent
yield" is computed by using the tax-exempt yield figure and dividing by 1 minus
the tax rate.  Tax equivalent yield demonstrates the yield from a taxable
investment necessary to produce an after-tax yield equivalent to that of a fund
that invests in tax-exempt obligations.

In addition, a Fund may advertise other total return performance data.  This
data shows as a percentage rate of return encompassing all elements of return
(i.e. income and capital appreciation or depreciation); it assumes reinvestment
of all dividends and capital gain distributions.  Such other total return data
may be quoted for the same or different periods as those for which the average
annual total return is quoted.  This data may consist of a cumulative percentage
rate of return, actual year-by-year rates or any combination thereof. Cumulative
total return represents the cumulative change in value of an investment in the
Fund for various periods.

                                   APPENDIX A
                      Description of Municipal Obligations

Municipal Obligations include bonds, notes and commercial paper issued by or on
behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies or
instrumentalities, the interest on which is exempt from federal income taxes
(without regard to whether the interest thereon is also exempt from the personal
income taxes of any state).  Municipal Obligation bonds are issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works.  Other public
purposes for which Municipal Obligation bonds may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses, and
obtaining funds to loan to other public institutions and facilities.  In
addition, certain types of industrial development bonds, are issued by or on
behalf of public authorities to obtain funds to provide privately-operated
housing facilities, airport, mass transit or port facilities, sewage disposal,
solid waste disposal or hazardous waste treatment or disposal facilities and
certain local facilities for water supply, gas or electricity.  Such obligations
are included within the term Municipal Obligations if the interest paid thereon
qualifies as exempt from federal income tax.  Other types of industrial
development bonds, the proceeds of which are used for the construction,
equipment, repair or improvement of privately operated industrial or commercial
facilities, may constitute Municipal Obligations, although the current federal
tax laws place substantial limitations on the size of such issues.

The two principal classifications of Municipal Obligation bonds are "general
obligation" and "revenue" bonds.  General obligation bonds are secured by the
issuer's pledge of its good faith, credit and taxing power for the payment of
principal and interest.  The payment of the principal of and interest on such
bonds may be dependent upon an appropriation by the issuer's legislative body.
The characteristics and enforcement of general obligation bonds vary according
to the law applicable to the particular issuer.  Revenue bonds are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other specific revenue
source. Industrial development bonds which are Municipal Obligations are in most
cases revenue bonds and do not generally constitute the pledge of the credit of
the issuer of such bonds.

Municipal Obligations also include participations in municipal leases.  These
are undivided interests in a portion of an obligation in the form of a lease or
installment purchase which is issued by state and local governments to acquire
equipment and facilities.  Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds.  Leases and
installment purchase or conditional sale contracts (which normally provide for
title to the leased asset to pass eventually to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt.  The debt-issuance limitations are deemed to be inapplicable because of
the inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.  Accordingly,
a risk peculiar to these municipal lease obligations is the possibility that a
government issuer will not appropriate funds for lease payments.  Although the
obligations will be secured by the leased equipment or facilities, the
disposition of the property in the event of non-appropriation or foreclosure
might, in some cases, prove difficult.  There are, of course, variations in the
security of Municipal Obligations, both within a particular classification and
between classifications, depending on numerous factors.

Municipal Obligation notes generally are used to provide for short-term capital
needs and generally have maturities of one year or less.  Municipal Obligation
notes include:

1.    Tax Anticipation Notes.  Tax Anticipation Notes are issued to finance
      working capital needs of municipalities.  Generally, they are issued in
      anticipation of various tax revenues, such as income, sales, use and
      business taxes, and are payable from these specific future taxes.

2.    Revenue Anticipation Notes.  Revenue Anticipation Notes are issued in
      expectation of receipt of other kinds of revenue, such as federal revenues
      available under Federal Revenue Sharing Programs.

3.    Bond Anticipation Notes.  Bond Anticipation Notes are issued to provide
      interim financing until long-term bond financing can be arranged.  In most
      cases, the long-term bonds then provide the money for the repayment of the
      Notes.

Issues of commercial paper typically represent short-term, unsecured, negotiable
promissory notes.  These obligations are issued by agencies of state and local
governments to finance seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general revenues of
municipalities or are refinanced with long term debt.  In most cases, Municipal
Obligation commercial paper is backed by letters of credit, lending agreements,
note repurchase agreements or other credit facility agreements offered by banks
or other institutions.

The yields on Municipal Obligations are dependent on a variety of factors,
including general market conditions, supply and demand and general conditions of
the Municipal Obligation market, size of a particular offering, the maturity of
the obligation and rating (if any) of the issue.


                               THE NORTH CAROLINA
                               TAX FREE BOND FUND

                                 A No-Load Fund

                                   Prospectus
   
                                January 1, 1996

                     The North Carolina Tax Free Bond Fund
                          105 North Washington Street
                             Post Office Drawer 69
                     Rocky Mount, North Carolina 27802-0069
                                 1-800-525-3863

                               Investment Advisor
                          Boys, Arnold & Company, Inc.
                            1272 Hendersonville Road
                            Post Office Drawer 5255
                        Asheville, North Carolina 28813
                                 1-800-286-8038
    
                                   Custodian
                     Wachovia Bank of North Carolina, N.A.
                               301 N. Main Street
                      Winston-Salem, North Carolina 27102

                       Administrator, Fund Accountant and
                     Dividend Disbursing and Transfer Agent
                             The Nottingham Company
                             Post Office Drawer 69
                     Rocky Mount, North Carolina 27802-0069
   
                              Independent Auditors
                             KPMG Peat Marwick LLP
                       1021 East Cary Street, Suite 1900
                         Richmond, Virginia 23219-4023
    

                      STATEMENT OF ADDITIONAL INFORMATION

                     THE NORTH CAROLINA TAX FREE BOND FUND
   
                                January 1, 1995
    
                                  A series of
                         THE ALBEMARLE INVESTMENT TRUST
                    105 North Washington Street, P.O. Box 69
                          Rocky Mount, NC  27802-0069
                            Telephone 1-800-525-3863

                               Table of Contents
   
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . .  2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
NET ASSET VALUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . .  7
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . .  7
ADDITIONAL INFORMATION CONCERNING TAXES. . . . . . . . . . . . . . . . . . .  8
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SPECIAL SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 14
ADDITIONAL INFORMATION ON PERFORMANCE. . . . . . . . . . . . . . . . . . . . 15
APPENDIX A - SPECIAL CONSIDERATIONS REGARDING
 INVESTMENT IN NORTH CAROLINA MUNICIPAL OBLIGATIONS. . . . . . . . . . . . . 19
APPENDIX B - DESCRIPTION OF MUNICIPAL BOND RATINGS . . . . . . . . . . . . . 21
ANNUAL REPORT OF THE FUND FOR THE FISCAL YEAR ENDED AUGUST 31, 1995. . ATTACHED

This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus dated January 1, 1995 for The
North Carolina Tax Free Bond Fund (the "Fund"), and is incorporated by reference
in its entirety into the Prospectus.  Because this Additional Statement is not
itself a prospectus, no investment in shares of the Fund should be made solely
upon the information contained herein.  Copies of the Fund's Prospectus may be
obtained at no charge by writing or calling the Fund at the address and phone
number shown above.  Capitalized terms used but not defined herein have the same
meanings as in the Prospectus.
    

                       INVESTMENT OBJECTIVES AND POLICIES

The following policies supplement the Fund's investment objectives and policies
as set forth in the Prospectus.  The Fund, organized in 1993, has no prior
history.

Additional Information on North Carolina Investments.  Attached to this
Additional Statement is Appendix A, "Special Considerations Regarding Investment
in North Carolina Municipal Obligations," which contains a discussion of
investment considerations associated with North Carolina Municipal Obligations.
Additional information on various types of Municipal Obligations that may be
acquired by the Fund and the special risks associated with these types of
investments is set forth below.

The Advisor may invest the assets of the Fund in a relatively high percentage of
municipal bonds issued by entities having similar characteristics.  The issuers
may pay their interest obligations from revenue of similar projects such as
multi- family housing, nursing homes, electric utility systems, hospitals or
life care facilities.

Housing revenue bonds typically are issued by a state, county or local housing
authority and are secured only by the revenues of mortgages originated by the
authority using the proceeds of the bond issue.  Because of the impossibility of
precisely predicting demand for mortgages from the proceeds of such an issue,
there is a risk that the proceeds of the issue will be in excess of demand,
which would result in early retirement of the bonds by the issuer.  Moreover,
such housing revenue bonds depend for their repayment upon the cash flow from
the underlying mortgages, which cannot be precisely predicted when the bonds are
issued.  Any difference in the actual cash flow from such mortgages from the
assumed cash flow could have an adverse impact upon the ability of the issuer to
make scheduled payments of principal and interest on the bonds, or could result
in early retirement of the bonds.  Additionally, such bonds depend in part for
scheduled payments of principal and interest upon reserve funds established from
the proceeds of the bonds, assuming certain rates of return on investment of
such reserve funds.  If the assumed rates of return are not realized because of
changes in interest rate levels or for other reasons, the actual cash flow for
scheduled payments of principal and interest on the bonds may be inadequate. The
financing of multi-family housing projects is affected by a variety of factors,
including satisfactory completion of construction within cost constraints, the
achievement and maintenance of a sufficient level of occupancy, sound management
of the developments, timely and adequate increases in rents to cover increases
in operating expenses, including taxes, utility rates and maintenance costs,
changes in applicable laws and governmental regulations and social and economic
trends.

Electric utilities face problems in financing large construction programs in an
inflationary period, cost increases and delay occasioned by environmental
considerations (particularly with respect to nuclear facilities), difficulty in
obtaining fuel at reasonable prices, the cost of competing fuel sources,
difficulty in obtaining sufficient rate increases and other regulatory problems,
the effect of energy conservation and difficulty of the capital market to absorb
utility debt.

Healthcare facilities include life care facilities, nursing homes and hospitals.
Life care facilities are alternative forms of long-term housing for the elderly
which offer residents the independence of condominium life style and, if needed,
the comprehensive care of nursing home services.  Bonds to finance these
facilities have been issued by various state industrial development authorities.
Because the bonds are secured only by the revenues of each facility, and not by
state or local government tax payments, they are subject to a wide variety of
risks.  Primarily, the projects must maintain adequate occupancy levels to be
able to provide revenues adequate to maintain debt service payments.  Moreover,
in the case of life care facilities, because a portion of housing, medical care
and other services may be financed by an initial deposit, there may be risk if
the facility does not maintain adequate financial reserves to secure estimated
actuarial liabilities.  The ability of management to accurately forecast
inflationary cost pressures weighs importantly in this process.  The facilities
may also be affected by regulatory cost restrictions applied to health care
delivery in general, particularly state regulations or changes in Medicare and
Medicaid payments or qualifications, or restrictions imposed by medical
insurance companies.  They may also face competition from alternative health
care or conventional housing facilities in the private or public sector.
Hospital bond ratings are often based on feasibility studies which contain
projections of expenses, revenues and occupancy levels.  A hospital's gross
receipts and net income available to service its debt are influenced by demand
for hospital services, the ability of the hospital to provide the services
required, management capabilities, economic developments in the service area,
efforts by insurers and government agencies to limit rates and expenses,
confidence in the hospital, service area economic developments, competition,
availability and expense of malpractice insurance, Medicaid and Medicare
funding, and possible federal legislation limiting the rates of increase of
hospital charges.

The Fund may also invest in bonds for industrial and other projects, such as
sewage or solid waste disposal or hazardous waste treatment facilities.
Financing for such projects will be subject to inflation and other general
economic factors as well as construction risks including labor problems,
difficulties with construction sites and the ability of contractors to meet
specifications in a timely manner.  Because some of the materials, processes and
wastes involved in these projects may include hazardous components, there are
risks associated with their production, handling and disposal.

Investment Transactions.  Subject to the general supervision of the Trust's
Board of Trustees, the Advisor is responsible for, makes decisions with respect
to, and places orders for all purchases and sales of portfolio securities for
the Fund.

The annualized portfolio turnover rate for the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period.  The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less.  Portfolio
turnover of the Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment.  Portfolio turnover will not be a limiting factor in making Fund
decisions, and the Fund may engage in short term trading to achieve its
investment objectives.

Purchases of money market instruments by the Fund are made from dealers,
underwriters and issuers. The Fund currently does not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer.  Securities
purchased in underwritten offerings include a fixed amount of compensation to
the underwriter, generally referred to as the underwriter's concession or
discount.  When securities are purchased directly from or sold directly to an
issuer, no commissions or discounts are paid.

Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions.  On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers.  Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument.  The Fund's portfolio transactions will normally be municipal
transactions executed in over-the-counter markets and will be executed on a
"net" basis, which may include a dealer markup.

The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group.  The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.
   
In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for the Fund.  In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis.  The sale of Fund shares may
be considered when determining firms that are to execute brokerage transactions
for the Fund.  In addition, the Advisor is authorized to cause the Fund to pay a
broker-dealer which furnishes brokerage and research services a higher spread or
commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Advisor determines in good
faith that such spread or commission is reasonable in relation to the value of
the brokerage and research services provided by such broker-dealer, viewed in
terms of either the particular transaction or the overall responsibilities of
the Advisor to the Fund. Such brokerage and research services might consist of
reports and statistics relating to specific companies or industries, general
summaries of groups of stocks or bonds and their comparative earnings and
yields, or broad overviews of the stock, bond and government securities markets
and the economy.
    
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund.  The Trustees will periodically review
any spread or commissions paid by the Fund to consider whether the spread or
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund.  It is possible that certain of
the supplementary research or other services received will primarily benefit one
or more other investment companies or other accounts for which investment
discretion is exercised by the Advisor.  Conversely, the Fund may be the primary
beneficiary of the research or services received as a result of securities
transactions effected for such other account or investment company.

The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution of transactions from
such broker.  The Fund will not execute portfolio transactions through, acquire
securities issued by, make savings deposits in or enter into repurchase
agreements with the Advisor or an affiliated person of the Advisor (as such term
is defined in the 1940 Act) acting as principal, except to the extent permitted
by the Securities and Exchange Commission ("SEC"). In addition, the Fund will
not purchase securities during the existence of any underwriting or selling
group relating thereto of which the Advisor, or an affiliated person of the
Advisor, is a member, except to the extent permitted by the SEC.  Under certain
circumstances, the Fund may be at a disadvantage because of these limitations in
comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.

Investment decisions for the Fund will be made independently from those for any
other series of the Trust, if any, and for any other investment companies and
accounts advised or managed by the Advisor.  Such other investment companies and
accounts may also invest in the same securities as the Fund.  To the extent
permitted by law, the Advisor may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions.  When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund and
another investment company or account, the transaction will be averaged as to
price and available investments allocated as to amount, in a manner which the
Advisor believes to be equitable to the Fund and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.
   
For the fiscal year ended August 31, 1995 and 1994, and the fiscal period ended
August 31, 1993, no brokerage commissions were paid by the Fund.

Repurchase Agreements.  The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements.  A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future.  The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
repurchase agreement is in effect.  Delivery pursuant to the resale will occur
within one to five days of the purchase.
    
Repurchase agreements are considered "loans" under the Investment Company Act of
1940 (the "1940 Act"), collateralized by the underlying security.  The Trust's
Board of Trustees will implement procedures to monitor on a continuous basis the
value of the collateral serving as security for repurchase obligations.
Additionally, the Advisor to the Fund will consider the creditworthiness of the
vendor.  If the vendor fails to pay the agreed upon resale price on the delivery
date, the Fund will retain or attempt to dispose of the collateral.  The Fund's
risks in such default may include any decline in value of the collateral to an
amount which is less than 100% of the repurchase price, any costs of disposing
of such collateral, and any loss resulting from any delay in foreclosing on the
collateral.  The Fund will not enter into a repurchase agreement which will
caused more than 10% of its assets to be invested in repurchase agreements which
extend beyond seven days and other illiquid securities.

Description of Money Market Instruments.  Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Fund.  Money market instruments also may include
Banker's Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). Banker's Acceptances are time drafts drawn on and "accepted" by a bank.
When a bank "accepts" such a time draft, it assumes liability for its payment.
When the Fund acquires a Banker's Acceptance the bank which "accepted" the time
draft is liable for payment of interest and principal when due.  The Banker's
Acceptance carries the full faith and credit of such bank.  A Certificate of
Deposit ("CD") is an unsecured interest bearing debt obligation of a bank.
Commercial Paper is an unsecured, short term debt obligation of a bank,
corporation or other borrower. Commercial Paper maturity generally ranges from
two to 270 days and is usually sold on a discounted basis rather than as an
interest bearing instrument.  The Fund will invest in Commercial Paper only if
it is rated in one of the two highest rating categories by any of the nationally
recognized securities rating organizations or if not rated, of equivalent
quality in the Advisor's opinion. Commercial Paper may include Master Notes of
the same quality.  Master Notes are unsecured obligations which are redeemable
upon demand of the holder and which permit the investment of fluctuating amounts
at varying rates of interest.  Master Notes are acquired by the Fund only
through the Master Note program of the Fund's custodian bank, acting as
administrator thereof.  The Advisor will monitor, on a continuous basis, the
earnings power, cash flow and other liquidity ratios of the issuer of a Master
Note held by the Fund.

Illiquid Investments.  The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued.  Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments and, through reports
from the Advisor, the Board monitors investments in illiquid instruments.  In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features) and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Fund to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days.  If through a change in values, net
assets or other circumstances, the Fund were in a position where more than 10%
of its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.

Certain investments in lease obligations (defined and described in detail in the
Prospectus) may be illiquid.  The Fund may not invest in illiquid lease
obligations if such investments, together with all other illiquid investments,
would exceed 10% of the Fund's net assets.  The Fund may, however, invest
without regard to such limitation in lease obligations which the Advisor,
pursuant to guidelines adopted by the Board of Trustees and subject to the
supervision of the Board of Trustees, determines to be liquid.  In determining
the liquidity of municipal lease obligations, the Advisor will consider a
variety of factors including:  (1) the willingness of dealers to bid for the
security; (2) the number of dealers willing to purchase or sell the obligation
and the number of other potential buyers; (3) the frequency of trades and quotes
for the obligation; and (4) the nature of the marketplace trades.  In addition,
the Advisor will consider factors unique to particular lease obligations
affecting their marketability. These include the general creditworthiness of the
municipality, the importance of the property covered by the lease to the
municipality, and the likelihood that the marketability of the obligation will
be maintained throughout the time the obligation is held by the Fund. The Board
of Trustees is responsible for determining the credit quality of unrated
municipal lease obligations on an ongoing basis, including as assessment of the
likelihood that the lease will not be cancelled.  The Advisor will deem lease
obligations liquid if they are publicly offered and have received an investment
grade rating of Baa or better by Moody's or BBB or better by Standard & Poor's
(or of equivalent rating by any of the nationally recognized securities rating
organizations).  Unrated lease obligations will be considered liquid if the
obligations come to the market through an underwritten public offering and at
least two dealers are willing to give competitive bids.

Forward Commitment & When-Issued Securities.  The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price.  In such purchase transactions the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly if a security is sold for a forward date the Fund will
accrue the interest until the settlement of the sale.  When-issued security
purchase and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale.  As a result the exposure to the
counterparty of the purchase or sale is increased.  Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Advisor felt such action was appropriate.  In such a case
the Fund could incur a short term gain or loss.

                             INVESTMENT LIMITATIONS

The Fund has adopted the following investment limitations, which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund.  A "majority" for this purpose, means the lesser of (i) 67%
of the Fund's outstanding shares represented in person or by proxy at a meeting
at which more than 50% of its outstanding shares are represented, or (ii) more
than 50% of its outstanding shares.

Under these limitations, the Fund may not:

1.      Invest in the securities of any issuer if any of the officers or
        trustees of the Trust or its Advisor who own beneficially more than 1/2
        of 1% of the outstanding securities of such issuer together own more
        than 5% of the outstanding securities of such issuer;

2.      Invest for the purpose of exercising control or management of another
        issuer;

3.      Invest in interests in real estate, real estate mortgage loans, oil, gas
        or other mineral exploration leases or exploration or development
        programs, except that the Fund may invest in the securities of companies
        (other than those which are not readily marketable) which own or deal in
        such things;

4.      Underwrite securities issued by others except to the extent the Fund may
        be deemed to be an underwriter under the Federal securities laws, in
        connection with the disposition of portfolio securities;

5.      Purchase securities on margin (but the Fund may obtain such short-term
        credits as may be necessary for the clearance of transactions);

6.      Make short sales of securities or maintain a short position, except
        short sales "against the box;" (A short sale is made by selling a
        security the Fund does not own.  A short sale is "against the box" to
        the extent that the Fund contemporaneously owns or has the right to
        obtain at no additional cost securities identical to those sold short.);

7.      Participate on a joint or joint and several basis in any trading account
        in securities;

8.      Make loans of money or securities, except that the Fund may invest in
        repurchase agreements;

9.      Invest in securities of issuers which have a record of less than three
        years' continuous operation (including predecessors and, in the case of
        bonds, guarantors), if more than 5% of its total assets would be
        invested in such securities;

10.     Issue senior securities, borrow money, or pledge its assets except, that
        it may borrow from banks as a temporary measure (a) for extraordinary or
        emergency purposes, in amounts not exceeding 5% of the Fund's total
        assets or, (b) in order to meet redemption requests which might
        otherwise require untimely disposition of portfolio securities in
        amounts no exceeding 15% of its total assets.  The Fund will not make
        any investments if borrowing exceeds 5% of its total assets;

11.     Invest more than 10% of its net assets in illiquid securities.  For this
        purpose, illiquid securities include, among others (a) securities for
        which no readily available market exists, (b) fixed time deposits that
        are subject to withdrawal penalties and have maturities of more than
        seven days, and (c) repurchase agreements not terminable within seven
        days;

12.     Invest in restricted securities; and

13.     Write, purchase or sell commodities, commodities contracts, futures
        contracts, or related options.

Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation.  However, in the case of the
borrowing limitation (limitation number 10, above), the Fund will, to the extent
necessary, reduce its existing borrowing to comply with the limitation.

While the Fund has reserved the right to make short sales "against the box,"
(limitation number 6, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.

                                NET ASSET VALUE
   
The net asset value per share of the Fund is determined at 4:00 p.m., New York
time, Monday through Friday, except on business holidays when the New York Stock
Exchange is closed.  The New York Stock Exchange recognizes the following
holidays:  New Year's Day, President's Day, Good Friday, Memorial Day, Fourth of
July, Labor Day, Thanksgiving Day, and Christmas Day.  Any other holiday
recognized by the New York Stock Exchange will be deemed a business holiday on
which the net asset value of the Fund will not be calculated.

The net asset value per share of the Fund is calculated separately by adding the
value of the Fund's securities and other assets belonging to the Fund,
subtracting the liabilities charged to the Fund, and dividing the result by the
number of outstanding shares.  "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund.  Assets belonging to the Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net asset values of all of the Trust's series at the time of allocation
or in accordance with other allocation methods approved by the Board of
Trustees.  Subject to the provisions of the Declaration of Trust, determinations
by the Board of Trustees as to the direct and allocable liabilities, and the
allocable portion of any general assets, with respect to the Fund are
conclusive.

For the fiscal years ended August 31, 1995 and 1994, and the fiscal period ended
August 31, 1993, the total expenses of the Fund, after voluntary fee waivers and
expense reimbursements, were $25,065 (0.85% of average daily net assets),
$26,934 (0.84% of average daily net assets), and $7,983 (0.77% of average daily
net assets).

                 ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Purchases.  Shares of the Fund are offered and sold on a continuous basis and
may be purchased through authorized investment dealers or directly by contacting
the Fund.  The minimum for initial investments is $1,000 and for any subsequent
investment is $250.  Selling dealers have the responsibility of transmitting
orders promptly to the Fund.  The public offering price of shares of the Fund
equals net asset value.  See " How Shares May Be Purchased" in the Prospectus.
    
Redemptions.  Under the 1940 Act, the Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange is restricted by applicable rules and regulations of
the SEC; (b) the Exchange is closed for other than customary weekend and holiday
closings; (c) the SEC has by order permitted such suspension; or (d) an
emergency exists as determined by the SEC.  The Fund may also suspend or
postpone the recordation of the transfer of shares upon the occurrence of any of
the foregoing conditions.

In addition to the situations described in the Prospectus under "How Shares May
Be Redeemed," the Fund may redeem shares involuntarily to reimburse the Fund for
any loss sustained by reason of the failure of a shareholder to make full
payment for shares purchased by the shareholder or to collect any charge
relating to a transaction effected for the benefit of a shareholder which is
applicable to Fund shares as provided in the Prospectus from time to time.

                            DESCRIPTION OF THE TRUST
   
The Trust is an unincorporated business trust organized under Massachusetts law
in 1992.  The Trust's Declaration of Trust authorizes the Board of Trustees to
divide shares into series, each series relating to a separate portfolio of
investments.  The Declaration of Trust currently provides for the shares of one
series, The North Carolina Tax Free Bond Fund (the subject of this Additional
Statement).  The number of shares of each series shall be unlimited.  The Trust
does not intend to issue share certificates.
    
In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each shareholder.  If there
are any assets, income, earnings, proceeds, funds or payments, that are not
readily identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more of the series as they, in their sole
discretion, deem fair and equitable.

Shareholders of all of the series of the Trust, including the Fund, will vote
together and not separately on a series-by-series basis, except as otherwise
required by law or when the Board of Trustees determines that the matter to be
voted upon affects only the interests of the shareholders of a particular
series. Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each series affected by the matter. A series is affected by a matter unless it
is clear that the interests of each series in the matter are substantially
identical or that the matter does not affect any interest of the series.  Under
Rule 18f-2, the approval of an investment advisory agreement, a Rule 12b-1 plan
or any change in a fundamental investment policy would be effectively acted upon
with respect to a series only if approved by a majority of the outstanding
shares of such series. However, the Rule also provides that the ratification of
the appointment of independent accountants, the approval of principal
underwriting contracts and the election of Trustees may be effectively acted
upon by shareholders of the Trust voting together, without regard to a
particular series.

When used in the Prospectus or this Additional Statement, a "majority" of
shareholders means the vote of the lesser of (1) 67% of the shares of the Trust
or the applicable series present at a meeting if the holders of more than 50% of
the outstanding shares are present in person or by proxy, or (2) more than 50%
of the outstanding shares of the Trust or the applicable series.

When issued for payment as described in the Prospectus and this Additional
Statement, shares of the Fund will be fully paid and non-assessable.

The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as such
liability may arise from his or her own bad faith, willful misfeasance, gross
negligence, or reckless disregard of duties.  It also provides that all third
parties shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust.  With the exceptions
stated, the Declaration of Trust provides that a Trustee or officer is entitled
to be indemnified against all liability in connection with the affairs of the
Trust.

                    ADDITIONAL INFORMATION CONCERNING TAXES
   
General Tax Considerations.  The following summarizes certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus.  No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning and is based on tax laws and regulations that are in effect
on the date hereof; such laws and regulations may be changed by legislative,
judicial, or administrative action. Investors are advised to consult their tax
advisors with specific reference to their own tax situations.
    
Each series of the Trust, including the Fund, will be treated as a separate
corporate entity under the Code and intends to qualify or remain qualified as a
regulated investment company.  In order to so qualify, each series must elect to
be a regulated investment company or have made such an election for a previous
year.  Each series must also distribute annually at least 90% of its net taxable
income plus 90% of its net tax-exempt interest income.  In addition to the
distribution requirement, each series must satisfy certain requirements with
respect to the source of its income for a taxable year.  At least 90% of the
gross income of each series must be derived from dividends, interest, payments
with respect to securities loans, gains from the sale or other disposition of
stocks, securities or foreign currencies, and other income derived with respect
to the series' business of investing in such stock, securities or currencies.
Any income derived by a series from a partnership or trust is treated as derived
with respect to the series' business of investing in stock, securities or
currencies only to the extent that such income is attributable to items of
income that would have been qualifying income if realized by the series in the
same manner as by the partnership or trust.

Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of a series' gross income for a taxable year must
be derived from gains realized on the sale or other disposition of the following
investments held for less than three months: (l) stock and securities (as
defined in Section 2(a) (36) of the 1940 Act); (2) options, futures and forward
contracts other than those on foreign currencies; or (3) foreign currencies (or
options, futures or forward contracts on foreign currencies) that are not
directly related to a series' principal business of investing in stocks or
securities (or options and futures with respect to stocks or securities).
Interest (including original issue discount and, with respect to certain debt
securities, accrued market discount) received by a series upon maturity or
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of this requirement. However, any other income which is attributable
to realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.

An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year.  In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer.  The
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.

Each series of the Trust, including the Fund, will designate any distribution of
long term capital gains as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long term capital loss
to the extent of the capital gain dividends received with respect to the shares.

A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses).  Each series of the Trust, including the Fund, intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.

If for any taxable year a series does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the series'
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.

Each series of the Trust, including the Fund, will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of taxable dividends or 31% of
gross proceeds realized upon sale paid to shareholders who have failed to
provide a correct tax identification number in the manner required, or who are
subject to withholding by the Internal Revenue Service for failure properly to
include on their return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup withholding
when required to do so or that they are "exempt recipients."

Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities.  In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.
   
Special Tax Considerations.  As indicated in the Prospectus, the Fund is
designed to provide North Carolina shareholders with current tax-exempt interest
income. The Fund is not intended to constitute a balanced investment program and
is not designed for investors seeking maximum capital appreciation or maximum
tax-exempt income irrespective of fluctuations in principal.  Shares of the Fund
would not be suitable for tax-exempt institutions and may not be suitable for
retirement plans qualified under Section 401 of the Code, so-called Keogh or
H.R. 10 plans, and individual retirement accounts.  Such plans and accounts are
generally tax - exempt and, therefore, would not realize any additional benefit
from the dividends of the Fund being tax-exempt, and such dividends would be
ultimately taxable to the beneficiaries when distributed to them.

In addition, the Fund may not be an appropriate investment for shareholders who
are "substantial users" of facilities financed by private activity bonds or
"related persons" thereof.  "Substantial user" is defined under U.S. Treasury
Regulations to include a non-exempt person who regularly uses a part of such
facilities in his trade or business, and whose gross revenues derived with
respect to the facilities financed by the issuance of bonds represent more than
5% of the total revenues derived by all users of such facilities, or who
occupies more than 5% of the usable area of such facilities, or for whom such
facilities or a part thereof were specifically constructed, reconstructed, or
acquired. "Related person" includes certain related natural persons, affiliated
corporations, a partnership and its partners, and an S corporation and its
shareholders.  Each shareholder who may be considered a "substantial user"
should consult a tax advisor with respect to whether exempt interest dividends
would retain the exclusion under Section 103 of the Code if the shareholder were
treated as a "substantial user" or a "related person."

The Code permits a regulated investment company which invests at least 50% of
its total assets in tax-exempt obligations (obligations exempt from federal
income tax) to pass through to its investors, tax-free, net tax-exempt
obligations interest income.  The policy of the Fund is to pay each year as
dividends substantially all of the Fund's tax-exempt obligations interest income
net of certain deductions.  An exempt-interest dividend is any dividend or part
thereof (other than a capital gain dividend) paid by the Fund and designated as
an exempt-interest dividend in a written notice mailed to shareholders within
sixty days after the close of the Fund's taxable year, but not to exceed in the
aggregate the net tax-exempt obligations interest received by the Fund during
the taxable year.  The percentage of the total dividends paid for any taxable
year that qualifies as federal exempt-interest dividends will be the same for
all shareholders receiving dividends from the Fund during such year, regardless
of the period for which the shares were held.  Although exempt interest
dividends are generally excludable from a shareholder's gross income for federal
income tax purposes, they will be included in determining the portion, if any,
of a person's social security benefits and railroad retirement benefits subject
to federal income taxes.

While the Fund does not expect to realize any significant amount of long-term
capital gains, any net realized long-term capital gains will be distributed
annually.  The Fund will have no tax liability with respect to such distributed
gains, and the distributions will be taxable to shareholders as long-term
capital gains, regardless of how long a shareholder has held the shares of the
Fund.  Such distributions will be designated as a capital gains dividend in a
written notice mailed by the Fund to shareholders within sixty days after the
close of the Fund's taxable year.

While the Fund does not expect to earn any significant amount of investment
company taxable income, taxable income earned by the Fund will be distributed to
shareholders.  In general, the investment company taxable income will be the
taxable income of the Fund (for example, short-term capital gains) subject to
certain adjustments and excluding the excess of any net long-term capital gains
for the taxable year over the net short-term capital loss, if any, for such
year. Any such income will be taxable to shareholders as ordinary income
(whether paid in cash or additional shares).

Distributions of exempt-interest dividends, to the extent attributable to
interest on North Carolina Municipal Obligations and to interest on direct
obligations of the United States (including territories thereof), are not
subject to North Carolina individual or corporate income tax.  Distributions of
gains attributable to the disposition of certain obligations of the State of
North Carolina and its political subdivisions issued prior to July 1, 1995 are
not subject to North Carolina individual or corporate income tax; however, for
such obligations issued after June 30, 1995, distributions of gains attributable
to disposition will be subject to North Carolina individual or corporate income
tax.  Any loss upon the sale or exchange of shares of the Fund held for six
months or less will be disallowed for North Carolina income tax purposes to the
extent of any exempt-interest dividends received by the shareholder, even though
some portion of such dividends actually may have been subject to North Carolina
income tax. Except for income exempted from North Carolina income tax as
described herein, the Fund's distributions will generally constitute taxable
income for taxpayers subject to North Carolina income tax.

An investment in the Fund by a corporate shareholder generally would be included
in the capital stock, surplus and undivided profits base in computing the North
Carolina franchise tax.

An investment in the Fund prior to 1995 was potentially subject to the North
Carolina intangible personal property tax, subject to certain exemptions.  This
tax, however, has been repealed by the North Carolina General Assembly,
effective for taxable years beginning on or after January 1, 1995.

The foregoing is only a summary of some of the important tax considerations
generally affecting purchasers of shares of the Fund.  No attempt has been made
to present a detailed explanation of the Federal or state income tax treatment
of the Fund or its shareholders, and this discussion is not intended as a
substitute for careful tax planning.  Accordingly, potential purchasers of
shares of the Fund are urged to consult their tax advisors with specific
reference to their own tax situation.  In addition, the foregoing discussion is
based on tax laws and regulations in effect on the date of this Additional
Statement; such laws and regulations may be changed by legislative, judicial, or
administrative action.

                             MANAGEMENT OF THE FUND

Trustees and Officers.  The Trustees and executive officers of the Trust, their
ages, and their principal occupations for the last five years are as follows:

Name, Age, Position(s)                 Principal Occupation(s)
    and Address                        during Past 5 Years

Edwin B. Armstrong, 66, Trustee        International Management Consultant
2506 Pineway Drive                     Burlington, North Carolina
Burlington, North Carolina 27215       Field Associate
                                       International Executive Services Corp.
                                       Burlington, North Carolina

Dodie M. Duffy, 32, Secretary          Compliance Administrator
105 North Washington Street            The Nottingham Company
Rocky Mount, North Carolina  27802     Rocky Mount, North Carolina
                                        since 1993,
                                       previously Paralegal
                                       W. Michael Stemmans
                                       Attorney at Law
                                       Baton Rouge, Louisiana

John B. Kuhns, 41                      Senior Vice President
President                              Boys, Arnold & Company, Inc.
The North Carolina Tax Free            Asheville, North Carolina
Bond Fund
1272 Hendersonville Road
Asheville, North Carolina  28813

J. Finley Lee, Jr., 56, Trustee       Julian Price Professor of Business
614 Croom Court                       Administration
Chapel Hill, North Carolina  27514    University of North Carolina
                                      Chapel Hill, North Carolina

Frank P. Meadows III, 34, Trustee*    Managing Director
Treasurer and Chairman                The Nottingham Company
105 North Washington Street           Rocky Mount, North Carolina;
Rocky Mount, North Carolina 27802     Registered Representative and
                                      Limited Securities Principal
                                      Capital Investment Group, Inc.
                                      Raleigh, North Carolina

Jon L. Vannice, 38, Trustee*          Vice President
Vice President                        Boys, Arnold & Company, Inc.
The North Carolina Tax Free           Asheville, North Carolina
Bond Fund                             since 1992, previously Vice President
1272 Hendersonville Road              and Trust Officer
Asheville, North Carolina  28813      NationsBank
                                      Nashville, Tennessee
                                      since 1990, previously
                                      Vice President and Trust Officer
                                      First National Bank
                                      Zanesville, Ohio

C. Franklin Watson III, 25            Compliance Administrator
Assistant Secretary                   The Nottingham Company, Inc.
Assistant Treasurer                   Rocky Mount, North Carolina,
105 North Washington Street           previously, Student
Rocky Mount, North Carolina 27802     University of North Carolina
                                      Chapel Hill, North Carolina
                                       since 1992
_______________________________

*  Indicates that Trustee is an Interested Person for purposes of the 1940 Act
because of his position with the Advisor or Administrator to the Trust.

Trustees and Officers of the Trust who are interested persons of the Trust will
receive no salary or fees from the Trust.  Trustees of the Trust who are not
interested persons of the Trust will receive $2,000 per year plus $250 per fund
per meeting attended in person and $100 per fund per meeting attended by
telephone.  All Trustees are reimbursed for any out-of-pocket expenses incurred
in connection with attendance at meetings.

                           COMPENSATION TABLE

                                          Pension                       Total
                                        Retirement                  Compensation
                         Aggregate       Benefits       Estimated     from the
                       Compensation     Accrued As       Annual         Trust
Name of Person,          from the      Part of Fund   Benefits Upon    Paid to
Position                   Trust         Expenses      Retirement     Trustees

Edwin B. Armstrong        $2,850           None           None         $2,850
Trustee

J. Finley Lee, Jr.        $2,350           None           None         $2,350
Trustee

Frank P. Meadows III        None           None           None           None
Trustee

Jon L. Vannice              None           None           None           None
Trustee

Figures are for the fiscal year ended August 31, 1995.

Messrs. Armstrong and Lee constitute the Trust's Audit Committee.  The Audit
Committee reviews annually the nature and cost of the professional services
rendered by the Trust's independent accountants, the results of their year-end
audit and their findings and recommendations as to accounting and financial
matters, including the adequacy of internal controls.  On the basis of this
review the Audit Committee makes recommendations to the Trustees as to the
appointment of independent accountants for the following year.  The Trustees
have not appointed a compensation committee or a nominating committee.

Principal Holders of Voting Securities.  As of December 4, 1995, the Trustees
and Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Fund.  On
the same date the following shareholders owned or are known by the Fund to
beneficially own (i.e., voting and/or investment power) 5% or more of the
outstanding shares of beneficial interest of the Fund:

Name and Address of                    Amount and Nature of
Beneficial Owner                       Beneficial Ownership*         Percent

Charles Schwab & Company, Inc.             86,177.853 Shares         20.668%
101 Montgomery Street
San Francisco, California  94104

Wachovia Securities, Inc.                  77,037.573 Shares         18.476%
301 North Main Street
Winston-Salem, North Carolina 27102
    
*  The Fund believes the shares indicated are owned of record by the indicated
parties for the benefit of certain of their clients.

Investment Advisor.  Boys, Arnold & Company, Inc. (the "Advisor") supervises the
Fund's investments pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") described in the Prospectus.  The Advisory Agreement is effective
for a one year term and will be renewed thereafter for periods of one year only
so long as such renewal and continuance is specifically approved at least
annually by the Board of Trustees or by vote of a majority of the Fund's
outstanding voting securities, provided the continuance is also approved by a
majority of the Trustees who are not "interested persons" of the Trust or the
Advisor by vote cast in person at a meeting called for the purpose of voting on
such approval.  The Advisory Agreement is terminable by the Fund without penalty
on sixty days notice by the Board of Trustees of the Trust or by the Advisor.
The Advisory Agreement provides that it will terminate automatically in the
event of its assignment.
   
Compensation of Advisor with regards to the Fund, based upon the Fund's daily
average net assets, is at the annual rate of 0.35%.  For the period ended August
31, 1993, the previous investment advisor to the Fund voluntarily waived its
advisory fee in the amount of $2,599.  For the fiscal year ended August 31,
1994, the Advisor voluntarily waived its fee from the Fund in the amount of
$9,311 and voluntarily reimbursed a portion of the Fund's operating expenses in
the amount of $27,346.  For the fiscal year ended August 31, 1995, the Advisor
voluntarily waived its fee from the Fund in the amount of $10,321 and
voluntarily reimbursed a portion of the Fund's operating expenses in the amount
of $41,501.

Under the Advisory Agreement, the Advisor is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of such Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from its reckless
disregard of its duties and obligations under the Agreement.

Administrator and Transfer Agent.  The Trust has entered into a Fund Accounting,
Dividend Disbursing and Transfer Agent and Administration Agreement with The
Nottingham Company, L.L.C. (the "Administrator"), a North Carolina limited
liability company, whose address is 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069.

The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform administrative and
clerical functions for the Fund; (4) supervise the maintenance by third parties
of such books and records of the Fund as may be required by applicable federal
or state law; (5) prepare or supervise the preparation by third parties of all
federal, state and local tax returns and reports of the Fund required by
applicable law; (6) prepare and, after approval by the Trust, file and arrange
for the distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable law; (7) prepare and, after approval by the
Trust, arrange for the filing of such registration statements and other
documents with the Securities and Exchange Commission and other federal and
state regulatory authorities as may be required by applicable law; (8) review
and submit to the officers of the Trust for their approval invoices or other
requests for payment of Fund expenses and instruct the Custodian to issue checks
in payment thereof; and (9) take such other action with respect to the Fund as
may be necessary in the opinion of the Administrator to perform its duties under
the agreement.

    

The Administration Agreement is currently for a one year term and will be
renewed thereafter only so long as such renewal and continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority of
the Fund's outstanding voting securities and may be terminated at any time
without penalty by the Trust or the Administrator upon 90 days written notice.

   

Compensation of the Administrator, based upon the average daily net assets of
the Fund, is at the annual rate of 0.15%.  For the period ended August 31, 1993
and the fiscal years ended August 31, 1994 and 1995, the Administrator
voluntarily waived its administrative fee for the Fund.  In addition, the
Administrator currently receives a monthly fee of $1,750 for accounting and
recordkeeping services for the Fund.  For the period ended August 31, 1993 and
the fiscal years ended August 31, 1994 and 1995, the Administrator received
$13,125, $21,000, and $21,000, respectively, for such services for the Fund. The
Administrator, however, voluntarily reimbursed a portion of the Fund's operating
expenses in the amount of $59,075 for the fiscal year ended August 31, 1994. The
Administrator also charges the Fund for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.

    

Shareholder Servicing Plan.  The Trust has adopted a Shareholder Servicing Plan
(the "Plan") with respect to the Fund pursuant to which the Trust may compensate
individuals, firms, banks, or investment advisors directly or indirectly for
personal services and/or the maintenance of accounts of shareholders of the Fund
and other shareholder liaison services not otherwise provided by the
Administrator or the Custodian, including but not limited to responding to
shareholder inquiries, providing information on shareholders' investments in the
Fund, and providing such other shareholder services as the Trust may reasonably
request.

The expenditures to be made under the Plan and the basis for payment of such
expenditures must be approved by the Board of Trustees of the Trust and may not
exceed 0.25% of the Fund's average annual net assets.  In addition, in no event
may such expenditures paid to any person who sells Fund shares exceed 0.25% of
the average annual net asset value of such shares.  The Plan may not be amended
to increase materially the amount to be spent for service fees pursuant to the
Plan without shareholder approval.

The continuation of the Plan must be considered by the Board of Trustees
annually. At least quarterly the Board of Trustees must review a written report
of amounts expended pursuant to the Plan and the purposes for which such
expenditures were made.
   

During the fiscal period ended August 31, 1993, and the fiscal years ended
August 31, 1994 and 1995, the Fund paid service fees of $1,084, $5,393, and
$1,574, respectively, pursuant to the Plan.

    
Custodian.  Wachovia Bank of North Carolina, N.A. (the "Custodian"), 301 North
Main Street, Winston-Salem, North Carolina 27102 serves as custodian for the
Fund's assets.  The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties as Custodian.  For its services as
Custodian, the Custodian is entitled to receive from the Fund an annual fee
based on the average net assets of the Fund held by the Custodian.
   
Independent Auditors.  The firm of KPMG Peat Marwick LLP, 1021 East Cary Street,
Richmond, Virginia 23219-4023, serves as independent accountants for the Fund,
and will audit the annual financial statements of the Fund and prepare the
Fund's federal and state tax returns.
    
                          SPECIAL SHAREHOLDER SERVICES

The Fund offers the following shareholder services:

Regular Account.  The regular account allows for voluntary investments to be
made at any time.  Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish.  When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions.  Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, shareholder certificates are not issued.

Automatic Investment Plan.  The automatic investment plan enables shareholders
to make regular monthly or quarterly investment in shares through automatic
charges to their checking account.  With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($100 minimum) which will be automatically invested in
shares at the public offering price on or about the 21st day of the month.  The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.

Systematic Withdrawal Plan.  Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan.  A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December) in
order to make the payments requested.  The Fund has the capability of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholders personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included on the Fund Shares
Application, enclosed in the Fund Prospectus, or available by calling the Fund.
If the shareholder prefers to receive his systematic withdrawal proceeds in
cash, or if such proceeds are less than the $5,000 minimum for a bank wire,
checks will be made payable to the designated recipient and mailed within 7 days
of the valuation date.  If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees").  A corporation (or partnership) must
also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf.  The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan.  Costs in conjunction with the administration of the plan are
borne by the Fund. Shareholders should be aware that such systematic withdrawals
may deplete or use up entirely their initial investment and may result in
realized long-term or short-term capital gains or losses.  The Systematic
Withdrawal Plan may be terminated at any time by the Fund upon sixty day's
written notice or by a shareholder upon written notice to the Fund. Applications
and further details may be obtained by calling the Fund at 1-800-525-3863, or by
writing to:

                     The North Carolina Tax Free Bond Fund
                          105 North Washington Street
                               Post Office Box 69
                          Rocky Mount, NC  27802-0069

Purchases in Kind.  The Fund may accept securities in lieu of cash in payment
for the purchase of shares in the Fund.  The acceptance of such securities is at
the sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate.
If accepted, the securities will be valued using the same criteria and methods
as described in "How Shares are Valued" in the Prospectus.  Transactions
involving the issuance of shares in the Fund for securities in lieu of cash will
be limited to acquisitions of securities (except for municipal debt securities
issued by state political subdivisions or their agencies or instrumentalities)
which: (a) meet the investment objective and policies of the Fund; (b) are
acquired for investment and not for resale; (c) are liquid securities which are
not restricted as to transfer either by law or liquidity of market; and (d) have
a value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange, the New
York Stock Exchange, or NASDAQ.

Redemptions in Kind.  The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind.  It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash.  In such
case, the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund.  Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share.  Shareholders receiving them would incur brokerage
costs when these securities are sold.  An irrevocable election has been filed
under Rule 18f- 1 of the 1940 Act, wherein the Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety-day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net asset value at the beginning of such period.

Transfer of Registration.  To transfer shares to another owner, send a written
request to the Fund at the address shown herein.  Your request should include
the following:  (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (See the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Fund.

                     ADDITIONAL INFORMATION ON PERFORMANCE

From time to time, the total return and yield of the Fund may be quoted in
advertisements, sales literature, shareholder reports or other communications to
shareholders.  The Fund computes its "average annual total return" by
determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by determining the ending redeemable value of a
hypothetical $1,000 initial payment. This calculation is as follows:

        P(1+T)n = ERV

Where:  T =     average annual total return.
        ERV =   ending redeemable value at the end of the period covered by the
                computation of a hypothetical $1,000 payment made at the
                beginning of the period.
        P =     hypothetical initial payment of $1,000 from which the maximum
                sales load is deducted.
        n =     period covered by the computation, expressed in terms of years.

The Fund may also compute its aggregate total return, which is calculated in a
similar manner, except that the results are not annualized.

The calculation of average annual total return and aggregate total return assume
that there is a reinvestment of all dividends and capital gain distributions on
the reinvestment dates during the period.  The ending redeemable value is
determined by assuming complete redemption of the hypothetical investment and
the deduction of all nonrecurring charges at the end of the period covered by
the computations.

The yield of the Fund is computed by dividing the net investment income per
share earned during the period stated in the yield quotation by the maximum
offering price per share on the last day of the period.  For the purpose of
determining net investment income, the calculation includes, among expenses of
the Fund, all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated.  In particular, yield is
determined according to the following formula:

                           Yield = 2[(A - B + 1)6-1]
                                       CD

Where: A equals dividends and interest earned during the period; B equals
expenses accrued for the period (net of reimbursements); C equals average daily
number of shares outstanding during the period that were entitled to receive
dividends; D equals the maximum offering price per share on the last day of the
period.  A tax equivalent yield is computed by dividing the tax-exempt yield
figure described above by 1 minus a stated income tax rate and adding the
product to the taxable portion (if any) of the Fund's yield.
   
The average annual total return for the Fund for the year ended August 31, 1995
was 8.16%.  The average annual total return for the Fund since inception
(January 13, 1993) through August 31, 1995 was 5.70%.  The cumulative total
return for the Fund since inception through August 31, 1995 and since April 1,
1994 (the effective date of the Advisory Agreement with the Advisor for the
Fund) through August 31, 1995 was 15.69% and 10.24%, respectively.  For the
thirty day period ended August 31, 1995, the yield of the Fund was 4.55%.  The
yield required of a taxable security that would produce an after tax yield
equivalent to that earned by the Fund of 4.55% (considering both North Carolina
and federal taxes) would be 7.00%, assuming a combined federal and North
Carolina tax rate of 35%.  These performance quotations should not be considered
as representative of the Fund's performance for any specified period in the
future.

The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance.  In particular, the Fund may compare its performance to
the Lehman Brothers Municipal Bond Index.  Comparative performance may also be
expressed by reference to a ranking prepared by a mutual fund monitoring service
or by one or more newspapers, newsletters or financial periodicals.  The Fund
may also occasionally cite statistics to reflect its volatility and risk.
Performance comparisons may be useful to investors who wish to compare the
Fund's past performance to that of other mutual funds and investment products.
Of course, past performance is not a guarantee of future results.
    
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily.  Both net earnings and net asset
value per share are factors in the computation of total return as described
above.

As indicated, from time to time, the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications.  These may include the following:

- - -     Lipper Analytical Services, Inc. ranks funds in various fund categories by
      making comparative calculations using total return.  Total return assumes
      the reinvestment of all capital gains distributions and income dividends
      and takes into account any change in net asset value over a specific
      period of time.

- - -     Morningstar, Inc., an independent rating service, is the publisher of the
      bi-weekly Mutual Fund Values.  Mutual Fund Values rates more than 1,000
      NASDAQ-listed mutual funds of all types, according to their risk-adjusted
      returns. The maximum rating is five stars, and ratings are effective for
      two weeks.

Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing.  Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons.  When comparing funds using reporting
services, or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price.  Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non- standardized base periods.  The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.

From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the reflects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation.  The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's).  The Fund may also depict the historical performance
of the securities in which the Fund may invest over periods reflecting a variety
of market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.

Comparative information about the yield of the Fund and about average rates of
return on certificates of deposits, bank money market deposit accounts, money
market mutual funds, and other similar types of investments may be included in
Fund communications.  A bank certificate of deposit, unlike the Fund's shares,
pays a fixed rate of interest and entitles the depositor to receive the face
amount of the certificate at maturity.  A bank money market deposit account is a
form of savings account which pays a variable rate of interest.  Unlike the
Fund's shares, bank certificates of deposit and bank money market deposit
accounts are insured by the Federal Deposit Insurance Corporation.  A money
market mutual fund is designed to maintain a constant value of $1.00 per share
and, thus, a money market fund's shares are subject to less price fluctuation
than the Fund's shares.
   
Advertisements and other communications may also compare the tax equivalent
yield of the Fund taking into account federal income tax and North Carolina
income tax to after-tax yields of certificates of deposits, bank money market
accounts, money market mutual funds, and other investments over various combined
federal and state tax brackets.

In addition, the benefits of tax-free investments may be communicated in
advertisements or other communications. For example, the table below presents
the approximate yield that a taxable investment must earn at various income
brackets to produce after-tax yields equivalent to those of tax-exempt
investments yielding from 3% to 6%. The yields below are for illustration
purposes only and are not intended to represent current or future yields for the
Fund, which may be higher or lower than those shown.  The rates shown in the
table below are subject to adjustment for the Internal Revenue Service inflation
indexation.  Investors should consult their tax advisors with specific reference
to their own tax situation.

<TABLE>
<CAPTION>

            APPROXIMATE YIELD TABLE: NORTH CAROLINA TAX FREE

              1995 Taxable                                                            Tax-Exempt Yield
             Income Bracket
<S>                  <C>         <C>        <C>        <C>         <C>     <C>      <C>      <C>      <C>      <C>      <C>

                                                       Combined
                                                       Federal
                                             North     and North
                                 Federal    Carolina   Carolina
     Single            Joint     Marginal   Marginal   Marginal
     Return           Return     Tax Rate   Tax Rate   Tax Rate*     3.0%     3.5%     4.0%     4.5%     5.0%     5.5%     6.0%
     0 - 12,750       0 - 21,250   15.0%      6.00%     20.100%    3.755%   4.380%   5.006%   5.632%   6.258%   6.884%   7.509%
12,751 - 23,350  21,251 - 39,000   15.0%      7.00%     20.950%    3.795%   4.428%   5.060%   5.693%   6.325%   6.958%   7.590%
23,351 - 56,550  39,001 - 94,250   28.0%      7.00%     33.040%    4.480%   5.227%   5.974%   6.720%   7.467%   8.214%   8.961%
56,551 - 60,000  94,251 -100,000   31.0%      7.00%     35.830%    4.675%   5.454%   6.233%   7.013%   7.792%   8.571%   9.350%
60,601 -117,950 100,001 -143,600   31.0%      7.75%     36.348%    4.713%   5.499%   6.284%   7.070%   7.855%   8.641%   9.426%
117,951-256,500 143,601 -256,500   36.0%      7.75%     40.960%    5.081%   5.928%   6.775%   7.622%   8.469%   9.316%  10.163%
 Over 256,500     Over 256,500     39.6%      7.75%     44.281%    5.384%   6.282%   7.179%   8.076%   8.974%   9.871%  10.768%

</TABLE>

*  The taxable income brackets applicable to North Carolina do not correspond to
the Federal taxable income brackets.  The taxable income brackets presented in
this table represent the breakpoints for both Federal and North Carolina
marginal tax rate changes.  When applying these brackets, Federal taxable income
may be different than North Carolina taxable income.  No state tax credits,
exemptions, or local taxes have been taken into account in arriving at the
combined marginal tax rate.  The income amount shown is income subject to
Federal income tax reduced by adjustments to income, exemptions, and itemized
deductions (including the deduction for state and local income taxes).  If the
standard deduction is taken for Federal income tax purposes, the taxable
equivalent yield required to equal a specified tax-exempt yield is at least as
great as that shown in the table.  It is assumed that the investor is not
subject to the alternative minimum tax.  Where applicable, investors should
consider that the benefit of certain itemized deductions and the benefit of
personal exemptions are limited in the case of higher-income individuals.  For
1995, taxpayers with adjusted gross income in excess of $114,700 are subject to
an overall limitation on certain itemized deductions, requiring a reduction in
such deductions equal to the lesser of (i) 3% of adjusted gross income in excess
of $114,700 or (ii) 80% of the amount of such itemized deductions otherwise
allowable.  The benefit of each personal exemption is phased out at a rate of
two percentage points for each $2,500 (or fraction thereof) of adjusted gross
income in the phase-out zone.  For single taxpayers the range of adjusted gross
income comprising the phase-out zone for 1995 is from $114,700 to $237,201, and
for married taxpayers filing a joint return the range is from $172,050 to
$294,551.  The Federal tax brackets, the threshold amounts at which itemized
deductions are subject to reduction, and the range over which personal
exemptions are phased out will be further adjusted for inflation for each year
after 1995.

                                   APPENDIX A

                             SPECIAL CONSIDERATIONS
                     REGARDING INVESTMENT IN NORTH CAROLINA
                             MUNICIPAL OBLIGATIONS

      The concentration of investments in North Carolina Municipal Obligations
by the Fund raises special investment considerations.  In particular, changes in
the economic condition and governmental policies of North Carolina and its
political subdivisions, agencies, instrumentalities, and authorities could
adversely affect the value of the Fund and its portfolio securities.  This
section briefly describes current economic trends in North Carolina and does not
purport to be a complete description of the economical and financial conditions
in North Carolina. The information set forth below is derived from official
statements prepared in connection with the issuance of North Carolina Municipal
Obligations and other sources that are generally available to investors.  It has
not, however, been updated nor will it be updated during the year.  The Trust
has not independently verified this information.

      The State of North Carolina has two major operating funds: the General
Fund and the Highway Fund.  In addition, the 1989 General Assembly created the
Highway Trust Fund to provide funding for a major highway construction program.
North Carolina derives most of its revenue from taxes, including individual
income tax, corporation income tax, sales and use taxes, corporation franchise
tax, alcoholic beverage tax, insurance tax, inheritance tax, tobacco products
tax, and soft drink tax.  North Carolina receives other non-tax revenues which
are also deposited in the General Fund.  The most important are Federal funds
collected by North Carolina agencies, university fees and tuition, interest
earned by the North Carolina Treasurer on investments of General Fund moneys and
revenues from the judicial branch.  The proceeds from the motor fuel tax,
highway use tax and motor vehicle license tax are deposited in the Highway Fund
and the Highway Trust Fund.
    
      During the 1989-92 budget years, growth of North Carolina tax revenues
slowed considerably, requiring tax increases and budget adjustments, including
hiring freezes and restrictions, spending constraints, changes in timing of
certain collections and payments, and other short-term budget adjustments
necessary to comply with North Carolina's constitutional mandate for a balanced
budget.  Many areas of North Carolina government were affected.  Reductions in
capital spending, local government aid, and the use of the budget stabilization
reserve, combined with other budget adjustments, brought the budget into
balance.  Tax increases in the fiscal 1992 budget included a $.01 increase in
the North Carolina sales tax and increases in the personal and corporate income
tax rates, as well as increases in the tax on cigarettes and alcohol, among
other items.
   
      Fiscal year 1992 ended with a positive fund balance of approximately
$164.8 million.  By law, $41.2 million of such positive fund balance was
required to be reserved in the General Fund of North Carolina as part of a
"Savings Reserve," leaving an unrestricted General Fund balance at June 30, 1992
of $123.6 million. Fiscal year 1993 ended with a positive General Fund balance
of approximately $537.3 million.  Of this amount, $134.3 million was reserved in
the Savings Reserve and $57 million was reserved in a Reserve for Repair and
Renovation of State Facilities, leaving an unrestricted General Fund balance at
June 30, 1993 of $346 million.  Fiscal year 1994 ended with a positive General
Fund balance of approximately $444.7 million.  An additional $178 million was
available from a reserved fund balance.  Of this aggregate amount, $155.7
million was reserved in the Savings Reserve (bringing the total reserve to
$210.6 million after prior withdrawals) and $60 million was reserved in the
Reserve for Repair and Renovation of State Facilities (bringing the total
reserve to $60 million after prior withdrawals), leaving an unrestricted General
Fund balance at June 30, 1994 of $407 million.  Fiscal year 1995 ended with a
positive General Fund balance of approximately $343.4 million.  An additional
$269.9 million was available from a reserved fund balance.  Of this aggregate
amount, $146.3 million was reserved in the Savings Reserve (bringing the total
reserve to $423.6 million after prior contributions) and $146.3 million was
reserved in the Reserve for Repair and Renovation of State Facilities (bringing
the total reserve to $146.3 million after prior withdrawals), leaving an
unrestricted General Fund balance at June 30, 1995 of $320.7 million.

      The foregoing results are presented on a budgetary basis.  Accounting
principles applied to develop data on a budgetary basis differ significantly
from those principles used to present financial statements in conformity with
generally accepted accounting principles.  Based on a modified accrual basis,
the General Fund balance at June 30, 1993 and 1994 was $681.5 million and
$1,240.9 million, respectively.  The foregoing results for fiscal year 1995 are
based upon unaudited financial information supplied by the Office of State
Budget and Management. Modified accrual basis results were not available as of
the date this Appendix was prepared.

      The 1995-97 biennium budget adopted by the General Assembly authorized
continuation funding from the General Fund of $9,512 million for fiscal 1996 and
$9,763 million for fiscal 1997.  Expansion funds of $280 million for fiscal 1996
were approved, along with capital improvements of $114 million for such fiscal
year.  For fiscal 1997, $267 million of expansion funds were approved, along
with $157 million of capital improvements.  Tax reductions of approximately $363
million for fiscal 1996 and $400 million for fiscal 1997 were authorized,
principally through the repeal of the State's intangible personal property tax
and reductions in the State's unemployment and personal income taxes.  The
General Assembly also took several measures that benefitted the State's
Department of Corrections, including a reservation of $33 million to build new
prison beds. State workers generally received a 2% pay increase.  The General
Assembly also passed a package of tort reform bills that included a cap on
punitive damage awards.

      The North Carolina budget is based upon a number of existing and assumed
State and non-State factors, including State and national economic conditions,
international activity, Federal government policies and legislation and the
activities of the State's General Assembly.  Such factors are subject to change
which may be material and affect the budget.  The Congress of the United States
is considering a number of matters affecting the Federal Government's
relationship with state governments that, if enacted, could affect fiscal and
economic policies of the states, including North Carolina.

      During recent years North Carolina has moved from an agricultural to a
service and goods producing economy.  According to the North Carolina Employment
Security Commission (the "Commission"), in November 1994, North Carolina ranked
ninth among the states in non-agricultural employment and eighth in
manufacturing employment. The Commission estimated North Carolina's seasonally
adjusted unemployment rate in October 1995 to be 3.9% of the labor force, as
compared with an unemployment rate of 5.5% nationwide.

      The following are certain cases pending in which the State of North
Carolina faces the risk of either a loss of revenue or an unanticipated
expenditure which, in the opinion of the North Carolina Department of State
Treasurer, would not materially adversely affect the State's ability to meet its
financial obligations:

      1.   Swanson v. State of North Carolina -- State Tax Refunds - Federal
Retirees.  In Davis v. Michigan (1989), the United States Supreme Court ruled
that a Michigan income tax statute which taxed federal retirement benefits while
exempting those paid by state and local governments violated the constitutional
doctrine of intergovernmental tax immunity.  At the time of the Davis decision,
North Carolina law contained similar exemptions in favor of state and local
retirees.  Those exemptions were repealed prospectively, beginning with the 1989
tax year.  All public pension and retirement benefits are now entitled to a
$4,000 annual exclusion.

      Following Davis, federal retirees filed a class action suit in federal
court in 1989 seeking damages equal to the North Carolina income tax paid on
federal retirement income by the class members.  A companion suit was filed in
state court in 1990.  The complaints alleged that the amount in controversy
exceeded $140 million.  The North Carolina Department of Revenue estimate of
refunds and interest liability is $280.89 million as of June 30, 1994.  In 1991,
the North Carolina Supreme Court ruled in favor of the State in the state court
action, concluding that Davis could only be applied prospectively and that the
taxes collected from the federal retirees were thus not improperly collected. In
1993, the United States Supreme Court vacated that decision and remanded the
case back to the North Carolina Supreme Court.  The North Carolina Supreme Court
then ruled in favor of the State on the grounds that the federal retirees had
failed to comply with state procedures for challenging unconstitutional taxes.
The United States District Court ruled in favor of the defendants in the
companion federal case, and a petition for reconsideration was denied.
Plaintiffs appealed to the United States Court of Appeals, which concurred with
the lower court's ruling. The United States Supreme court rejected an appeal,
ruling that the lawsuit was a state matter, leaving the North Carolina Supreme
Court's ruling in force.

      An additional lawsuit was recently filed in State court by Federal
pensioners to recover State income taxes paid on Federal retirement benefits.
This case grew out of a claim by Federal pensioners in the original Federal
court case in Swanson.  In the new lawsuit, the plaintiffs allege that when the
State granted an increase in retirement benefits to State retirees in the same
legislation that equalized tax treatment between state and Federal retirees, the
increased benefits to State retirees constituted an indirect violation of Davis.
The lawsuit seeks a refund of taxes paid by Federal retirees on Federal
retirement benefits received in the years 1989 through 1993 and refunds or
monetary relief sufficient to equalize the alleged on-going discriminatory
treatment for those years.  An extension of time to answer the complaint has
been filed by the North Carolina Attorney General, who believes that sound legal
authority and arguments support the denial of this claim.

      2.    Bailey v. State of North Carolina -- State Tax Refunds - State
Retirees.   State and local governmental retirees filed a class action suit in
1990 as a result of the repeal of the income tax exemptions for state and local
government retirement benefits.  The original suit was dismissed after the North
Carolina Supreme Court ruled in 1991 that the plaintiffs had failed to comply
with state law requirements for challenging unconstitutional taxes and the
United States Supreme Court denied review.  In 1992, many of the same plaintiffs
filed a new lawsuit alleging essentially the same claims, including breach of
contract, unconstitutional impairment of contract rights by the State in taxing
benefits that were allegedly promised to be tax-exempt and violation of several
state constitutional provisions.

      On May 31, 1995 the Superior Court issued an order ruling in favor of the
plaintiffs.  Under the terms of the order, the Superior Court found that the act
of the General Assembly that repealed the tax exemption on State and local
government retirement benefits is null, void, and unenforceable and that
retirement benefits which were vested before August 1989 are exempt from
taxation. The North Carolina Attorney General intends to pursue an appeal from
this order.


      The North Carolina Attorney General's Office estimates that the amount in
controversy is approximately $40-$45 million annually for the tax years 1989
through 1991.  In addition, it is anticipated that the decision reached in this
case will govern the resolution of tax refund claims made by retired state and
local government employees for taxes paid on retirement benefit income for tax
years after 1991.  Furthermore, if the order of the Superior Court is upheld,
its provisions would apply prospectively to prevent future taxation of State and
local government retirement benefits that were vested before August 1989.

      In October, 1993, the State issued a total of $194.7 million general
obligation bonds (consisting of $87.5 million Prison and Youth Services
Facilities Bonds, $61 million Public Improvement Refunding Bonds, $30.2 million
Highway Refunding Bonds, and $16 million Clean Water Refunding Bonds).  An
additional $67.5 million general obligation bonds (Prison and Youth Services
Facilities Bonds) were issued in November, 1993.  On November 2, 1993, a total
of $740 million general obligation bonds (consisting of $310 million University
Improvement Bonds, $250 million Community College Bonds, $145 million Clean
Water Bonds, and $35 million State Parks Bonds) were approved by the voters of
the State.  Pursuant to this authorization, the State issued $400 million
general obligation bonds (Capital Improvement Bonds) in January, 1994.  The
proceeds of these Capital Improvement Bonds may be used for any purpose for
which the proceeds of the University Improvement Bonds, Community College Bonds,
and State Parks Bonds may be used (none of such proceeds may be used for Clean
Water purposes). An additional $60 million general obligation bonds (Clean Water
Bonds) were issued in September and October, 1994.  The remaining $85 million
general obligation bonds (Clean Water Bonds) were issued in June and July, 1995.
The offering of the remaining $195 million of these authorized bonds is
anticipated to occur over the next two years.

      Currently, Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, and Fitch Investors Service, Inc. rate North Carolina general obligation
bonds Aaa, AAA, and AAA, respectively.  See Appendix A to the Prospectus.

                                   APPENDIX B
                     DESCRIPTION OF MUNICIPAL BOND RATINGS

The ratings of the nationally recognized securities rating organizations
(including Moody's Investors Service, Inc., Standard & Poor's Ratings Group,
Fitch Investors Service and Duff & Phelps) represent each firms' opinions as to
the quality of various Municipal Obligations.  It should be emphasized, however,
that ratings are not absolute standards of quality.  Consequently, Municipal
Obligations with the same maturity, coupon and rating may have different yields
while Municipal Obligations of the same maturity and coupon with different
ratings may have the same yield.  The descriptions offered by each individual
rating firm may differ slightly, but the following offers Moody's and S&P's
description of each rating category:
    
                        Moody's Investors Service, Inc.

Municipal Bonds

Aaa: Bonds which are rated Aaa are judged to be of the best quality.  They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure.  While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds.  They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long- term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations.  Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured.  Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time.  Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa through B in its corporate bond rating system; the
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic category.

Municipal Short-Term Obligations

Ratings: Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG).  Such rating recognizes the
differences between short term credit risk and long term risk.  Factors
affecting the liquidity of the borrower and short term cyclical elements are
critical in short term ratings, while other factors of major importance in bond
risk, long term secular trends for example, may be less important over the short
run.

Commercial Paper

Moody's commercial paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
365 days.

Issuers rated Prime-1 or P-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations.  Prime-1 or P-1
repayment ability will often be evidenced by the following characteristics:

   -  Leading market positions in well established industries.
   -  High rates of return on funds employed.
   -  Conservative capitalization structures with moderate reliance on debt and
      ample asset protection.
   -  Broad margins in earnings coverage of fixed financial charges and high
      internal cash generation.
   -  Well established access to a range of financial markets and assured
      sources of alternate liquidity.

Prime-2

Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong ability
for repayment of senior short-term obligations.  This will normally be evidenced
by many of the characteristics cited above, but to a lesser degree.  Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions.  Ample alternate liquidity is maintained.
   
                        Standard & Poor's Ratings Group
    
Investment Grade Debt

AAA: Debt rated AAA has the highest rating assigned by S&P.  Capacity to pay
interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible  to adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal.  Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

Plus (+) or Minus (-): The foregoing ratings may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.

Commercial Paper

S&P's commercial paper ratings is a current assessment of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.

   A: Issues assigned this highest rating are regarded as having the greatest
   capacity for timely payment.  Issues in this category are delineated with the
   numbers 1, 2 and 3 to indicate the relative degree of safety.

   A-1: This designation indicates that the degree of safety regarding timely
   payments is either overwhelming or very strong.  Those issues determined to
   possess overwhelming safety characteristics are denoted with a plus (+) sign
   designation.

   A-2: Capacity for timely payment on issues with this designation is
   satisfactory.  However, the relative degree of safety is not as high as for
   issues designated "A-1".


                     THE NORTH CAROLINA TAX FREE BOND FUND

                            PORTFOLIO OF INVESTMENTS

                                August 31, 1995

                                          Principal  Interest  Maturity
                                            Amount     Rate      Date    Value
MUNICIPAL OBLIGATIONS - 94.22%

   Appalachian State University, North
      Carolina Utility System Revenue       $150,000   5.90%  05-15-08 $158,145
   Buncombe County, North Carolina
      Public Improvement General Obligation  100,000   5.80%  02-01-09  104,642
   Cary, North Carolina General Obligation   100,000   5.50%  02-01-04  105,194
   Catawba County, North Carolina
      General Obligation                     100,000   4.50%  06-01-01  100,144
   Catawba County, North Carolina
      Hospital Revenue                       100,000   6.20%  10-01-09  105,165
   Charlotte-Mecklenburg Hospital,
      Authorized North Carolina Health Care
      System Revenue                         100,000   5.75%  01-01-12   99,572
   Charlotte, North Carolina Series A
      General Obligation                     100,000   5.25%  07-01-03  104,852
   Charlotte, North Carolina Water &
      Sewer General Obligation               100,000   5.70%  02-01-06  106,694
   Charlotte, North Carolina Certificate of
      Participation Law Enforcement
      Facilities Series A General Obligation 100,000   6.10%  12-01-15  101,959
   Cleveland County, North Carolina
      General Obligation                     100,000   5.10%  06-01-03  103,024
   Concord, North Carolina Utilities
      System Revenue                         100,000   5.75%  12-01-17  101,819
   Concord, North Carolina Utilities
      System Revenue                         125,000   5.50%  12-01-14  122,804
   Dare County, North Carolina Utilities
      System Revenue                         100,000   5.75%  06-01-14   99,422
   Durham, North Carolina
      General Obligation                     100,000   5.10%  12-01-07  100,857
   Durham, North Carolina
      General Obligation                     100,000   5.80%  02-01-12  103,210
   East Carolina University, North
      Carolina University Revenue            100,000   5.25%  05-01-07   99,132
   Fayetteville, North Carolina Public
      Works Community Revenue                100,000   4.80%  03-01-07   96,486
   Gaston, North Carolina
      General Obligation                     175,000   5.70%  03-01-11  177,886
   Gastonia, North Carolina Combined
      Utilities System Revenue                90,000   5.70%  05-01-06   94,544
   Gastonia, North Carolina
      General Obligation                     100,000   5.70%  08-01-15   98,128
   Greensboro, North Carolina
      General Obligation                     100,000   5.80%  04-01-07  106,504
   Greenville County, North Carolina
      Utilities Revenue                      100,000   6.00%  09-01-10  102,921
   Hickory, North Carolina
      General Obligation                     100,000   6.50%  05-01-10  106,778
   High Point, North Carolina
      General Obligation                     100,000   5.60%  03-01-13  100,778

                                                                     (Continued)
                     THE NORTH CAROLINA TAX FREE BOND FUND

                            PORTFOLIO OF INVESTMENTS

                                August 31, 1995
                                  (Continued)

                                           Principal Interest Maturity
                                             Amount    Rate     Date     Value

   Lincoln County, North Carolina
      General Obligation                    $100,000   4.70%  06-01-01 $101,249
   Mecklenburg County, North Carolina
      Public Improvement General Obligation  150,000   5.40%  04-01-04  158,533
   Morganton, North Carolina Water
      & Sewer General Obligation             100,000   5.70%  06-01-14  100,678
   North Carolina Municipal Power Agency -
      Number 1 - Catawba Electric Revenue    100,000   6.00%  01-01-09  105,544
   North Carolina State Clean Water
      Bonds Series A General Obligation      100,000   5.80%  06-01-16  102,302
   Pitt County, North Carolina
      General Obligation                     100,000   6.10%  06-01-08  107,005
   Raleigh, North Carolina
     General Obligation                      100,000   6.50%  03-01-08  108,257
   Rowan County, North Carolina
      General Obligation                     150,000   5.60%  05-01-10  151,633
   Union County, North Carolina
      Series A General Obligation            100,000   5.20%  06-01-12   95,054
   University of North Carolina at
      Chapel Hill Utility System Revenue     100,000   4.70%  08-01-01  101,284
   Wake County, North Carolina Industrial
      Facilities & Pollution Control Findings
      Authority Revenue, adjustable rate     100,000   6.90%  04-01-09  107,790
   Wilmington, North Carolina
      General Obligation                     100,000   5.60%  06-01-11  101,141

Total Municipal Obligations (Cost $3,820,636)                        $3,941,130

REPURCHASE AGREEMENT (a) - 3.63%
    Wachovia Bank                           $151,939   5.83%  09-01-95  151,939
    (Cost $151,939)

Total Value of Investments (Cost $3,972,575) (b)              97.85%  4,093,069
Other Assets Less Liabilities                                  2.15%     90,080
   Net Assets                                                100.00% $4,183,149

   (a) Joint repurchase agreement entered into August 31, 1995, with a maturity
       value of $10,869,785 collateralized by $10,770,000 U.S. Treasury Notes,
       6.50%, due May 15, 1997. The aggregate market value of the collateral at
       August 31, 1995 was $11,086,298.  The Fund's pro rata interest in the
       collateral at August 31, 1995 was $154,986.  The Fund's pro rata interest
       in the joint repurchase agreement is taken into possession by the Fund
       upon entering into the repuchase agreement.  The collateral is marked to
       market daily to ensure its market value is at least 102 percent of the
       sales repurchase agreement.

   (b) Aggregate cost for federal income tax purposes is the same as for
       financial reporting purposes. Unrealized appreciation (depreciation) of
       investments for book and federal income tax purposes is as follows:

      Unrealized appreciation                                        $126,289
      Unrealized depreciation                                          (5,795)

               Net unrealized appreciation                           $120,494

See accompanying notes to financial statements



                     THE NORTH CAROLINA TAX FREE BOND FUND

                      STATEMENT OF ASSETS AND LIABILITIES

                                August 31, 1995


    ASSETS
       Investments at value (Cost $3,972,575)                   $4,093,069
       Cash                                                         29,732
       Interest receivable                                          62,890
       Reserve premium                                               1,203

          Total assets                                           4,186,894

    LIABILITIES
       Accrued expenses                                              1,159
       Payable to Advisor                                            2,586

          Total liabilities                                          3,745

    NET ASSETS
       (applicable to 403,672 shares outstanding; unlimited
       shares of no par value beneficial interest authorized)   $4,183,149

    NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
       ($4,183,149 / 403,672 shares)                                $10.36


    NET ASSETS CONSIST OF:
       Paid-in capital                                          $4,163,428
       Undistributed net investment income                           1,521
       Accumulated net realized loss on investments               (102,294)
       Net unrealized appreciation on investments                  120,494
                                                                $4,183,149


    See accompanying notes to financial statements




                     THE NORTH CAROLINA TAX FREE BOND FUND

                            STATEMENT OF OPERATIONS

                           Year ended August 31, 1995


    INVESTMENT INCOME
       Income
          Interest                                              $159,592

       Expenses
          Professional fees                                       21,820
          Fund accounting fees (note 2)                           21,000
          Investment advisory fees (note 2)                       10,321
          Custody fees                                             4,832
          Shareholder servicing expenses                           4,550
          Fund administration fees (note 2)                        4,423
          Trustee fees and meeting expenses                        4,200
          Printing expenses                                        2,873
          Securities pricing fees                                  2,420
          Shareholder servicing fees (note 3)                      1,574
          Other operating expenses                                 1,350
          Shareholder recordkeeping fees                             861
          Registration and filing expenses                           860
          Registration and filing administration fees                226

             Total expenses                                       81,310

             Less:
                Expense reimbursements (note 2)                  (41,501)
                Investment advisory fees waived (note 2)         (10,321)
                Fund administration fees waived (note 2)          (4,423)

             Net expenses                                         25,065

                Net investment income                            134,527

    REALIZED AND UNREALIZED GAIN ON INVESTMENTS

       Net realized loss from investment transactions            (83,088)
       Decrease in unrealized depreciation on investments        161,103

          Net realized and unrealized gain on investments         78,015

             Net increase in net assets resulting
              from operations                                   $212,542


    See accompanying notes to financial statements




                     THE NORTH CAROLINA TAX FREE BOND FUND

                      STATEMENTS OF CHANGES IN NET ASSETS




                                                        Year ended   Year ended
                                                        August 31,   August 31,
                                                           1995         1994
INCREASE IN NET ASSETS

  Operations
     Net investment income                                $134,527     $130,504
     Net realized loss from investment transactions        (83,088)     (19,206)
     (Increase) decrease in unrealized depreciation on
     investments                                           161,103     (104,107)

        Net increase in net assets resulting from
        operations                                         212,542        7,191

  Distributions to shareholders from
     Net investment income                                (133,006)    (130,504)

  Capital share transactions
     (a)Increase in net assets resulting from
        capital share transactions                         174,560    1,628,371

           Total increase in net assets                    254,096    1,505,058

NET ASSETS
  Beginning of year                                      3,929,053    2,423,995

  End of year                                           $4,183,149   $3,929,053



(a) A summary of capital share activity follows:

                               Year ended August 31,    Year ended August 31,
                                       1995                     1994
                                 Shares      Value       Shares       Value

Shares sold                      262,514  $2,637,430     226,138   $2,302,414
Shares issued for reinvestment
of distributions                  10,102     101,474       6,009       60,751
                                 272,616   2,738,904     232,147    2,363,165

Shares redeemed                 (261,060) (2,564,344)    (73,190)    (734,794)

   Net increase                   11,556    $174,560     158,957   $1,628,371

See accompanying notes to financial statements




                     THE NORTH CAROLINA TAX FREE BOND FUND

                              FINANCIAL HIGHLIGHTS

                (For a Share Outstanding Throughout the Period)
                                                                   For the
                                                                 period from
                                                               January 13, 1993
                                          Year         Year     (commencement
                                          ended        ended   of operations) to
                                       August 31,    August 31,   August 31,
                                          1995          1994        1993

Net asset value, beginning of period       $10.02      $10.40      $10.00

   Income (loss) from investment operations
      Net investment income                  0.45        0.42        0.24
      Net realized and unrealized gain       0.34       (0.38)       0.40

         Total from investment operations    0.79        0.04        0.64

   Less distributions to shareholders from
      Net investment income                 (0.45)      (0.42)      (0.24)

Net asset value, end of period             $10.36      $10.02      $10.40


Total return                                 8.16%       0.38%      10.43%(a)

Ratios / supplemental data

   Net assets, end of period           $4,183,149  $3,929,053    $2,423,995

   Ratio of expenses to average net assets
      Before expense reimbursements and
       and fee waivers                       2.76%       3.26%         3.50%(a)
      After expense reimbursements and
       and fee wiavers                       0.85%       0.84%         0.77%(a)

   Ratio of net investment income to average net assets
      Before expense reimbursements and
       and fee waivers                       2.65%       1.67%         1.25%(a)
      After expense reimbursements and

       and fee waivers                       4.56%       4.09%         3.98%(a)


   Portfolio turnover rate                  83.12%      22.82%         0.00%


(a) Annualized.

See accompanying notes to financial statements

                     THE NORTH CAROLINA TAX FREE BOND FUND

                         NOTES TO FINANCIAL STATEMENTS

                                August 31, 1995



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The North Carolina Tax Free Bond Fund (the "Fund") is a non-diversified
      series of shares of beneficial interest of the Albemarle Investment Trust
      (the "Trust").  The Trust is an open-end investment company which was
      organized in 1992 as a Massachusetts Business Trust and is registered
      under the Investment Company Act of 1940.  The Fund began operations on
      January 13, 1993. The following is a summary of significant accounting
      policies followed by the Fund.

      A.    Security Valuation - The Fund's investments in securities are
            carried at market value.  Securities listed on an exchange or quoted
            on a national market system are valued at the last sales price on
            the day of valuation.  Other securities are valued at the most
            recent bid price.  Securities for which market quotations are not
            readily available are valued by an independent pricing service which
            takes into consideration institutional bid and last sale prices, and
            securities prices, yields, maturities, call features, ratings and
            institutional trading in similar groups of securities; or if not
            available from the pricing service, the value of a security is
            determined following procedures approved by the Board of Trustees.
            Short-term investments are valued at cost which approximates market
            value.

            The Fund invests in debt instruments of municipal issuers within the
            state of North Carolina.  The issuers' abilities to meet their
            obligations may be affected by economic developments in the state of
            North Carolina.

      B.    Federal Income Taxes - No provision has been made for federal income
            taxes since it is the policy of the Fund to comply with the
            provisions of the Internal Revenue Code applicable to regulated
            investment companies and to make sufficient distributions of taxable
            income to relieve it from all federal income taxes.

            Net realized gains (losses) may differ for financial statements and
            tax purposes primarily because of losses incurred subsequent to
            October 31, which are deferred for tax purposes.

      C.    Investment Transactions - Investment transactions are recorded on
            the trade date.  Realized gains and losses are determined using the
            specific identification cost method. Interest income is recorded
            daily on the accrual basis.

      D.    Distributions to Shareholders - Distributions to shareholders are
            recorded on the ex-dividend date.  The Fund generally declares
            dividends daily, payable monthly on a date selected by the Fund's
            Trustees.  In addition, distributions may be made annually in
            November out of net realized gains through October 31 of that year.
            The Fund may make a supplemental distribution subsequent to the end
            of its fiscal year ending August 31.  For the year ended August 31,
            1995, 99% of the distributions paid from net investment income
            qualify as tax-exempt dividends to non-corporate shareholders.


                     THE NORTH CAROLINA TAX FREE BOND FUND

                         NOTES TO FINANCIAL STATEMENTS

                                August 31, 1995




NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

      Pursuant to an investment advisory agreement (commenced April 1, 1994),
      Boys, Arnold & Company, Inc. (the "Advisor") provides the Fund with a
      continuous program of supervision of the Fund's assets, including the
      composition of its portfolio, and furnishes advice and recommendations
      with respect to investments, investment policies, and the purchase and
      sale of securities.  As compensation for its services, the Advisor
      receives a fee at the annual rate of 0.35% of the Fund's average daily net
      assets.  Prior to April 1, 1994, T. Leavell & Associates acted as
      investment advisor to the Fund and received a fee at the annual rate of
      0.25% of the Fund's first $100 million of average daily net assets and
      0.10% of average daily net assets over $100 million.

      The Fund's administrator, The Nottingham Company (the "Administrator"),
      provides administrative services to and is generally responsible for the
      overall management and day-to-day operations of the Fund pursuant to an
      accounting and administrative agreement with the Trust.  As compensation
      for its services, the Administrator receives a fee at the annual rate of
      0.15% of the Fund's average daily net assets.  The Administrator also
      receives a monthly fee of $1,750 for accounting and recordkeeping
      services.  Additionally, the Administrator charges the Fund for servicing
      of shareholder accounts and registration of the Fund's shares.  The
      Administrator also charges the Fund for certain expenses involved with the
      daily valuation of portfolio securities.

      Currently, the Fund does not offer its shares for sale in states which
      require limitations to be placed on its expenses.  The Advisor has
      voluntarily waived its fee amounting to $10,321 ($0.03 per share) and has
      reimbursed a portion of the Fund's operating expenses for the year ended
      August 31, 1995. The total fees waived and expenses reimbursed by the
      advisor amounted to $51,822.

      The Administrator has voluntarily waived a portion of its fee amounting to
      $4,423 ($0.01 per share).

      Certain trustees and officers of the Trust are also officers of the
      Advisor or the Administrator.

NOTE 3 - SHAREHOLDER SERVICING FEES

      The Board of Trustees, including a majority of the Trustees who are not
      "interested persons" of the Trust as defined in the Investment Company Act
      of 1940, adopted a Shareholder Servicing Fee Plan (the "Plan").  The Plan
      regulates the manner in which a regulated investment company may assume
      expenses from the servicing and maintenance of shareholder accounts.

      The Plan provides that the Fund may incur certain expenses for payment to
      persons for providing services including, but not limited to, responding
      to shareholder inquiries, providing information on shareholders'
      investments in the Fund, and providing such other shareholder services as
      the Trust may reasonably request.  The basis for amounts paid under the
      Plan is determined by the Board of Trustees.  Expenses pursuant to the
      Plan may not exceed 0.25% of the Fund's average daily net assets per annum
      since inception of the Plan, nor exceed 0.25% per annum of the average net
      assets of the shareholder accounts being serviced.  During the year ended
      August 31, 1995, the Fund paid $1,574 of shareholder servicing fees to an
      entity of which a former Trustee of the Trust is an officer.


                     THE NORTH CAROLINA TAX FREE BOND FUND

                         NOTES TO FINANCIAL STATEMENTS

                                August 31, 1995


NOTE 4 - PURCHASES AND SALES OF INVESTMENTS

      Purchases and sales of investments, other than short-term investments,
      aggregated $2,637,430 and $2,564,344, respectively, for the year ended
      August 31, 1995.


NOTE 5 - DISTRIBUTIONS TO SHAREHOLDERS

      The Fund has capital loss carryforwards for federal income tax purposes of
      $77,925 which expire in the year 2003.  It is the intention of the Board
      of Trustees of the Trust not to distribute any realized gains until the
      carryforwards have been offset or expire.

      Of the $133,006 of distributions to shareholders ($0.45 per share) during
      the fiscal year ended August 31, 1995, the Fund has determined that
      $131,676 ($0.44 per share) qualify as exempt-interest dividends for
      federal income tax purposes.  Shareholders are advised to consult with
      their professional tax advisor regarding the state income tax implications
      of these distributions.




                         Independent Auditors' Report




To the Board of Trustees and Shareholders
Albemarle Investment Trust


We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The North Carolina Tax Free Bond Fund (the
"Fund"), a series of the Albemarle Investment Trust, as of August 31, 1995, the
related statement of operations for the year then ended and the related
statements of changes in net assets and financial highlights for each of the
years in the two-year period then ended.  These financial statements and
financial highlights are the responsibility of the Fund's management.  Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.  The financial highlights for the
period from January 13, 1993 (commencement of operations) to August 31, 1993
were audited by other auditors whose report thereon dated September 24, 1993
expressed an unqualified opinion on those financials highlights.

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 and financial
highlights are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  Our procedures include confirmation of securities owned as of
August 31, 1995 by correspondence with the custodian.  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 1995 and 1994 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The North Carolina Tax Free Bond Fund as of August 31, 1995, the
results of its operations for the year then ended and the changes in its net
assets and the financial highlights for each of the years in the two-year period
then ended in conformity with generally accepted accounting principles.



Richmond, Virginia
September 29, 1995






                                     PART C

                           ALBEMARLE INVESTMENT TRUST

                     THE NORTH CAROLINA TAX FREE BOND FUND

                                   FORM N-1A

                               OTHER INFORMATION


                                     PART C
                               OTHER INFORMATION

ITEM 24.           Financial Statements and Exhibits

      a)    Financial Statements:

            Financial Statements contained in Part A:

                   Financial Highlights for The North Carolina Tax Free Bond
                   Fund from commencement of operations to August 31 of each
                   fiscal year thereafter through the year ended August 31,
                   1995.

            Financial Statements contained in Part B:
            For The North Carolina Tax Free Bond Fund:
                   Portfolio of Investments, August 31, 1995
                   Statement of Assets and Liabilities, August 31, 1995
                   Statement of Operations, August 31, 1995
                   Statement of Changes in Net Assets for the two previous
                         fiscal periods ending with the year ended August 31,
                         1995
                   Financial Highlights (from commencement of operations to
                   August 31 of each fiscal year thereafter through the year
                   ended August 31, 1995)

      b)    Exhibits*

(1)   Amended and Restated Declaration of Trust - Enclosed Exhibit 1
(2)   By-Laws - Incorporated by reference; filed on 11/13/92; amendment to
      By-Laws filed 2/1/94
(3)   Voting Trust Agreement - Not applicable
(4)   Specimens, etc. - Not applicable - the Fund does not issue certificates
(5)   Investment Advisory Agreement for the Fund - Incorporated by reference;
      filed on 2/1/94
(6)   Distribution Agreement - None
(7)   Retirements Plans Sponsored by Registrant - Not applicable
(8)   Custodian Agreement - Incorporated by reference; filed on 12/10/93
(9)   (a)   Fund Accounting, Dividend Disbursing & Transfer Agent and
            Administration Agreement - Incorporated by reference; filed on
            11/13/92
      (b)   Amendment to Fund Accounting, Dividend Disbursing & Transfer Agent
            and Administration Agreement - Enclosed Exhibit 9(b)
      (c)   Shareholder Servicing Plan - Enclosed Exhibit 9(c)
(10)        Opinion of Counsel - Enclosed Exhibit 10
(11)        Consent of Auditors - Enclosed Exhibit 11
(12)        Financial Statements Omitted - Not applicable
(13)        Initial Capital Agreement - Not applicable
(14)        Prototype Plans - Not applicable
(15)        Plan of Distribution under Rule 12b-1 - None
(16)        Computation of Performance - Enclosed Exhibit 16
(17)        Powers of Attorney - Incorporated by reference; filed on 11/13/92
            and 11/17/94
(18)        Rule 18f-3 Multi-Class Plan - Not applicable

*     All exhibits are being refiled herewith pursuant to the applicable
      regulations under EDGAR.

ITEM 25.           Persons Controlled by or Under Common Control with Registrant

            No person is controlled by or under common control with Registrant.

ITEM 26.           Number of Holders of Securities

            As of December 5, 1995, the number of record holders of each class
            of securities of Registrant was as follows:

                                                           Number of
            Title of Class                                 Record Holders

            The North Carolina Tax Free Bond Fund                102

ITEM 27.           Indemnification

            Reference is hereby made to the specified sections of the following
            documents filed or included by reference as exhibits hereto:

            The Trust's Declaration of Trust (Article VIII, Sections 8.4 through
            8.6), Investment Advisory Agreement (Section 8(b)), and
            Administration Agreement (Section 8(b)), which provide for
            indemnification of certain persons action on behalf of the Trust.

            The Trustees and officers of the Registrant and the personnel of the
            Registrant's Administrator are insured under an errors and omissions
            liability insurance policy.  The Registrant and its officers are
            also insured under the fidelity bond required by Rule 17g-1 under
            the Investment Company Act of 1940.

ITEM 28.           Business and other Connections of Investment Advisor

            See the Statement of Additional Information section entitled
            "Management of the Fund - Trustees and Officers" and the Investment
            Advisor's Form ADV filed with the Commission for the activities and
            affiliations of the officers and directors of the Investment Advisor
            of the Registrant. Except as so provided, to the knowledge of
            Registrant, none of the directors or executive officers of the
            Investment Advisor is or has been at any time during the past two
            fiscal years engaged in any other business, profession, vocation or
            employment of a substantial nature.  The Investment Advisor
            currently serves as investment advisor to numerous institutional and
            individual clients.

ITEM 29.           Principal Underwriter - Not Applicable

ITEM 30.           Location of Accounts and Records

            All account books and records not normally held by the Custodian are
            held by the Registrant, in the offices of The Nottingham Company,
            Administrator and Transfer Agent to the Registrant, or in the office
            of the Advisor.

            The address of The Nottingham Company is 105 North Washington
            Street, Post Office Drawer 69, Rocky Mount, North Carolina
            27802-0069.  The office of Boys, Arnold & Company is 1272
            Hendersonville Road, Asheville, North Carolina  28813-5255.

ITEM 31.           Management Services

            The substantive provisions of the Fund Accounting, Dividend
            Disbursing & Transfer Agent and Administration Agreement between the
            Registrant and The Nottingham Company are discussed in Part B
            hereof.

ITEM 32.           Undertakings

            Registrant undertakes to furnish each person to whom a Prospectus is
            delivered with a copy of the latest annual report to shareholders of
            each series of Registrant upon request and without charge.



                                                       SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of Rocky
Mount, State of North Carolina on the 14th day of December, 1995.

ALBEMARLE INVESTMENT TRUST


By: Frank P. Meadows III
    Frank P. Meadows III
    Chairman and Treasurer, Board of Trustees

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated.


                  *
                                              Trustee
Edwin B. Armstrong

                  *
                                              Trustee
J. Finley Lee, Jr.


Frank P. Meadows                              Trustee, Chairman and Treasurer
Frank P. Meadows III                          (Principal Executive Officer,
                                              Principal Financial Officer
                                              and Principal Accounting
                                              Officer)
                  *
                                              Trustee
Jon L. Vannice



* By:  Frank P. Meadows III                   Dated: December 14, 1995
       Frank P. Meadows III
       Attorney-in-Fact


                           ALBEMARLE INVESTMENT TRUST
                                 EXHIBIT INDEX


                                                                 SEQUENTIAL PAGE
EXHIBIT NUMBER     DESCRIPTION                                       NUMBER

Exhibit 99.B.1     Amended and Restated Declaration of Trust

Exhibit 99.B.2     Bylaws, as amended

Exhibit 99.B.5     Investment Advisory Agreement

Exhibit 99.B.8     Custody Agreement

Exhibit 99.B.9.a   Fund Accounting, Dividend Disbursing &
                   Transfer Agent and Administration Agreement

Exhibit 99.B.9.b   Amendment to Fund Accounting, Dividend Disbursing &
                   Transfer Agent and Administration Agreement

Exhibit 99.B.9.c   Shareholder Servicing Plan

Exhibit 99.B.10    Opinion of Counsel

Exhibit 99.B.11    Consent of Auditors

Exhibit 99.B.16    Computation of Performance

Exhibit 99.B.17    Powers of Attorney



                                   Exhibit 1

                   Amended and Restated Declaration of Trust



                           ALBEMARLE INVESTMENT TRUST
                              AMENDED AND RESTATED
                       AGREEMENT AND DECLARATION OF TRUST

                               Table of Contents
                                                                            Page

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I

                THE TRUST
     SECTION 1.1      Name . . . . . . . . . . . . . . . . . . . . . . . . . . 2
     SECTION 1.2      Location . . . . . . . . . . . . . . . . . . . . . . . . 2
     SECTION 1.3      Nature of Trust. . . . . . . . . . . . . . . . . . . . . 3
     SECTION 1.4      Definitions. . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II
                PURPOSE OF THE TRUST . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III
                POWERS OF THE TRUSTEES. . . . . . . . . . . . . . . . . . . .  7
     SECTION 3.1      Powers in General. . . . . . . . . . . . . . . . . . .   7
     SECTION 3.2      Borrowings; Financings; Issuance of Securities . . . .  12
     SECTION 3.3      Deposits . . . . . . . . . . . . . . . . . . . . . . .  13
     SECTION 3.4      Allocations. . . . . . . . . . . . . . . . . . . . . .  13
     SECTION 3.5      Further Powers and Limitations . . . . . . . . . . . .  13

ARTICLE IV
                TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . .  13
     SECTION 4.1      Number; Election; Term . . . . . . . . . . . . . . . .  13
     SECTION 4.2      Trustees' Meetings . . . . . . . . . . . . . . . . . .  16
     SECTION 4.3      Committees . . . . . . . . . . . . . . . . . . . . . .  16
     SECTION 4.4      Officers . . . . . . . . . . . . . . . . . . . . . . .  16
     SECTION 4.5      Compensation of Trustees and Officers. . . . . . . . .  17
     SECTION 4.6      Ownership of Shares and Securities of the Trust. . . .  17
     SECTION 4.7      Right of Trustees and Officers to Own Property or to
                      Engage in Business; Authority of Trustees to Permit
                      Others to do Likewise. . . . . . . . . . . . . . . . .  17
     SECTION 4.8      Reliance on Experts. . . . . . . . . . . . . . . . . .  18
     SECTION 4.9      Surety Bonds . . . . . . . . . . . . . . . . . . . . .  18
     SECTION 4.10     Apparent Authority of Trustees and Officers . . . . . . 18
     SECTION 4.11     Other Relationships Not Prohibited. . . . . . . . . . . 18
     SECTION 4.12     Payment of Trust Expenses . . . . . . . . . . . . . . . 19
     SECTION 4.13     Ownership of the Trust Property . . . . . . . . . . . . 19

ARTICLE V
                DELEGATION OF MANAGERIAL RESPONSIBILITIES. . . . . . . . . .  20
     SECTION 5.1      Appointment; Action by Less than All Trustees. . . . .  20
     SECTION 5.2      Certain Contracts. . . . . . . . . . . . . . . . . . .  20

ARTICLE VI
                FUNDS AND SHARES . . . . . . . . . . . . . . . . . . . . . .  22

     SECTION 6.1      Description of Funds and Shares. . . . . . . . . . . .  23
     SECTION 6.2      Establishment and Designation of Certain Funds;
                      General Provisions for All Funds. . . . . . . . . . . . 24
     SECTION 6.3      Ownership of Shares. . . . . . . . . . . . . . . . . .  28
     SECTION 6.4      Investments in the Trust . . . . . . . . . . . . . . .  28
     SECTION 6.5      No Preemptive Rights . . . . . . . . . . . . . . . . .  29
     SECTION 6.6      Status of Shares . . . . . . . . . . . . . . . . . . .  29

ARTICLE VII
                SHAREHOLDERS' VOTING POWERS AND MEETINGS . . . . . . . . . .  29
     SECTION 7.1      Voting Powers. . . . . . . . . . . . . . . . . . . . .  29
     SECTION 7.2      Number of Votes and Manner of Voting; Proxies. . . . .  30
     SECTION 7.3      Meetings . . . . . . . . . . . . . . . . . . . . . . .  30
     SECTION 7.4      Record Dates . . . . . . . . . . . . . . . . . . . . .  31
     SECTION 7.5      Quorum and Required Vote . . . . . . . . . . . . . . .  31
     SECTION 7.6      Action by Written Consent. . . . . . . . . . . . . . .  32
     SECTION 7.7      Inspection of Records. . . . . . . . . . . . . . . . .  32
     SECTION 7.8      Additional Provisions. . . . . . . . . . . . . . . . .  32

ARTICLE VIII
                LIMITATION OF LIABILITY; INDEMNIFICATION . . . . . . . . . .  32
     SECTION 8.1      Trustees and Shareholders Not Personally Liable. . . .  32
     SECTION 8.2      Trustees' Good Faith Action. . . . . . . . . . . . . .  33
     SECTION 8.3      Indemnification of Shareholders. . . . . . . . . . . .  33
     SECTION 8.4      Indemnification of Trustees and Officers . . . . . . .  34
     SECTION 8.5      Compromise Payment . . . . . . . . . . . . . . . . . .  35
     SECTION 8.6      Indemnification Not Exclusive. . . . . . . . . . . . .  35
     SECTION 8.7      Liability of Third Persons Dealing with Trustees . . .  35

ARTICLE IX
                DURATION; REORGANIZATION; AMENDMENTS . . . . . . . . . . . .  36
     SECTION 9.1      Duration and Termination of Trust. . . . . . . . . . .  36
     SECTION 9.2      Reorganization . . . . . . . . . . . . . . . . . . . .  36
     SECTION 9.3      Amendments . . . . . . . . . . . . . . . . . . . . . .  37
     SECTION 9.4      Filing of Copies of Declaration and Amendments . . . .  37

ARTICLE X
                MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . .  38
     SECTION 10.1     Governing Law . . . . . . . . . . . . . . . . . . . . . 38
     SECTION 10.2     Counterparts. . . . . . . . . . . . . . . . . . . . . . 38
     SECTION 10.3     Reliance by Third Parties . . . . . . . . . . . . . . . 38
     SECTION 10.4     References; Headings. . . . . . . . . . . . . . . . . . 38


                              AMENDED AND RESTATED

                     AGREEMENT AND DECLARATION OF TRUST OF

                           ALBEMARLE INVESTMENT TRUST


This AGREEMENT AND DECLARATION OF TRUST, originally made at Boston,
Massachusetts the 11th day of August, 1992, by and between the Settlor and the
Initial Trustee to the Trust, and amended and restated by at least a Majority of
the Trustees, this 29th day of November, 1994;

WITNESSETH THAT:


WHEREAS, the Settlor, an individual residing in Massachusetts, has delivered to
the Initial Trustee the sum of one hundred dollars ($100.00) lawful money of the
United States of America in trust hereunder and has authorized the Initial
Trustee and all other persons acting as Trustees hereunder to employ such funds,
and any other funds coming into their hands or the hands of their successor or
successors as such Trustees, to carry on the business of an investment company,
and as such of buying, selling, investing in or otherwise dealing in and with
stocks, bonds, debentures, warrants and other securities, and interests therein,
or calls or puts with respect to any of the same, or financial futures
contracts, or such other and further investment media and other property as the
Trustees may deem advisable, which are not prohibited by law or the terms of
this Declaration; and

WHEREAS, the Initial Trustee has accepted such sum, together with any and all
additions thereto and the income or increments thereof, upon the terms,
conditions and trusts hereinafter set forth; and

WHEREAS, the assets held by the Trustees may be divided into separate Funds,
each with its own separate investment portfolio and investment objectives,
policies and purposes, and the beneficial interest in each such Fund shall be
divided into transferable Shares, there being a separate Series of Shares for
each Fund, all in accordance with the provisions hereinafter set forth; and

WHEREAS, it is desired that the trust established hereby (the "Trust") be
managed and operated as a trust with transferrable shares under the laws of
Massachusetts, of the type commonly known and referred to as a Massachusetts
business trust, in accordance with the provisions hereinafter set forth; and

WHEREAS, this Declaration has been amended from time to time, and at least a
Majority of the Trustees desire to further amend this Declaration and restate
into a single instrument all of the provisions of this Declaration that are now
in effect and operative as provided herein in accordance with Sections 9.3 and
9.4 hereof, all without adversely affecting the rights of any Shareholder or the
limitations on personal liability of any Shareholder or Trustee and without
contravening any applicable law, including the 1940 Act;

Now, THEREFORE, the Initial Trustee, for himself and his successors as Trustees,
has declared, and agreed with the Settlor, and the Trustees whose signatures are
set forth below, for themselves and their successors as Trustees, hereby declare
and agree, for themselves and for all persons who shall hereafter become holders
of Shares of Beneficial Interest of the Trust, of any Series, that the Trustees
will hold the sum delivered to them upon the execution hereof, and thereafter
from time to time, and all other and further cash, Securities and other property
of every type and description which they may in any way acquire in their
capacity as such Trustees, together with the income therefrom and the proceeds
thereof, IN TRUST, to manage and dispose of the same for the benefit of the
holders from time to time of the Shares of the several Series being issued and
to be issued hereunder and in the manner and subject to the provisions hereof,
to wit:

                                   ARTICLE I

                                   THE TRUST

SECTION 1.1         Name.  The name of the Trust shall be "Albemarle Investment
Trust", and so far as may be practicable the Trustees shall conduct the Trust's
activities, execute all documents and enter into legal action, if any, under
that name, which name (and the word "Trust" wherever used in this Agreement and
Declaration of Trust, except where the context otherwise requires) shall refer
to the Trustees in their capacity as Trustees, and not individually or
personally, and shall not refer to the officers, agents or employees of the
Trust or of such Trustees, or to the holders of the shares of Beneficial
Interest of the Trust, of any Series.  If the Trustees determine that the use of
such name is not practicable, legal or convenient at any time or in any
jurisdiction, or if the Trust is required to discontinue the use of such name
pursuant to Section 10.5 hereof, then subject to that Section, the Trustees may
use such other designation, or they may adopt such other name for the Trust as
they deem proper, and the Trust may hold property and conduct its activities
under such designation or name.

SECTION 1.2         Location.  The Trust shall have an office in Rocky Mount,
North Carolina, unless changed by the Trustees to another location in another
jurisdiction within the United States, but such office need not be the sole or
principal office of the Trust.  The Trust may have such other offices or places
of business as the Trustees may from time to time determine to be necessary or
expedient.

SECTION 1.3         Nature of Trust.  The Trust shall be a trust with
transferrable shares under the laws of The Commonwealth of Massachusetts, of the
type referred to in Section 1 of Chapter 182 of the Massachusetts General Laws
and commonly known as a Massachusetts business trust.  The Trust is not intended
to be, shall not be deemed to be, and shall not be treated as, a general
partnership, limited partnership, limited liability company, joint venture,
corporation or joint stock company.  The Shareholders shall be beneficiaries and
their relationship to the Trustees shall be solely in that capacity in
accordance with the rights conferred upon them hereunder.

SECTION 1.4         Definitions.  As used in this Agreement and Declaration of
Trust, the following terms shall have the meanings set forth below unless the
context thereof otherwise requires:

"Accounting Agent" shall have the meaning designated in Section 5.2(g) hereof.

"Administrator" shall have the meaning designated in Section 5.2(b) hereof.

"Affiliated Person" shall have the meaning designated in the 1940 Act.

"By-Laws" shall mean the By-Laws of the Trust, as amended from time to time.

"Certificate of Designation" shall have the meaning designated in Section 6.1
hereof.

"Certificate of Termination" shall have the meaning designated in Section 6.1
hereof.

"Commission" shall have the meaning designated in the 1940 Act.

"Contracting Party" shall have the meaning designated in the preamble to Section
5.2 hereof.

"Covered Person" shall have the meaning designated in Section 8.4 hereof.

"Custodian" shall have the meaning designated in Section 5.2(d) hereof.

"Declaration" and "Declaration of Trust" shall mean this Agreement and
Declaration of Trust, as amended and restated, and all amendments or
modifications thereof as from time to time in effect.  References in this
Agreement and Declaration of Trust to "hereof", "herein" and "hereunder" shall
be deemed to refer to the Declaration of Trust generally, and shall not be
limited to the particular text, Article or Section in which such words appear.

"Disabling Conduct" shall have the meaning designated in Section 8.4 hereof.

"Distributor" shall have the meaning designated in Section 5.2(c) hereof.

"Dividend Disbursing Agent" shall have the meaning designated in Section 5.2(e)
hereof.

"Fund" or "Funds" shall mean one or more of the separate components of the
assets of the Trust which are now or hereafter established and designated under
or in accordance with the provisions of Article VI hereof.

"Fund Assets" shall have the meaning designated in Section 6.2(a) hereof.

"General Items" shall have the meaning designated in Section 6.2(a) hereof.

"Initial Trustee" shall have the meaning designated in the Preamble to the
original Declaration of the Trust dated August 11, 1992.

"Investment Adviser" shall have the meaning designated in Section 5.2(a) hereof.

"Majority of the Trustees" shall mean a majority of the Trustees in office at
the time in question.  At any time at which there shall be only one (1) Trustee
in office, such phrase shall mean such Trustee.

"Majority Shareholder Vote," as used with respect to the election of any Trustee
at a meeting of Shareholders, shall mean the vote for the election of such
Trustee of a plurality of all outstanding Shares, without regard to Series,
represented in person or by proxy and entitled to vote thereon, provided that a
quorum (as determined in accordance with Section 7.5 hereof) is present, and as
used with respect to any other action required or permitted to be taken by
Shareholders, shall mean the vote for such action of the holders of that
majority of outstanding Shares (or where a separate vote of Shares of any
particular Series is to be taken the affirmative vote of that majority of the
outstanding Shares of that Series) which consists of:  (i) a majority of all
Shares (or of all Shares of the particular Series) represented in person or by
proxy and entitled to vote on such action at the meeting of Shareholders at
which such action is to be taken, provided that a quorum (as determined in
accordance with Section 7.5 hereof) is present; or (ii) if such action is to be
taken by written consent of Shareholders, a majority of all outstanding Shares
(or of all outstanding Shares of the particular Series) entitled to vote on such
action; provided, further, that (iii) as used with respect to any action
requiring the affirmative vote of "a majority of the outstanding voting
securities", as the quoted phrase is defined in the 1940 Act, of the Trust or of
any Fund, "Majority Shareholder Vote" shall mean the vote for such action at a
meeting of Shareholders of the smallest majority of all outstanding Shares of
the Trust (or the particular Series) entitled to vote on such action which
satisfies such 1940 Act voting requirement.

"1940 Act" shall mean the provisions of the Investment Company Act of 1940 and
the rules and regulations thereunder, both as amended from time to time, and any
order or orders thereunder which may from time to time be applicable to the
Trust.

"Person" shall mean and include individuals as well as corporations, limited
partnerships, limited liability companies, general partnerships, joint stock
companies, joint ventures, associations, banks, trust companies, business trusts
or any other organizations or entities whatsoever established under the laws of
any jurisdiction, whether or not considered to be legal entities, and
governments and agencies and political subdivisions thereof.

"Principal Underwriter" shall have the meaning designated in Section 5.2(c)
hereof.

"Prospectus," as used with respect to any Fund or Series of Shares, shall mean
the prospectus relating to such Fund or Series which constitutes part of the
currently effective Registration Statement of the Trust under the Securities Act
of 1933, as such prospectus may be amended or supplemented from time to time.

"Securities" shall mean any and all bills, notes, bonds, debentures or other
obligations or evidences of indebtedness, certificates of deposit, bankers'
acceptances, commercial paper, repurchase agreements or other money market
instruments, stocks, shares or other equity ownership interests, and warrants,
options, futures, "when issued" or "delayed delivery" contracts, or other
instruments representing rights to subscribe for, purchase, receive or otherwise
acquire or to sell, transfer, assign or otherwise dispose of any scrip,
certificates, receipts or other instruments evidencing any ownership rights or
interests in, any of the foregoing, issued, guaranteed or sponsored by any
governments, political subdivisions or governmental authorities, municipalities
or instrumentalities, by any individuals, firms, companies, corporations,
syndicates, associations or trusts, or by any other organizations or entities
whatsoever, irrespective of their forms or the names by which they may be
described, whether or not they be organized and operated for profit, and whether
they be domestic or foreign with respect to The Commonwealth of Massachusetts or
the United States of America.

"Securities of the Trust" shall mean any Securities issued by the Trust.

"Series" shall mean one or more of the series of Shares authorized by the
Trustees to represent the beneficial interest in one or more of the Funds.

"Settlor" shall have the meaning designated in the Preamble to the original
Declaration of the Trust dated August 11, 1992.

"Shareholder" shall mean as of any particular time any Person shown of record at
such time on the books of the Trust as a holder of outstanding Shares of any
Series, and shall include a pledgee into whose name any such Shares are
transferred in pledge.

"Shareholder Servicing Agent" shall have the meaning designated in Section
5.2(f) hereof.

"Shares" shall mean the transferable units into which the beneficial interest in
the Trust and each Fund of the Trust (as the context may require) shall be
divided from time to time, and includes fractions of Shares as well as whole
Shares.  All references herein to "Shares" which are not accompanied by a
reference to any particular Series or Fund shall be deemed to apply to
outstanding Shares without regard to Series.

"Single Class Voting," as used with respect to any matter to be acted upon at a
meeting or by written consent of Shareholders, shall mean a style of voting in
which each holder of one or more Shares shall be entitled to one vote on the
matter in question for each Share standing in his name on the records of the
Trust, irrespective of Series, and all outstanding Shares of all Series shall
vote as a single class.

"Statement of Additional Information," as used with respect to any Fund or
Series of Shares, shall mean the statement of additional information relating to
such Fund or Series which constitutes part of the currently effective
Registration Statement of the Trust under the Securities Act of 1933, as
amended, as such statement of additional information may be amended or
supplemented from time to time.

"Transfer Agent" shall have the meaning designated in Section 5.2(e) hereof.

"Trust" shall have the meaning designated in the fourth "Whereas" clause set
forth above.

"Trust Property" shall mean, as of any particular time, any and all property
which shall have been transferred, conveyed or paid to the Trust or the
Trustees, and all interest, dividends, income, earnings, profits and gains
therefrom, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and which at
such time is owned or held by, or for the account of, the Trust or the Trustees,
without regard to the Fund to which such property is allocated.

"Trustees" shall mean, collectively, the Initial Trustee, so long as he shall
continue in office, and all other individuals who at the time in question have
been duly elected or appointed as Trustees of the Trust in accordance with the
provisions hereof and who have qualified and are then in office.  At any time at
which there shall be only one (1) Trustee in office, such term shall mean such
single Trustee.

                                   ARTICLE II

                              PURPOSE OF THE TRUST

The purpose of the Trust shall be to engage in the business of being an
investment company, and as such of subscribing for, purchasing or otherwise
acquiring, holding for investment or trading in, borrowing, lending and selling
short, selling, assigning, negotiating or exchanging and otherwise disposing of,
and turning to account, realizing upon and generally dealing in and with, in any
manner, (i) Securities of all kinds, and (ii) precious metals and other
minerals, contracts to purchase and sell, and other interests of every nature
and kind, in such metals and minerals, and all investments as the Trustees in
their discretion shall determine to be necessary, desirable or appropriate, and
to exercise and perform any and every act, thing or power necessary, suitable or
desirable for the accomplishment of such purpose, the attainment of any of the
objects or the furtherance of any of the powers of a trust with transferrable
shares of the type commonly known as a Massachusetts business trust; and to do
every other act or acts or thing or things incidental or appurtenant to or
growing out of or in connection with the aforesaid objects, purposes or powers,
or any of them, which a trust of the type commonly known as a Massachusetts
business trust is not now or hereafter prohibited from doing, exercising or
performing.

                                  ARTICLE III

                             POWERS OF THE TRUSTEES

SECTION 3.1         Powers in General.  The Trustees shall have, without other
or further authorization, full, entire, exclusive and absolute power, control
and authority over, and the management of, the business of the Trust and over
the Trust Property, to the same extent as if the Trustees were the sole owners
of the business and property of the Trust in their own right, and with such
powers of delegation as may be permitted by this Declaration, subject only to
such limitations as may be expressly imposed by this Declaration of Trust or by
applicable law.  The enumeration of any specific power or authority herein shall
not be construed as limiting the aforesaid power or authority or any specific
power or authority.  Without limiting the foregoing, the Trustees may adopt
By-Laws not inconsistent with this Declaration of Trust providing for the
conduct of the business and affairs of the Trust and may amend and repeal them
to the extent that such By-Laws do not reserve that right to the Shareholders;
they may select, and from time to time change, the fiscal year of the Trust;
they may adopt and use a seal for the Trust, provided, that unless otherwise
required by the Trustees, it shall not be necessary to place the seal upon, and
its absence shall not impair the validity of any document, instrument or other
paper executed and delivered by or on behalf of the Trust.

The Trustees may from time to time in accordance with the provisions of Section
6.1 hereof establish one or more Funds to which they may allocate such of the
Trust Property, subject to such liabilities, as they shall deem appropriate,
each such Fund to be operated by the Trustees as a separate and distinct
investment portfolio and with separately defined investment objectives and
policies and distinct investment purposes, all as established by the Trustees,
or from time to time changed by them.

The Trustees may, as they consider appropriate, elect and remove officers and
appoint and terminate agents and consultants and hire and terminate employees,
any one or more of the foregoing of whom may be a Trustee; they may appoint from
their own number, and terminate any one or more committees consisting of one or
more Trustees, including without implied limitation an Executive Committee,
which may, when the Trustees are not in session and subject to the 1940 Act,
exercise some or all of the power and authority of the Trustees as the Trustees
may determine; in accordance with Section 5.2 hereof they may employ one or more
Investment Advisers, Administrators and Custodians and may authorize any
Custodian to employ subcustodians or agents and to deposit all or any part of
the securities held by the Trust in a system or systems for the central handling
of securities, retain Transfer, Dividend Disbursing, Accounting or Shareholder
Servicing Agents or any of the foregoing, provide for the distribution of shares
through one or more Distributors or Principal Underwriters, or otherwise.

The Trustees may set record dates or times for the determination of Shareholders
entitled to participate in, benefit from or act with respect to various matters.

In general the Trustees may delegate to any officer of the Trust, to any
committee of the Trustees and to any employee, Investment Adviser,
Administrator, Distributor, Custodian, Transfer Agent, Dividend Disbursing,
Accounting or Shareholder Servicing Agents, or any other agent or consultant of
the Trust, such authority, powers, functions and duties as they consider
desirable or appropriate for the conduct of the business and affairs of the
Trust, including without implied limitation and power an authority to act in the
name of the Trust and of the Trustees, to sign documents and to act as
attorney-in-fact for the Trustees.

Without limiting the foregoing and to the extent not inconsistent with the 1940
Act or other applicable law, the Trustees shall have power and authority:

     (a)       Investments.  To invest and reinvest cash and other property
     forming part of the Trust Property; to buy, for cash or on margin, and
     otherwise acquire and hold, securities created or issued by any Persons,
     including securities maturing after the possible termination of the Trust;
     to make payment therefor in any lawful manner in exchange for any of the
     Trust Property; and to hold cash or other property uninvested without in
     any event being bound or limited by any present or future law or custom in
     regard to investments by trustees;

     (b)       Disposition of Assets.  To lend, sell, exchange, mortgage,
     pledge, hypothecate, grant security interests in, encumber, negotiate,
     convey, transfer or otherwise dispose of and to trade in, any and all of
     the Trust Property, free and clear of all trusts, for cash or on terms,
     with or without advertisement, and on such terms as to payment, security or
     otherwise, all as they shall deem necessary or expedient;

     (c)       Ownership Powers.  To vote or give assent, or exercise any and
     all other rights, powers and privileges of ownership with respect to, and
     to perform any and all duties and obligations as owners of, any securities
     or other property forming part of the Trust Property, the same as any
     individual might do; to exercise powers and rights of subscription or
     otherwise which in any manner arise out of ownership of Securities, and to
     receive powers of attorney from, and to execute and deliver proxies or
     powers of attorney to, such person or persons as the Trustees shall deem to
     be giving from or granting to such person or persons such power and
     discretion with relation to Securities or other property forming part of
     the Trust Property, all as they shall deem proper;

     (d)       Form of Holding.  To hold any Security or other property, whether
     in bearer, unregistered or other negotiable form, or in the name of the
     Trustees or of the Trust or of the Fund to which such Securities or other
     property have been assigned, or in the name of a Custodian or other nominee
     or nominees, or otherwise, upon such terms, in such manner or with such
     powers as the Trustees may determine and with or without indicating any
     trust or the interest of the Trustees therein;

     (e)       Reorganization.  To consent to or participate in any plan for the
     reorganization, consolidation or merger of any issuer, any Security of
     which is or was held in the Trust or any Fund; to consent to any contract,
     lease, mortgage, purchase or sale of property by any such issuer; and to
     pay calls or subscriptions with respect to any Security forming part of the
     Trust Property;

     (f)       Voting Trusts.  To join with other holders of any securities in
     acting through a committee, depository, voting trustee or otherwise, and in
     that connection to deposit any Security with, or transfer any Security to,
     any such committee, depository or trustee, and to delegate to them such
     power and authority with relation to any Security (whether or not so
     deposited or transferred) as the Trustees shall deem proper, and to agree
     to pay, and to pay, such portion of the expenses and compensation of such
     committee, depository or trustee as the Trustees shall deem proper;

     (g)       Contracts.  To enter into, make and perform all such obligations,
     contracts, agreements and undertakings of every kind and description, with
     any person or persons, as the Trustees shall in their discretion deem
     expedient in the conduct of the business of the Trust, for such terms as
     they shall see fit, whether or not extending beyond the term of office of
     the Trustees, or beyond the possible expiration of the Trust; to amend,
     extend, release or cancel any such obligations, contracts, agreements or
     understandings; and to execute, acknowledge, deliver and record all written
     instruments which they may deem necessary or expedient in the exercise of
     their powers;

     (h)       Guarantees.  To endorse or guarantee the payment of any notes or
     other obligations of any person; to make contracts of guaranty or
     suretyship, or otherwise assume liability for payment thereof, and to
     mortgage or pledge the Trust Property or any part thereof to secure any
     part of or all such obligations;

     (i)       Partnership.  To enter into joint ventures, general or limited
     partnerships, and any other combinations or associations;

     (j)       Insurance.  To purchase and pay for entirely out of the Trust
     Property such insurance as they may deem appropriate for the conduct of the
     business of the Trust, including, without limitation, insurance policies
     insuring the Trust Property and payment of distributions and principal on
     Securities included in the Trust Property, and insurance policies insuring
     the Shareholders, Trustees, officers, employees, consultants, Investment
     Advisers, Administrators, Distributors, Principal Underwriters, or other
     agents or independent contractors, or any thereof (or any Person connected
     therewith), of the Trust, individually, against all claims and liabilities
     of every nature arising by reason of holding, being or having held any such
     office or position, or by reason of any action alleged to have been taken
     or omitted by any such Person in any such capacity, including any action
     taken or omitted that may be determined to constitute negligence, whether
     or not the Trust would have the power to indemnity any such Person against
     such liability;

     (k)       Pensions.  To pay pensions for faithful service, as deemed
     appropriate by the Trustees, and to adopt, establish and carry out pension,
     profit sharing, share bonus, share purchase, savings, thrift and other
     retirement, incentive and benefit plans, trusts and provisions, including
     the purchasing of life insurance and annuity contracts as a means of
     providing such retirement and other benefits, for any or all of the
     Trustees, officers, employees and agents of the Trust; in Power of
     Collection and Litigation.  To collect, sue for and receive all sums of
     money coming due to the Trust, to employ counsel, and to commence, engage
     in, prosecute, intervene in, join, defend, compound, advise, adjust or
     abandon, in the name of the Trust, any and all actions, suits, proceedings,
     disputes, claims, controversies, demands or other litigation or legal
     proceedings relating to the Trust, the business of the Trust, the Trust
     Property, or the Trustees, officers, employees, agents and independent
     contractors of the Trust, in their capacity as such, at law or in equity,
     or before any other bodies or tribunals, and to compromise, arbitrate or
     otherwise adjust any dispute to which the Trust may be a party, whether or
     not any suit is commenced or any claim shall have been made or asserted;

     (m)       Issuance and Repurchase of Shares.  To issue, sell, repurchase,
     redeem, retire, cancel, acquire, hold, resell, reissue, dispose of,
     transfer, and otherwise deal in Shares of any Series, and subject to
     Article VI hereof, to apply to any such repurchase, redemption, retirement,
     cancellation or acquisition of Shares of any Series any of the Fund Assets
     belonging to the Fund to which such Series relates, whether constituting
     capital or surplus or otherwise, to the full extent now or hereafter
     permitted by applicable law; provided that any Shares belonging to the
     Trust shall not be voted, directly or indirectly;

     (n)       Offices.  To have one or more offices, and to carry on all or any
     of the operations and business of the Trust, in any of the States,
     Districts or Territories of the United States of America, and in any and
     all foreign countries, subject to the laws of such State, District,
     Territory or country;

     (o)       Expenses.  To incur and pay any and all such expenses and charges
     as they may deem advisable (including without limitation appropriate fees
     to themselves as Trustees), and to pay all such sums of money for which
     they may be held liable by way of damages, penalty, fine or otherwise;

     (p)       Agents.  To retain and employ any and all such servants, agents,
     employees, attorneys, brokers, investment advisers, accountants, engineers,
     escrow agents, depositories, consultant, ancillary trustees, custodians,
     agents for collection, insurers, banks and officers, as they think best for
     the business of the Trust or any Fund, to supervise and direct the acts of
     any of the same, and to fix and pay their compensation and define their
     duties;

     (q)       Accounts.  To determine, and from time to time change, the method
     or form in which the accounts of the Trust shall be kept;

     (r)       Valuation.  Subject to the requirements of the 1940 Act, to
     determine from time to time the value of all or any part of the Trust
     Property and of any services, Securities, property or other consideration
     to be furnished to or acquired by the Trust, and from time to time to
     revalue all or any part of the Trust Property in accordance with such
     appraisals or other information as is, in the Trustees' sole judgment,
     necessary and satisfactory;

     (s)       Indemnification.  In addition to the mandatory indemnification
     provided for in Article VIII hereof and to the extent permitted by law, to
     indemnity or enter into agreements with respect to indemnification with any
     person with whom the Trust has dealings, including, without limitation, any
     independent contractor, to such extent as the Trustees shall determine; and

     (t)       General.  To do all such other acts and things and to conduct,
     operate, carry on and engage in such other lawful businesses or business
     activities as they shall in their sole and absolute discretion consider to
     be incidental to the business of the Trust or any Fund, and to exercise all
     powers which they shall in their discretion consider necessary, useful or
     appropriate to carry on the business of the Trust or any Fund, to promote
     any of the purposes for which the Trust is formed, whether or not such
     things are specifically mentioned herein, in order to protect or promote
     the interests of the Trust or any Fund, or otherwise to carry out the
     provisions of this Declaration.

SECTION 3.2         Borrowings; Financings; Issuance of Securities.  Subject to
the requirements of the 1940 Act, the Trustees shall have power to borrow or in
any other manner raise such sum or sums of money, and to incur such other
indebtedness for goods or services, or for or in connection with the purchase or
other acquisition of property, as they shall deem advisable for the purposes of
the Trust, in any manner and on any terms, and to evidence the same by
negotiable or non-negotiable securities which may mature at any time or times,
even beyond the possible date of termination of the Trust; to issue securities
of any type for such cash, property, services or other consideration, and at
such time or times and upon such terms, as they may deem advisable; and to
reacquire any such securities.  Any such securities of the Trust may, at the
discretion of the Trustees, be made convertible into Shares of any Series, or
may evidence the right to purchase, subscribe for or otherwise acquire Shares of
any Series, at such times and on such terms as the Trustees may prescribe.

SECTION 3.3         Deposits.  Subject to the requirements of the 1940 Act, the
Trustees shall have power to deposit any moneys or securities included in the
Trust Property with any one or more banks, trust companies or other banking
institutions, whether or not such deposits will draw interest.  Such deposits
are to be subject to withdrawal in such manner as the Trustees may determine,
and the Trustees shall have no responsibility for any loss which may occur by
reason of the failure of the bank, trust company or other banking institution
with which any such moneys or securities have been deposited, other than
liability based on their gross negligence or willful fault.

SECTION 3.4         Allocations.  The Trustees shall have power to determine
whether moneys or other assets received by the Trust shall be charged or
credited to income or capital, or allocated between income and capital,
including the power to amortize or fail to amortize any part or all specifically
mentioned.  Any determination as to what is in the interests of the Trust made
by the Trustees in good faith shall be conclusive.

SECTION 3.5         Further Powers and Limitations.  In construing the
provisions of this Declaration of Trust, the presumption shall be in favor of a
grant of power to the Trustees.  The Trustees shall not be required to obtain
any court order to deal with the Trust Property.  The Trustees may limit their
right to exercise any of their powers through express restrictive provisions in
the instruments evidencing or providing the terms for any Securities of the
Trust or in other contractual instruments adopted on behalf of the Trust.

                                   ARTICLE IV

                             TRUSTEES AND OFFICERS

SECTION 4.1         Number; Election; Term.

     (a)       Initial Trustee.  Upon his execution of the original Declaration
of this Trust dated August 11, 1992, the individual whose signature was affixed
thereto as Initial Trustee became the Initial Trustee hereof.

     (b)       Number.  A Majority of the Trustees may increase or decrease the
number of Trustees to a number other than the number theretofore determined.  No
decrease in the number of Trustees shall have the effect of removing any Trustee
from office prior to the expiration of his term, but the number of Trustees may
be decreased in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 4.1.

     (c)       Election and Term.  The Trustees shall be elected by the
Shareholders of the Trust at a meeting of Shareholders held prior to the
effective date of the Registration Statement of the Trust under the 1940 Act,
and the term of office of any Trustees in office before such election shall
terminate at the time of such election.  Subject to Section 16(a) of the 1940
Act and to the preceding sentence of this subsection(c), the Trustees shall have
the power to set and alter the terms of office of the Trustees, and at any time
to lengthen or shorten their own terms or make their terms of unlimited
duration, to elect their own successors and, pursuant to subsection (f) of this
Section 4.1, to appoint Trustees to fill vacancies; provided, that Trustees
shall be elected by a Majority Shareholder Vote at any such time or times as the
Trustees shall determine that such action is required under Section 16(a) of the
1940 Act or, if not so required, that such action is advisable.

     (d)       Resignation and Retirement.  Any Trustee may resign or retire as
a Trustee, by a written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such delivery or upon such later date as is specified in
such instrument.

     (e)       Removal.  Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds (2/3) of the
number of Trustees prior to such removal shall become effective; or (ii) by vote
of Shareholders holding not less than two-thirds (2/3) of all outstanding Shares
of the Trust without regard to Series, cast in person or by proxy at any meeting
called for the purpose; or (iii) be a written declaration signed by Shareholders
holding not less than two-thirds (2/3) of all outstanding Shares of the Trust
without regard to Series and filed with the Trust's Custodian.

     (f)       Vacancies.  Any vacancy or anticipated vacancy resulting from any
reason, including an increase in the number of Trustees, may (but unless
required by the 1940 Act need not) be filled by a Majority of the Trustees,
subject to the provisions of Section 16(a) of the 1940 Act, through the
appointment of such other individual as such remaining Trustees in their
discretion shall determine; provided, that if there shall be no Trustees in
office, such vacancy or vacancies shall be filled by Majority Shareholder Vote.
Any such appointment or election shall take effect immediately, except that any
such appointment or election in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in the number of Trustees to be effective at
a later date shall become effective only at or after the effective date of said
retirement, resignation or increase in the number of Trustees.

     (g)       Acceptance of Trusts.  Whenever any conditions to the appointment
or election of any individual as a Trustee hereunder who was not, immediately
prior to such election, acting as a Trustee shall have been satisfied, such
individual shall become a Trustee and the Trust Property shall vest in the new
Trustee, together with the continuing Trustees, without any further act or
conveyance. Such new Trustee shall accept such appointment or election in
writing and agree in such writing to be bound by the provisions hereof, but the
execution of such writing shall not be requisite to the effectiveness of the
appointment or election of a new Trustee.

     (h)       Effect of Death, Resignation, etc.  No vacancy, whether resulting
from the death, resignation, retirement, removal or incapacity of any Trustee,
an increase in the number of Trustees or otherwise, shall operate to annul or
terminate the Trust hereunder or to revoke or terminate any existing agency or
contract created or entered into pursuant to the terms of this Declaration of
Trust.  Until such vacancy is filled as provided in this Section 4.1, the
Trustees in office (if any), regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties imposed upon
the Trustees by this Declaration.

     (i)       Conveyance.  In the event of the resignation or removal of a
Trustee or his otherwise ceasing to be a Trustee, such former Trustee or his
legal representative shall, upon request of the continuing Trustees, execute and
deliver such documents as may be required for the purpose of consummating or
evidencing the conveyance to the Trust or the remaining Trustees of any Trust
Property held in such former Trustee's name, but the execution and delivery of
such documents shall not be requisite to the vesting of title to the Trust
property in the remaining Trustees, as provided in subsection (g) of this
Section 4.1 and in Section 4.13 hereof.

     (j)       Accounting by Former Trustee.  Except to the extent required by
the 1940 Act or under circumstances that would justify his removal for cause, no
person ceasing to be a Trustee (nor the estate of any such person) shall be
required to make an accounting to the Shareholders or remaining Trustees upon
such cessation.

     (k)       Filings.  Whenever there shall be a change in the composition of
the Trustees, the Trust shall cause to be filed in the office of the Secretary
of The Commonwealth of Massachusetts, and in each other place where the Trust is
required to file amendments to this Declaration, a certificate executed by a
Trustee or officer of the Trust as to the fact of the appointment or election of
an individual who was not theretofore a Trustee or as to the resignation,
removal or death of a Trustee, but the filing of such certificate shall not be
requisite to the effectiveness of any such appointment, election, resignation or
removal of a Trustee.

SECTION 4.2         Trustees' Meetings.  An annual meeting of Trustees shall be
held not later than the last day of the fourth month after the end of each
fiscal year of the Trust, and special meetings may be held from time to time, in
each case, upon the call of such officers as may be thereunto authorized by the
By-Laws or vote of the Trustees, or by any two (2) Trustees, or pursuant to a
vote of the Trustees adopted at a duly constituted meeting of the Trustees, and
upon such notice as shall be provided in the By-Laws.  The Trustees may act with
or without a meeting, and a written consent to any matter, signed by a Majority
of the Trustees, shall be equivalent to action duly taken at a meeting of the
Trustees, duly carried and held.  Except as otherwise provided by the 1940 Act
or other applicable law, or by this Declaration of Trust or the By-Laws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least a Majority of
the Trustees, being present), within or without Massachusetts.  If authorized by
the By-Laws, all or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of conference telephone or similar
means of communication by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to such
means of communication shall constitute presence in person at such meeting.  The
minutes of any meeting thus held shall be prepared in the same manner as a
meeting at which all participants were present in person.

SECTION 4.3         Committees.  The Trustees shall have power, consistent with
their ultimate responsibility to supervise the affairs of the Trust, to delegate
from time to time to an executive committee, and to one or more other
committees, or to any single Trustee, or to any other person, the doing of such
things and the execution of such deeds or other instruments, either in the name
of the Trust or the names of the Trustees or as their attorney or
attorneys-in-fact, or otherwise as the Trustees may from time to time deem
expedient, and any agreement, deed, mortgage, lease or other instrument or
writing executed by the Trustee or Trustees or other person to whom such
delegation was made shall be valid and binding upon the Trustees and upon the
Trust.

SECTION 4.4         Officers.  The Trustees shall annually elect such officers
or agents, who shall have such powers, duties and responsibilities as the
Trustees may deem to be advisable, and as they shall specify by resolution or in
the By-Laws. Except as may be provided in the By-Laws, any officer elected by
the Trustees may be removed at any time with or without cause.  Any two (2) or
more offices may be held by the same individual.

SECTION 4.5         Compensation of Trustees and Officers.  The Trustees shall
fix the compensation of all officers and Trustees.  Without limiting the
generality of any of the provisions hereof, the Trustees shall be entitled to
receive reasonable compensation for their general services as such, and to fix
the amount of such compensation, and to pay themselves or any one or more of
themselves such compensation for special services including legal, accounting,
or other professional services, as they in good faith may deem reasonable.  No
Trustee or officer resigning and (except where a right to receive compensation
for a definite future period shall be expressly provided in a written agreement
with the Trust, duly approved by the Trustees) no Trustee or officer removed
shall have any right to any compensation as such Trustee or officer for any
period following his resignation or removal, or any right to damages on account
of his removal, whether his compensation be by the month, by the year or
otherwise.

SECTION 4.6         Ownership of Shares and Securities of the Trust.  Any
Trustee, and any officer, employee or agent of the Trust, and any organization
in which any such Person is interested, may acquire, own, hold and dispose of
Shares of any Series and other Securities of the Trust for his or its individual
account, and may exercise all rights of a holder of such Shares or Securities to
the same extent and in the same manner as if such Person were not such a
Trustee, officer, employee or agent of the Trust; and the Trust may issue and
sell or cause to be issued and sold, and may purchase any such Shares or other
Securities from any such Person or any such organization, subject only to the
general limitations, restrictions or other provisions applicable to the sale or
purchase of shares of such Series or other Securities of the Trust generally.

SECTION 4.7         Right of Trustees and Officers to Own Property or to Engage
in Business; Authority of Trustees to Permit Others to do Likewise.  The
Trustees, in their capacity as Trustees, and (unless otherwise specifically
directed by vote of the Trustees) the officers of the Trust in their capacity as
such, shall not be required to devote their entire time to the business and
affairs of the Trust. Except as otherwise specifically provided by vote of the
Trustees, or by agreement in any particular case, any Trustee or officer of the
Trust may acquire, own, hold, carry on and dispose of, for his own individual
account, any business entity or business activity, whether similar or dissimilar
to any property or business entity or business activity invested in or carried
on by the Trust, and without first offering the same as an investment
opportunity to the Trust, and may exercise all rights in respect thereof as if
he were not a Trustee or officer of the Trust.  The Trustees shall also have
power, generally or in specific cases, to permit employees or agents of the
Trust to have the same rights (or lesser rights) to acquire, hold, own and
dispose of property and businesses, to carry on businesses, and to accept
investment opportunities without offering them to the Trust, as the Trustees
have by virtue of this Section 4.7.

SECTION 4.8         Reliance on Experts.  The Trustees and officers may consult
with counsel, brokers, appraisers, accountants, investment bankers, securities
analysts or other Persons (any of which may be a firm in which one or more of
the Trustees or officers is or are members or otherwise interested) whose
profession gives authority to a statement made by them on the subject in
question, and who are reasonably deemed by the Trustees or officers in question
to be competent, and the advice or opinion of such Persons shall be full and
complete personal protection to all of the Trustees and officers in respect of
any action taken or suffered by them in good faith and in reliance on or in
accordance with such advice or opinion.  In discharging their duties, Trustees
and officers, when acting in good faith, may rely upon financial statements of
the Trust represented to them to be correct by any officer of the Trust having
charge of its books of account, or stated in a written report by an independent
certified public accountant fairly to present the financial position of the
Trust.  The Trustees and officers may rely, and shall be personally protected in
taking action, upon any instrument or other document believed by them to be
genuine.

SECTION 4.9         Surety Bonds.  No Trustee, officer, employee or agent of the
Trust shall, as such, be obligated to give any bond or surety or other security
for the performance of any of his duties, unless required by applicable law or
regulation, or unless the Trustees shall otherwise determine in any particular
case.

SECTION 4.10        Apparent Authority of Trustees and Officers.  No purchaser,
lender, transfer agent or other Person dealing with the Trustees or any officer
of the Trust shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by such officer, or to make
inquiry concerning or be liable for the application of money or property paid,
loaned or delivered to or on the order of the Trustees or of such officer.

SECTION 4.11        Other Relationships Not Prohibited.  The fact that:

     (i)       any of the Shareholders, Trustees or officers of the Trust is a
     shareholder, director, officer, manager, member, partner, trustee,
     employee, investment adviser, principal underwriter or distributor, or
     agent of or for any Contracting Party or of or for any parent or affiliate
     of any Contracting Party, or that any Contracting Party or any parent or
     affiliate thereof is a shareholder or has an interest in the Trust or any
     Fund, or that

     (ii)      any Contracting Party may have a contract providing for the
     rendering of any similar services to one or more other corporations,
     trusts, associations, limited liability companies, partnerships, limited
     partnerships or other organizations, or have other businesses or interests,

shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or to the Shareholders; provided, that in the case of any mitigating
clause (i) on the part of any Trustee or officer of the Trust, either (x) the
material facts as to such relationship or interest have been disclosed to or are
known by the Trustees not having any such relationship or interest and the
contract involved is approved in good faith by a majority of such Trustees not
having any such relationship or interest (even though such unrelated or
disinterested Trustees are less than a quorum of all the Trustees), (y) the
material facts as to such relationship or interest and as to the contract have
been disclosed to or are known by the Shareholders entitled to vote thereon and
the contract involved is specifically approved in good faith by vote of the
Shareholders, or (z) the specific contract involved is fair to the Trust as of
the time it is authorized, approved or ratified by the Trustees or by the
Shareholders.

SECTION 4.12        Payment of Trust Expenses.  The Trustees are authorized to
pay or to cause to be paid out of the principal or income of the Trust, or
partly out of principal and partly out of income, and according to any
allocation to particular Funds made by them pursuant to Section 6.2(b) hereof,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the business and affairs of the Trust or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, Investment Adviser, Administrator, Distributor or Principal
Underwriter, auditor, counsel, Custodian, Transfer Agent, Dividend Disbursing
Agent, Accounting Agent, Shareholder Servicing Agent, and such other agents,
consultants, and independent contracts and such other expenses and charges as
the Trustees may deem necessary or proper to incur.

SECTION 4.13        Ownership of the Trust Property.  Legal title to all the
Trust Property shall be vested in the Trustees as joint tenants, except that the
Trustees shall have power to cause legal title to any Trust Property to be held
by or in the name of one or more of the Trustees, or in the name of the Trust,
or of any particular Fund, or in the name of any other Person as nominee, on
such terms as the Trustees may determine; provided, that the interest of the
Trust and of the respective Fund therein is appropriately protected.  The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each person who may hereafter become a Trustee.  Upon the
termination of the term of office of a Trustee as provided in Section 4.1(c),
(d) or (e) hereof, such Trustee shall automatically cease to have any right,
title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees.  Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to Section 4.1(i) hereof.

                                   ARTICLE V

                   DELEGATION OF MANAGERIAL RESPONSIBILITIES

SECTION 5.1         Appointment; Action by Less than All Trustees.  The Trustees
shall be responsible for the general operating policy of the Trust and for the
general supervision of the business of the Trust conducted by officers, agents
or employees of the Trust or by independent contractors, but the Trustees shall
not be required personally to conduct all the business of the Trust and,
consistent with their ultimate responsibility as stated herein, the Trustees may
appoint employ or contract with one or more officers, employees or agents to
conduct, manage or supervise the operations of the Trust, and may grant or
delegate such authority to such officers, employees or agents as the Trustees
may, in their discretion, deem to be necessary or desirable, without regard to
whether such authority is normally granted or delegated by trustees.  With
respect to those matters of the operation and business of the Trust that they
shall elect to conduct themselves, except as otherwise provided by this
Declaration or the By-Laws, if any, the Trustees may authorize a single Trustee
or defined group of Trustees or any committee consisting of a number of Trustees
less than the whole number of Trustees then in office without specification of
the particular Trustees required to be included therein, to act for and to bind
the Trust, to the same extent as the whole number of Trustees could do, either
with respect to one or more particular matters or classes of matters, or
generally.

SECTION 5.2         Certain Contracts.  Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time in their discretion and
without limiting the generality of their powers and authority otherwise set
forth herein, enter into one or more contracts with any one or more
corporations, trusts, associations, limited liability companies, partnerships,
limited partnerships, or other organizations or individuals (any such person
being herein referred to as a "Contracting Party"), to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or on behalf of the Trust or any Fund, or the Trustees,
and to provide for the performance and assumption of such other services, duties
and responsibilities in addition to those set forth below, as the Trustees may
deem appropriate:

     (a)       Advisory.  An agreement whereby an investment adviser registered
under the Investment Advisers Act of 1940, as amended, shall undertake to
furnish the Trust or any Fund such management, investment advisory or
supervisory, administrative, accounting, legal, statistical and research
facilities and services, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable, all upon such terms and
conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the 1940 Act or
any applicable provisions of the By-Laws (any such investment adviser being
herein referred to as an "Investment Adviser").  Any such advisory or management
agreement and any amendment thereto shall be subject to approval by a Majority
Shareholder Vote at a meeting of the Shareholders of the Trust.  Notwithstanding
any provisions of this Declaration, the Trustees may authorize an Investment
Adviser (subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or exchanges pursuant
to recommendations of an Investment Adviser (and all without further action by
the Trustees).  Any such purchases, sales, loans and exchanges shall be deemed
to have been authorized by all the Trustees.  The Trustees may, in their sole
discretion, call a meeting of Shareholders in order to submit to a vote of
Shareholders at such meeting the approval of continuance of any such investment
advisory or management agreement. If the Shareholders of any Fund should fail to
approve any such investment advisory or management agreement, the Investment
Adviser may nonetheless serve as Investment Adviser with respect to any other
Fund whose Shareholders shall have approved such contract.

     (b)       Administration.  An agreement whereby an agent, subject to the
general supervision of the Trustees and in conformity with any policies of the
Trustees with respect to the operations of the Trust and each Fund, will
supervise all or any part of the operations of the Trust and each Fund, and will
provide all or any part of the administrative and clerical personnel, office
space and office equipment and services appropriate for the efficient
administration and operations of the Trust and each Fund (any such agent being
herein referred to as an "Administrator").

     (c)       Distribution.  An agreement providing for the sale of shares of
any one or more Series to net the Trust not less than the net asset value per
Share (as described in Section 6.2(h) hereof) and pursuant to which the Trust
may appoint the other party to such agreement as its principal underwriter or
sales agent for the distribution of such Shares.  The agreement shall contain
such terms and conditions as the Trustees may in their discretion determine to
be not inconsistent with this Declaration, the applicable provisions of the 1940
Act and any applicable provisions of the By-Laws (any such agent being herein
referred to as a "Distributor" or a "Principal Underwriter," as the case may
be).

     (d)       Custodian.  An agreement appointing a bank or trust company
having an aggregate capital surplus and undivided profits (as shown in its last
published report) of at least two million dollars ($2,000,000), and meeting the
requirements of Section 17(f) of the 1940 Act as custodian of the Securities and
similar investments of the Trust or of any Fund and of the accounting records in
connection therewith (any such custodian being herein referred to as a
"Custodian").

     (e)       Transfer and Dividend Disbursing Agent.  An agreement with an
agent to maintain records of the ownership of outstanding shares, the issuance
and redemption and the transfer thereof (any such agent being herein referred to
as a "Transfer Agent"), and to disburse any dividends declared by the Trustees
and in accordance with the policies of the Trustees or the instructions of any
particular Shareholder to reinvest any such dividends (any such agent being
herein referred to as a "Dividend Disbursing Agent").

     (f)       Shareholder Servicing.  An agreement with an agent to provide
service with respect to the relationship of the Trust and its Shareholders,
records with respect to Shareholders and their Shares, and similar matters (any
such agent being herein referred to as a "Shareholder Servicing Agent").

     (g)       Accounting.  An agreement with an agent to handle all or any part
of the accounting responsibilities, whether with respect to the Trust Property,
Shareholders or otherwise (any such agent being herein referred to as an
"Accounting Agent").

The same person may be a Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust or the Trustees, and the
contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party from entering into subcontractual arrangements relative to any
of the matters referred to in subsections (a) through (g) of this Section 5.2.

                                   ARTICLE VI

                                FUNDS AND SHARES

SECTION 6.1         Description of Funds and Shares.

     (a)       Shares; Funds; Series of Shares.  The beneficial interest in the
Trust shall be divided into Shares having a nominal or par value of zero cents
($.00) per Share, and all of one class, of which an unlimited number may be
issued.  The Trustees shall have the authority from time to time to establish
and designate one or more separate, distinct and independent Funds into which
the assets of the Trust shall be divided, and to authorize a separate Series of
Shares for each such Fund (each of which Series, including without limitation
the Series authorized in Section 6.2 hereof, shall represent interests only in
the Fund with respect to which such Series was authorized), as they deem
necessary or desirable.  Except as otherwise provided as to a particular Fund
herein, or in the Certificate of Designation therefor, the Trustees shall have
all the rights and powers, and be subject to all the duties and obligations,
with respect to each such Fund and the assets and affairs as they have under
this Declaration with respect to the Trust and the Trust Property in general.

     (b)       Establishment of Funds; Authorization of Shares.  The
establishment and designation of any Fund in addition to the Fund established
and designated in Section 6.2 hereof and the authorization of the Shares thereof
shall be effective upon the execution by a Majority of the Trustees (or by an
officer of the Trust pursuant to the vote of a Majority of the Trustees) of an
instrument setting forth such establishment and designation and the relative
rights and preferences of the Shares of such Fund and the manner in which the
same may be amended (a "Certificate of Designation").  A Certificate of
Designation may provide that the number of Shares of any such Series which may
be issued is unlimited, or may limit the number issuable.  At any time that
there are no Shares outstanding of any particular Fund previously established
and designated, including any Fund established and designated in Section 6.2
hereof, the Trustees may by an instrument (a "Certificate of Termination")
executed by a Majority of the Trustees (or by an officer of the Trust pursuant
to the vote of a Majority of the Trustees) terminate such Fund and the
establishment and designation thereof and the authorization of its Shares.  Each
Certificate of Designation, Certificate of Termination and any instrument
amending a Certificate of Designation shall have the status of an amendment to
this Declaration of Trust, and shall be filed and become effective as provided
in Section 9.3 hereof.

     (c)       Character of Separate Funds and Shares Thereof.  Each Fund
established hereunder shall be a separate component of the assets of the Trust,
and the holders of Shares of the Series representing the beneficial interest in
the assets of that Fund shall be considered Shareholders of such Fund, but such
Shareholders shall also be considered Shareholders of the Trust for purposes of
receiving reports and notices and, except as otherwise provided herein or in the
Certificate of Designation of a particular Fund as to such Fund, or as required
by the 1940 Act or other applicable law, the right to vote, all without
distinction by Series. The Trustees shall have exclusive power without the
requirement of Shareholder approval to establish and designate such separate and
distinct Funds, and to fix and determine the relative rights and preferences as
between the Shares of the respective Funds as to rights of redemption and the
price, terms and manner of redemption, special and relative rights as to
dividends and other distributions and on liquidation, sinking or purchase fund
provisions, conversion rights, and conditions under which the Shareholders of
the several Funds shall have separate voting rights or no voting rights.

     (d)       Consideration for Shares.  The Trustees may issue Shares of any
Series for such consideration (which may include property subject to, or
acquired in connection with the assumption of, liabilities) and on such terms as
they may determine (or for no consideration if pursuant to a Share dividend or
split), all without action or approval of the Shareholders.  All Shares when so
issued on the terms determined by the Trustees shall be fully paid and
non-assessable (but may be subject to mandatory contribution back to the Trust
as provided in Section 6.2(h) hereof).  The Trustees may classify or reclassify
any unissued Shares, or any Shares of any Series previously issued and
reacquired by the Trust, into Shares of one or more other Funds that may be
established and designated from time to time.

SECTION 6.2         Establishment and Designation of Certain Funds; General
Provisions for All Funds.  Without limiting the authority of the Trustees set
forth in Section 6.1(a) hereof to establish and designate further Funds, the
Trustees have heretofore established and designated, and Shares are currently
outstanding for, the following Funds:  the Oak Value Fund and The North Carolina
Tax Free Bond Fund.  The Shares of such Funds, and the Shares of any further
Funds that may from time to time be established and designated by the Trustees
shall (unless the Trustees otherwise determine with respect to some further Fund
at the time of establishing and designating the same) have the following
relative rights and preferences:

     (a)       Assets Belonging to Funds.  Any portion of the Trust Property
allocated to a particular Fund, and all consideration received by the Trust for
the issue or sale of Shares of such Fund, together with all assets in which such
consideration is invested or reinvested, all interest, dividends, income,
earnings, profits and gains therefrom, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Fund and shall irrevocably belong to that Fund for
all purposes, and shall be so recorded upon the books of account of the Trust,
and the Shareholders of such Fund shall not have, and shall be conclusively
deemed to have waived, any claims to the assets of any Fund of which they are
not Shareholders. Such consideration, assets, interest, dividends, income,
earnings, profits, gains and proceeds, together with any General Items allocated
to that Fund as provided in the following sentence, are herein referred to
collectively as "Fund Assets" of such Fund, and as assets "belonging to" that
Fund.  If there are any assets, interest, dividends, income, earnings, profits,
gains and proceeds which are not readily identifiable as belonging to any
particular Fund (collectively "General Items"), the Trustees shall allocate such
General Items to and among any one or more of the Funds established and
designated from time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable; and any General Items so allocated to
a particular Fund shall belong to and be part of the Fund Assets of that Fund.
Each such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Funds for all purposes.

     (b)       Liabilities of Funds.  The assets belonging to each particular
Fund shall be charged with the liabilities in respect of that Fund and all
expenses, costs, charges and reserves attributable to that Fund, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as pertaining to any particular Fund shall be allocated and
charged by the Trustees to and among any one or more of the Funds established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable.  The indebtedness,
expenses, costs, charges and reserves allocated and so charged to a particular
Fund are herein referred to as "liabilities" of that Fund.  Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Funds for all purposes.  Any
creditor of any Fund may look only to the assets belonging to that Fund to
satisfy such creditor's debt.

     (c)       Dividends.  Dividends and distributions on Shares of a particular
Fund may be paid with such frequency as the Trustees may determine, which may be
daily or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the Shareholders
of that Fund, from such of the income, accrued or realized, and capital gains,
realized or unrealized, and out of the assets belonging to that Fund, as the
Trustees may determine, after providing for actual and accrued liabilities of
that Fund.  All dividends and distributions on Shares of a particular Fund shall
be distributed pro rata to the Shareholders of that Fund in proportion to the
number of such Shares held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure the Trustees
may determine that no dividend or distribution shall be payable on Shares as to
which the Shareholder's purchase order and payment have not been received by the
time established by the Trustees under such program or procedure, or that
dividends or distributions shall be payable on Shares which have been tendered
by the holder thereof for redemption or repurchase, but which have not yet been
redeemed or repurchased.  Such dividends and distributions may be made in cash,
property or Shares of that Fund, or a combination thereof, as determined by the
Trustees, or pursuant to any program that the Trustees may have in effect at the
time for the election by each Shareholder of the mode of the making of such
dividend or distribution to that Shareholder.  Any such dividend or distribution
paid in Shares shall be paid at the net asset value thereof as determined in
accordance with subsection (h) of this Section 6.2.

     (d)       Liquidation.  In the event of the liquidation or dissolution of
the Trust, the Shareholders of each Fund of which Shares are outstanding shall
be entitled to receive, when, and as declared by the Trustees, the excess of the
Fund Assets over the liabilities of such Fund.  The assets so distributable to
the Shareholders of any particular Fund shall be distributed among such
Shareholders in proportion to the number of Shares of that Fund held by them and
recorded on the books of the Trust.  The liquidation of any particular Fund of
which Shares are outstanding may be authorized by a Majority of the Trustees.

     (e)       Voting.  The Shareholders shall have the voting rights set forth
in or determined under Article VII hereof.

     (f)       Redemption by Shareholder.  Each holder of Shares of a particular
Fund shall have the right at such times as may be permitted by the Trust, but no
less frequently than once each week, to require the Trust to redeem all or any
part of his Shares of that Fund at a redemption price equal to the net asset
value per Share of that Fund next determined in accordance with subsection (h)
of this Section 6.2 after such Shares are properly tendered for redemption;
provided, that the Trustees may from time to time, in their discretion,
determine and impose a fee for such redemption.  Payment of the redemption price
shall be in cash; provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Trust may make payment wholly or
partly in Securities or other assets belonging to such Fund at the value of such
Securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the redemption
price and may suspend the right of the holders of Shares of any Fund to require
the Trust to redeem Shares of that Fund during any period or at any time when
and to the extent permissible under the 1940 Act.

     (g)       Redemption at the Option of the Trust.  Each Share of any Fund
shall be subject to redemption at any time at the option of the Trust at the
redemption price which would be applicable if such Share were then being
redeemed by a Shareholder pursuant to subsection (f) of this Section 6.2: (i) if
the Trustees determine in their sole discretion that failure to so redeem may
have materially adverse consequences to the holders of Shares of the Trust or of
any Fund, or (ii) upon such other conditions with respect to maintenance of
Shareholder accounts of a minimum amount as may from time to time be determined
by the Trustees and set forth in the then current Prospectus or Statement of
Additional Information of such Fund.  Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect thereto other than
to receive payment of such redemption price.

     (h)       Net Asset Value.  The net asset value per Share of any Fund at
any time shall be the quotient obtained by dividing the value of the net assets
of such Fund at such time (being the current value of the assets belonging to
such Fund, less the then existing liabilities of such Fund) by the total number
of Shares of that Fund then outstanding, all determined in accordance with the
methods and procedures, including without limitation those with respect to
pricing, established by the Trustees from time to time.  The Trustees may
determine to maintain the net asset value per share of any Fund at a designated
constant dollar amount and in connection therewith may adopt procedures not
inconsistent with the 1940 Act for the continuing declaration of income
attributable to that Fund as dividends payable in additional Shares of that Fund
at the designated constant dollar amount and for the handling of any losses
attributable to that Fund.  Such procedures may provide that in the event of any
loss each Shareholder shall be deemed to have contributed to the shares of
beneficial interest account of that Fund his pro rata portion of the total
number of Shares required to be canceled in order to permit the net asset value
per Share of that Fund to be maintained, after reflecting such loss, at the
designated constant dollar amount.  Each Shareholder of the Trust shall be
deemed to have expressly agreed, by his investment in any Fund with respect to
which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.

     (i)       Transfer.  All Shares of each particular Fund shall be
transferable, but transfers of Shares of a particular Fund shall be recorded on
the share transfer records of the Trust applicable to that Fund only at such
times as Shareholders have the right to require the Trust to redeem Shares of
that Fund and at such other times as may be permitted by the Trustees.

     (j)       Equality of Share Valuation.  All Shares of each particular Fund
shall represent an equal proportionate interest in the assets belonging to that
Fund (subject to the liabilities of that Fund), and each Share thereof; but the
provisions of this sentence shall not restrict any distinctions permissible
under subsection (c) of this Section 6.2 that may exist with respect to
dividends and distributions on Shares of the same Fund.  The Trustees may from
time to time divide or combine the Shares of any particular Fund into a greater
or lesser number of Shares of that Fund without thereby changing the
proportionate beneficial interest in the assets belonging to that Fund or in any
way affecting the rights of the holders of Shares of any other Fund.

     (k)       Rights of Fractional Shares.  Any fractional Share of any Series
shall carry proportionately all the rights and obligations of a whole Share of
that Series, including rights and obligations with respect to voting, receipt of
dividends and distributions, redemption and liquidation.

     (l)       Conversion Rights.  Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide that holders
of Shares of any Fund shall have the right to convert said Shares into Shares of
one or more other Funds in accordance with such requirements and procedures as
the Trustees may establish.

SECTION 6.3         Ownership of Shares.  The ownership of Shares shall be
recorded on the books of the Trust or of a Transfer Agent or similar agent for
the Trust, which books shall be maintained separately for the Shares of each
Series that has been authorized.  Certificates evidencing the ownership of
Shares need not be issued except as the Trustees may otherwise determine from
time to time, and the Trustees shall have power to call outstanding Share
certificates and to replace them with book entries.  The Trustees may make such
rules as they consider appropriate for the issuance of share certificates, the
use of facsimile signatures, the transfer of Shares and similar matters.  The
record books of the Trust as kept by the Trust or any Transfer Agent or similar
agent, as the case may be, shall be conclusive as to who are the Shareholders
and as to the number of Shares of each Fund held from time to time by each such
Shareholder.

The holders of Shares of each Fund shall upon demand disclose to the Trustees in
writing such information with respect to their direct and indirect ownership of
Shares of such Fund as the Trustees deem necessary to comply with the provisions
of the Internal Revenue Code of 1986, as amended, or to comply with the
requirements of any other authority.

SECTION 6.4         Investments in the Trust.  The Trustees may accept
investments in any Fund of the Trust from such Persons and on such terms and for
such consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize.  The Trustees may authorize any Distributor or
Principal Underwriter, Custodian, Transfer Agent or other Person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any such orders, whether or not conforming to such authorized terms.

SECTION 6.5         No Preemptive Rights.  No Shareholder, by virtue of holding
Shares of any Fund, shall have any preemptive or other right to subscribe to any
additional Shares of that Fund, or to any Shares of any other Fund, or any other
Securities of the Trust.

SECTION 6.6         Status of Shares.  Every Shareholder, by virtue of having
become a Shareholder, shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto.  Shares shall be deemed to be
personal property, giving only the rights provided herein.  Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole or any part of
the Trust Property or any right to call for a partition or division of the same
or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners.  The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust or any Fund, nor to entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Declaration of Trust.

                                  ARTICLE VII

                    SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 7.1         Voting Powers.  Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Sections 4.1(c) and
(e) hereof, (ii) with respect to the approval or termination of any contract as
to which Shareholder action is required by the 1940 Act, (iii) with respect to
any termination or reorganization of the Trust or any Fund to the extent and as
provided in Sections 9.1 and 9.2 hereof, (iv) with respect to any amendment of
this Declaration of Trust to the extent and as provided in Section 9.3 hereof,
(v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or any Fund, or the Shareholders of any of them (except that a
Shareholder of a particular Fund shall not in any event be entitled to maintain
a derivative or class action on behalf of any other Fund or the Shareholders
thereof), and (vi) with respect to such additional matters as may be required by
the 1940 Act, this Declaration of Trust, the By-Laws, or any registration with
the Commission or any State, or as the Trustees may consider necessary or
desirable.  Each matter required or permitted to be voted upon at a meeting or
by written consent of Shareholders shall be submitted to a separate vote of the
outstanding Shares of each Fund entitled to vote thereon; provided, that (i)
when required by this Declaration or by the 1940 Act, actions of Shareholders
shall be taken by Single Class Voting and (ii) when the Trustees determine that
any matter to be submitted to a vote of Shareholders affects only the rights or
interests of Shareholders of one or more but not all Funds, then only the
Shareholders of the Funds so affected shall be entitled to vote thereon.

SECTION 7.2         Number of Votes and Manner of Voting; Proxies.  On each
matter submitted to a vote of the Shareholders, each holder of Shares of any
Series shall be entitled to a number of votes equal to the number of Shares of
such Series standing in his name on the books of the Trust.  There shall be no
cumulative voting in the election of Trustees.  Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of two (2) or more
Persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them.  A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise, and the burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the
By-Laws to be taken by Shareholders.

SECTION 7.3         Meetings.  Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of Shareholders as herein provided, or upon any
other matter deemed by the Trustees to be necessary or desirable.  Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least seven (7) days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder entitled to vote or act at any such meeting at the Shareholder's
address as it appears on the records of the Trust.  The Trustees shall promptly
call and give notice of a meeting of Shareholders when requested to do so in
writing by Shareholders holding not less than ten percent (10%) of the Shares
then outstanding and entitled to vote at any such meeting.  If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a period of
thirty (30) days after written application by such Shareholders, then
Shareholders holding at least ten percent (10%) of the Shares then outstanding
and entitled to vote at any such meeting may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees.

Whenever ten or more Shareholders of record who have been such for at least six
months preceding the date of application, and who hold in the aggregate either
Shares having a net asset value of at least $25,000 or at least one percent (1%)
of the outstanding Shares, whichever is less, shall apply to the Trustees in
writing, stating that they wish to communicate with other Shareholders with a
view to obtaining signatures to a request for a meeting pursuant to this section
7.3 and accompanied by a form of communication and request which they wish to
transmit, the Trustees shall, within five days after receipt of such application
either (i) afford to such applicants access to a list of the names and addresses
of all Shareholders as recorded on the books of the Trust or (ii) inform such
applicants as to the approximate number of Shareholders of record and the
approximate cost of mailing to them the proposed communication and form of
request.  If the Trustees elect to follow the course of (ii), above, the
Trustees, upon the written request of such applicants, accompanied by a tender
of the material to be mailed and the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all Shareholders of record at their
addresses as recorded on the books.  If in the opinion of the Trustees, the
material to be mailed contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, the Trustees may, within five business days and
in lieu of mailing the tendered material to Shareholders, request a hearing by
the Securities and Exchange Commission (the "Commission"), in accordance with
Section 16(c) of the 1940 Act, to decide the matter.

SECTION 7.4         Record Dates.  For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereat or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding thirty (30) days (except at or
in connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than ninety (90) days prior to the date and time of record for the
determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes of
such other action, and any Shareholder who was a Shareholder at the date and
time so fixed shall be entitled to vote at such meeting or any adjournment
thereof or to be treated as a Shareholder of record for purposes of such other
action, even though he has since that date and time disposed of his shares
(other than through redemption or repurchase by the Trust), and no Shareholder
becoming such after that date and time shall be so entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action.

SECTION 7.5         Quorum and Required Vote.  Fifty percent (50%) of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments.  Any adjourned session or sessions may be held within a reasonable
time after the date set for the original meeting without the necessity of
further notice.  A Majority Shareholder Vote shall decide any question, except
when a different vote is required or permitted by the 1940 Act or other
applicable law or by this Declaration of Trust or the By-Laws, or when the
Trustees shall in their discretion require a larger vote or the vote of a
majority or larger fraction of the Shares of one or more particular Series.

SECTION 7.6         Action by Written Consent.  Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof or of the Shares of any particular Series as
shall be required by the 1940 Act or by any provision of this Declaration of
Trust or the By-Laws or as shall be permitted by the Trustees) consent to the
action in writing and if the writings in which such consent is given are filed
with the records of the meetings of Shareholders, to the same extent and for the
same period as proxies given in connection with a Shareholders' meeting.  Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.

SECTION 7.7         Inspection of Records.  The records of the Trust shall be
open for inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.

SECTION 7.8         Additional Provisions.  The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.

                                  ARTICLE VIII

                    LIMITATION OF LIABILITY; INDEMNIFICATION

SECTION 8.1         Trustees and Shareholders Not Personally Liable.  The
Trustees and officers of the Trust, in incurring any debts, liabilities, or
obligations, or in limiting or omitting any other actions for or in connection
with the Trust, are or shall be deemed to be acting as Trustees or officers of
the Trust and not in their own capacities.  No Shareholder shall be subject to
any personal liability whatsoever in tort, contract or otherwise to any other
Person in connection with the assets or affairs of the Trust or of any Fund; and
subject to Section 8.4 hereof, no Trustee, officer, employee or agent of the
Trust shall be subject to any personal liability whatsoever in tort, contract or
otherwise to any other Person in connection with the assets or affairs of the
Trust or of any Fund, unless only that arising from his own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office or the discharge of his functions.  The Trust (or if the
matter relates only to a particular Fund, that Fund) shall be solely liable for
any and all debts, claims, demands, judgments, decrees, liabilities or
obligations of any and every kind, against or with respect to the Trust or such
Fund in tort, contract or otherwise in connection with the assets or affairs of
the Trust or of such Fund, and all persons dealing with the Trust or any Fund
shall be deemed to have agreed that resort shall be had solely to the Trust
Property or the Fund Assets of such Fund, as the case may be, for the payment or
performance thereof.

The Trustees shall use their best efforts to ensure that every note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officer shall give notice that this Declaration of Trust is on file
with the Secretary of The Commonwealth of Massachusetts and shall recite to the
effect that the same was executed or made by or on behalf of the Trust or by
them as Trustees or officers, and not individually, and that the obligations of
such instrument are not binding upon any of them or Shareholders individually,
but are binding only upon the Trust Property, or the Fund Assets of the
particular Fund in question, as the case may be, but the omission thereof shall
not operate to bind any Trustee or officer or Shareholder individually, or to
subject the Fund Assets of any Fund to the obligations of any other Fund.

SECTION 8.2         Trustees' Good Faith Action.  The exercise by the Trustees
of their powers and discretion hereunder shall be binding upon everyone
interested. Subject to Section 8.4 hereof, a Trustee shall be liable for his
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (i) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant or contracting party, nor shall any Trustee be responsible for the
act or omission of any other Trustee; (ii) the Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (iii) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant, and (with respect to the subject matter
of the contract involved) any officer, partner or responsible employee of a
contracting party.  The Trustees as such shall not be required to give any bond
or surety or any other security for the performance of their duties.

SECTION 8.3         Indemnification of Shareholders.  If any Shareholder (or
former Shareholder) of the Trust shall be charged or held to be personally
liable for any obligation or liability of the Trust solely by reason of being or
having been a Shareholder and not because of such Shareholder's acts or
omissions or for some other reason, the Trust (upon proper and timely request by
the Shareholder) shall assume the defense against such charge and satisfy any
judgment thereon, and the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representative, or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled (but solely out of the assets of the Fund of which such Shareholder or
former Shareholder is or was the holder of Shares) to be held harmless from and
indemnified against all loss and expense arising from such liability.

SECTION 8.4         Indemnification of Trustees and Officers.  Subject to the
limitations set forth in this Section 8.4, the Trust shall indemnify (from the
assets of the Fund or Funds to which the conduct in question relates) each of
its Trustees and officers, including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (referred to hereinafter,
together with such Person's heirs, executors, administrators or other legal
representatives, as a "covered person") against all liabilities, including but
not limited to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including reasonable accountants' and counsel
fees, incurred by any covered person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which such covered
person may be or may have been involved as a party or otherwise or with which
such covered person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee or officer,
director or trustee, except with respect to any matter as to which it has been
determined that such covered person (i) did not act in good faith in the
reasonable belief that his action was in or not opposed to the best interests of
the Trust or (ii) had acted with willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office (either and both of the conduct described in clauses (i) and (ii) above
being referred to hereinafter as "Disabling Conduct").  A determination that the
covered person is entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that such covered person was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative action against such
covered person for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that such covered
person was not liable by reason of Disabling Conduct by (a) vote of a majority
of a quorum of Trustees who are neither "interested persons" of the Trust as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor parties to the
action, suit or other proceeding on the same or similar grounds is then or has
been pending or threatened (such quorum of such Trustees being referred to
hereinafter as the "Disinterested Trustees"), or (b) an independent legal
counsel in a written opinion.  Expenses, including accountants' and counsel fees
so incurred by any such covered person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties), may be paid
from time to time by the Fund or Funds to which the conduct in question related
in advance of the final disposition of any such action, suit or proceeding;
provided, that the covered person shall have undertaken to repay the amounts so
paid if it is ultimately determined that indemnification of such expenses is not
authorized under this Article VIII and if (i) the covered person shall have
provided security for such undertaking, (ii) the Trust shall be insured against
losses arising by reason of any lawful advances, or (iii) a majority of the
Independent Trustees, or an independent legal counsel in a written opinion,
shall have determined, based on a review of readily available facts (as opposed
to a full inquiry), that there is reason to believe that the covered person
ultimately will be entitled to indemnification hereunder.

SECTION 8.5         Compromise Payment.  As to any matter disposed of by a
compromise payment by any covered person referred to in Section 8.4 hereof,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of the Disinterested
Trustees or (ii) by an independent legal counsel in a written opinion.  Approval
by the Disinterested Trustees pursuant to clause (i) shall not prevent the
recovery from any covered person of any amount paid to such covered person in
accordance with either of such clauses as indemnification if such covered person
is subsequently adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such covered person's action
was in or not opposed to the best interests of the Trust or to have been liable
to the Trust or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such covered person's office.

SECTION 8.6         Indemnification Not Exclusive.  The right of indemnification
provided by this Article VIII shall not be exclusive of or affect any of the
rights to which any covered person may be entitled.  Nothing contained in this
Article VIII shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other Persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.

SECTION 8.7         Liability of Third Persons Dealing with Trustees.  No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.

                                   ARTICLE IX

                      DURATION; REORGANIZATION; AMENDMENTS

SECTION 9.1         Duration and Termination of Trust.  Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to the Trust or any Fund or Series of Shares shall
operate to terminate the Trust.  The Trust may be terminated at any time by a
Majority of the Trustees, subject to the favorable vote of the holders of not
less than a majority of the Shares outstanding and entitled to vote of each Fund
of the Trust, or by an instrument or instruments in writing without a meeting,
consented to by the holders of not less than a majority of such Shares, or by a
greater or different vote of shareholders of any Series as may be established by
the Certificate of Designation by which such Series was unauthorized.  Upon
termination, after paying or otherwise providing for all charges, taxes,
expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of Section 6.2(d) hereof.

SECTION 9.2         Reorganization.  The Trustees may sell, convey and transfer
all or substantially all of the Trust Property, or the assets belonging to any
one or more Funds, to another trust, partnership, association, corporation or
other entity, or may transfer such assets to another Fund of the Trust in
exchange for cash, Shares or other Securities (including, in the case of a
transfer to another Fund of the Trust, Shares of such other Fund), or to the
extent permitted by law then in effect, may merge or consolidate the Trust or
any Fund with any other trust, partnership, association, corporation or other
entity, all upon such terms and conditions and for such consideration when and
as authorized by a Majority of the Trustees, subject to the favorable vote of
the holders of not less than a majority of the Shares outstanding and entitled
to vote of each Fund whose assets are affected by such transaction, or by an
instrument or instruments in writing without a meeting, consented to by the
holders of not less than a majority of such Shares, or by such greater or
different vote of Shareholders of any Series as may be established by the
Certificate of Designation by which such Series was authorized.  Following such
transfer, the Trustees shall distribute the cash, Shares or other Securities or
other consideration received in such transaction (giving due effect to the
assets belonging to and the liabilities of, and any other differences among, the
various Funds of which the assets have so been transferred) among the
Shareholders of the Fund of which the assets have been so transferred; and if
all of the assets of the Trust have been so transferred, the Trust shall be
terminated.  Nothing in this Section 9.2 shall be construed as requiring
approval of Shareholders for the Trustees to organize or assist in organizing
one or more corporations, trusts, partnerships, associations or other
organizations, and to sell, convey or transfer less than substantially all of
the Trust Property or the assets belonging to any Fund to such organizations or
entities.

SECTION 9.3         Amendments.  All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall adversely affect the limitations on personal liability of any Shareholder
or Trustee or the prohibition of assessment upon the Shareholders (otherwise
than as permitted under Section 6.2(h)) without the express consent of each
Shareholder or Trustee involved.  Subject to the foregoing, the provisions of
this Declaration of Trust (whether or not related to the rights of Shareholders)
may be amended at any time, so long as such amendment does not adversely affect
the rights of any Shareholder with respect to matters to which such amendment is
or purports to be applicable and so long as such amendment is not in
contravention of applicable law, including the 1940 Act, by an instrument in
writing signed by a Majority of the Trustees (or by an officer of the Trust
pursuant to the vote of a Majority of the Trustees).  Any amendment to this
Declaration of Trust that adversely affects the rights of all Shareholders may
be adopted at any time by an instrument in writing signed by a Majority of the
Trustees (or by an officer of the Trust pursuant to a vote of a Majority of the
Trustees) when authorized to do so by the vote in accordance with Section 7.1
hereof of Shareholders holding a majority of all the Shares outstanding and
entitled to vote, without regard to Series, or if said amendment adversely
affects the rights of the Shareholders of less than all of the Funds, by the
vote of the holders of a majority of all the Shares entitled to vote of each
Fund so affected.  A Certificate of Designation establishing and designating any
Fund in addition to the Fund established and designated in Section 6.2 hereof
and authorizing of the Shares thereof shall not constitute an amendment to this
Declaration which adversely affects the rights of any Shareholder. Subject to
the foregoing, any amendment shall be effective when an instrument containing
the terms thereof and a certificate (which may be a part of such instrument) to
the effect that such amendment has been duly adopted, and setting forth the
circumstances thereof, shall have been executed by a Trustee or officer of the
Trust and filed as provided in Section 9.4 hereof.

SECTION 9.4         Filing of Copies of Declaration and Amendments.  The
original or a copy of this Declaration and of each amendment hereto (including
each Certificate of Designation and Certificate of Termination) shall be kept at
the principal office of the Trust where it may be inspected by any Shareholder,
and one copy of each such instrument shall be filed with the Secretary of The
Commonwealth of Massachusetts, as well as with any other governmental office
where such filing may from time to time be required by the laws of
Massachusetts.  A restated Declaration, integrating into a single instrument all
of the provisions of this Declaration which are then in effect and operative,
may be executed from time to time by a Majority of the Trustees (or by an
officer of the Trust pursuant to the vote of a Majority of the Trustees) and
shall, upon filing with the Secretary of The Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.

                                   ARTICLE X

                                 MISCELLANEOUS

SECTION 10.1        Governing Law.  This Declaration of Trust is executed and
delivered in The Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the construction and effect of every
provision hereof shall be subject to and construed according to the laws of said
Commonwealth.

SECTION 10.2        Counterparts.  This Declaration of Trust and any amendment
hereto may be simultaneously executed in several counterparts, each of which so
executed shall be deemed to be an original, and such counterparts, together
shall constitute but one and the same instrument, which shall be sufficiently
evidenced by any such original counterpart.

SECTION 10.3        Reliance by Third Parties.  Any certificate executed by an
individual who, according to the records in the office of the Secretary of The
Commonwealth of Massachusetts appears to be a Trustee hereunder or an officer of
the Trust certifying to: (i) the number or identity of Trustees or Shareholders,
(ii) the due authorization of the execution of any instrument or writing, (iii)
the form of any vote passed at a meeting of Trustees or Shareholders, (iv) the
fact that the number of Trustees or Shareholders present at any meeting or
executing any written instrument satisfies the requirements of this Declaration
of Trust, (v) the form of any By-Law adopted, or the identity of any officers
elected, by the Trustees, or (vi) the existence or nonexistence of any fact or
facts which in any manner relate to the affairs of the Trust, shall be
conclusive evidence as to the matters so certified in favor of any person
dealing with the Trustees, or any of them, and the successors of such person.

SECTION 10.4        References; Headings.  The masculine gender shall include
the feminine and neuter genders.  Headings are placed herein for convenience of
reference only and shall not be taken as a part of this Declaration or control
or affect the meaning, construction or effect hereof.

IN WITNESS WHEREOF, the undersigned, representing at least a Majority of the
Trustees, have hereunto set their hands and seals, for themselves and their
assigns, all as of the day and year first above written.


                    _____________________________________
                    Edwin B. Armstrong


                    _____________________________________
                    Jack E. Brinson


                    _____________________________________
                    David R. Carr, Jr.


                    _____________________________________
                    H. Spencer Everett, Jr.


                    _____________________________________
                    J. Finley Lee, Jr.


                    _____________________________________
                    Frank P. Meadows, III


                    _____________________________________
                    O. James Peterson, III


                    _____________________________________
                    Jon L. Vannice





                                   Exhibit 2

                                     Bylaws


                           ALBEMARLE INVESTMENT TRUST

                                    BY-LAWS


                               Table of Contents

                                                                            Page

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I  SHAREHOLDERS AND SHAREHOLDERS' MEETINGS . . . . . . . . . . . . . . 1

Section 1.1         Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.2         Presiding Officer; Secretary . . . . . . . . . . . . . . . 1

Section 1.3         Authority of Chairman of Meeting to Interpret
                    Declaration and By-Laws. . . . . . . . . . . . . . . . . . 2

Section 1.4         Voting Quorum. . . . . . . . . . . . . . . . . . . . . . . 2

Section 1.5         Inspectors . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 1.6         Shareholders' Action in Writing. . . . . . . . . . . . . . 2

ARTICLE II TRUSTEES AND TRUSTEES' MEETINGS . . . . . . . . . . . . . . . . . . 2

Section 2.1         Number of Trustees . . . . . . . . . . . . . . . . . . . . 2

Section 2.2         Regular Meetings of Trustees . . . . . . . . . . . . . . . 3

Section 2.3         Special Meetings of Trustees . . . . . . . . . . . . . . . 3

Section 2.4         Notice of Meetings . . . . . . . . . . . . . . . . . . . . 3

Section 2.5         Quorum; Presiding Officer. . . . . . . . . . . . . . . . . 3

Section 2.6         Participation by Telephone . . . . . . . . . . . . . . . . 3

Section 2.7         Location of Meetings . . . . . . . . . . . . . . . . . . . 4

Section 2.8         Votes. . . . . . . . . . . . . . . . . . . . . . . . . . . 4


Section 2.9         Rulings of Chairman. . . . . . . . . . . . . . . . . . . . 4

Section 2.10       Trustees' Action in Writing . . . . . . . . . . . . . . . . 4


                                    BY-LAWS

                                       OF

                       ALBEMARLE CAPITAL INVESTMENT TRUST


These ARTICLES are the BY-LAWS of Albemarle Investment Trust, a trust with
transferable shares established under the laws of the Commonwealth of
Massachusetts (the "Trust"), pursuant to an Agreement and Declaration of Trust
of the Trust (the "Declaration") made the 11th day of August 1992, and filed in
the office of the Secretary of the Commonwealth.  These By-Laws have been
adopted by the Trustees pursuant to the authority granted by Section 3.1 of the
Declaration.

All words and terms capitalized in these By-Laws, unless otherwise defined
herein, shall have the same meanings as they have in the Declaration.

ARTICLE I

SHAREHOLDERS AND SHAREHOLDERS' MEETINGS


Section 1.1 Meetings.  A meeting of the Shareholders of the Trust shall be held
whenever called by the Trustees and whenever election of a Trustee or Trustees
by Shareholders is required by the provisions of the 1940 Act.  Meetings of
Shareholders shall also be called by the Trustees when requested in writing by
the Shareholders holding at least ten percent (10%) of the Shares then
outstanding for the purpose of voting upon removal of Trustee, or if the
Trustees shall fail to call or give notice of any such meeting of Shareholders
for period of thirty (30) days after such application, then Shareholders holding
at least ten percent (10%) of the Shares then outstanding may call and give
notice of such meeting.  Notice of Shareholders' meetings shall be given as
provided in the Declaration.

SECTION 1.2 Presiding Officer; Secretary.  The Chairman of the Trustees, or in
his absence the Vice Chairmen, if any, in the order of their seniority or as the
Trustees shall otherwise determine, and in the absence of the Chairman and all
Vice Chairmen, if any, the President, shall preside at each Shareholders'
meeting as chairman of the meeting, or in the absence of the Chairman, all Vice
Chairmen and the President, the Trustees present at the meeting shall elect one
of their number as chairman of the meeting.  Unless otherwise provided for by
the Trustees, the Secretary of the Trust shall be the secretary of all meetings
of Shareholders and shall record the minutes thereof.

SECTION 1.3  Authority of Chairman of Meeting to Interpret Declaration and By-
Laws.  At any Shareholders' meeting the chairman of the meeting shall be
empowered to determine the construction or interpretation of the Declaration or
these By- Laws, or and part thereof or hereof, and his ruling shall be final.

SECTION 1.4  Voting;  Quorum.  At each meeting of Shareholders, except as
otherwise provided by the Declaration, every holder of record of Shares entitled
to vote shall be standing in his name on the Share register of the Trust.
Shareholders may vote by proxy and the form of any such proxy may be prescribed
from time to time by the Trustees.  As provided in the Declaration, a quorum
shall exist if the holders of fifty percent (50%) of the outstanding Shares of
the Trust entitled to vote without regard to Series, are present in person or by
proxy, but any lesser number shall be sufficient for adjournments.  At all
meetings of the Shareholders, votes shall be taken by ballot for all matters
which may be binding upon the Trustees pursuant to Section 7.1 of the
Declaration.  On other matters, votes of Shareholders need not be taken by
ballot unless otherwise provided for by the Declaration or by vote of the
Trustees, or as required by the 1940 Act, but the chairman of the meeting may in
his discretion authorize any matter to be voted upon by ballot.

SECTION 1.5  Inspectors.  At any meeting of Shareholders, the chairman of the
meeting may appoint one or more Inspectors of Election or Balloting to supervise
the voting at such meeting or any adjournment thereof.  If Inspectors are not so
appointed, the chairman of the meeting may, and on the request of any
Shareholders present or represented and entitled to vote shall, appoint one or
more Inspectors for such purpose.  If appointed Inspectors shall take charge of
the polls and, when the vote is completed, shall make a certificate of the
result of the vote taken and of such other facts as may be required by law.

SECTION 1.6  Shareholders' Action in Writing.  Nothing in this Article I shall
limit the power of the Shareholders to take any action without a meeting by
means of written instruments as permitted by Section 7.6 of the Declaration.

                                   ARTICLE II

                        TRUSTEES AND TRUSTEES' MEETINGS

SECTION 2.1  Number of Trustees.  There shall initially be one (1) Trustee, and
the number of Trustees shall thereafter be such number as shall be fixed from
time to time by a vote adopted by a Majority of the Trustees.

SECTION 2.2  Regular Meetings of Trustees.  Regular meetings of the Trustees may
be held without call or notice at such places and at such times as the Trustees
may form time to time determine;  provided, that notice of such determination,
and of the time, place and purpose of the first regular meeting thereafter,
shall be given to each absent Trustee in accordance with Section 2.4 hereof.

SECTION 2.3  Special Meetings of Trustees.  Special meetings of the trustees may
be held at any time and at any place when called by the Chairman of the
Trustees, any Vice Chairman, the President or the Treasurer or by two (2) or
more trustees, or if there shall be fewer than three (3) Trustees, by any
Trustee; provided, that notice of the time, place and purpose thereof is given
to each Trustee in accordance with Section 2.4 hereof by the Secretary or an
Assistant Secretary or by the officer or the Trustee calling the meeting.

SECTION 2.4  Notice of Meeting.  Notice of any regular or special meeting of the
Trustee shall be sufficient if given orally or in writing to each Trustee, and
if sent by  mail at least five (5) days, or by telegram at least twenty-four
(24) hours, before the meeting.  Notice of a special meeting need not be given
to any Trustee who was present at an earlier meeting, not more than thirty-one
(31) days prior to the subsequent meeting, at which the subsequent meeting was
called. Notice of a meeting may be waived by any Trustee by written waiver of
notice, executed by him before or after the meeting, and such waiver shall be
filled with the records of the meeting.  Attendance by a Trustee at a meeting
shall constitute a waiver of notice, except where a Trustee attends a meeting
for the purpose of protesting prior thereto or at its commencement the lack of
notice.

SECTION 2.5  Quorum; Presiding Officer.  At any meeting of the Trustees, a
Majority of the Trustees shall constitute a quorum.  Any meeting may be
adjourned from time to time by a majority of the vote cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice.  Unless the Trustees shall otherwise elect, generally or
in a particular case, the Chairman of the Trustees, if any, or in his absence
the Vice-Chairman or Vice-Chairmen, if any, in the order of their seniority or
as the Trustees shall otherwise determine, or in the absence of the Chairman and
all Vice Chairmen, if any, and if he shall be a Trustee, the President, shall
preside at each meeting of the Trustees as chairman of the meeting.

SECTION 2.6  Participation by Telephone.  One or more of the Trustees may
participate in a meeting thereof or of any Committee of the Trustees by means of
a conference telephone or  similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.  Participating
by such means shall constitute presence in person at a meeting.

SECTION 2.7  Location of Meetings.  Trustees' meetings may be held at any place,
within or without Massachusetts.

SECTION 2.8  Votes.  Voting at Trustees' meetings may be conducted orally, by
show of hands. or, if requested by any Trustee, by written ballot.  The results
of all voting shall be recorded by the Secretary in the minute book.

SECTION 2.9  Rulings of Chairman.  All other rules of conduct adopted and used
at any Trustees' meeting shall be determined by the chairman of such meeting,
whose ruling on all procedural matters shall be final.

SECTION 2.10  Trustees's Action in Writing.  Nothing in this Article II shall
limit the power of the Trustees to take action without a meeting by means of a
written instrument, as provided in Section 4.2 of the Declaration.

SECTION 2.11  Resignations.  Any Trustee may resign at any time by written
instrument signed by him and delivered to the Chairman, The President or the
Secretary or to a meeting of the Trustees.  Such resignation shall be effective
upon receipt unless specified to be effective at some other time.

SECTION 2.12  Indemnity Insurance.  The Trustees may purchase professional
indemnity insurance coverage for its officers and trustees, the terms and
conditions of which must conform generally to the standard coverage available to
the investment company industry, provided, however, that no such insurance will
be purchased which protects or purports to protect, any officer or trustee for
actions constituting willful misfeasance, bad faith, gross negligence or
reckless disregard of duties.

                                  ARTICLE III

                                    OFFICERS

SECTION 3.1  Officers of the Trust.  The officers of the Trust shall consist of
a Chairman of the Trustees, Treasurer and a Secretary, and may include one or
more Vice Chairmen, Assistant Treasurers and Assistant Secretaries, and such
other officers as the Trustees may designate.  In addition, a President and one
or more Vice Presidents, as the Trustees shall determine, shall be elected for
each series of the Trust.  Any person may hold more than one office.  Except for
the Chairman and  Vice Chairmen, no officer need be a Trustee.

SECTION 3.2  Time and Terms of Election.  The Presidents of each Series, the
Treasurer and the Secretary shall be elected by the Trustees at their first
meeting.  All other officers of the Trust may be elected or appointed at any
meeting of the Trustees.  Officers of the Trust shall hold office for any term,
or indefinitely, as determined by the Trustees, and shall be subject to removal,
with or without cause, at any time by the Trustees.

SECTION 3.3  Resignation and Removal.  Any officer may resign at any time by
giving written notice to the Trustees.  Such resignation shall take effect at
the time specified therein, and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.  If
the office of any officer or agent becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office or otherwise, the
Trustees may choose a successor, who shall hold office for the unexpired term in
respect of which such vacancy occurred.  Except to the extent expressly provided
in a written agreement with the Trust, no officer resigning or removed shall
have any right to any compensation for any period following such resignation or
removal, or any right to damage on account of such removal.

SECTION 3.4  Fidelity Bond.  The Trustees may, in their discretion, direct any
officer appointed by them to furnish at the expense of the Trust a fidelity bond
approved by the Trustees, in such amount as the Trustees may prescribe.

SECTION 3.5  Chairman of the Board.  Unless the Trustees otherwise provide, the
Chairman of the Board (of Trustees) shall preside at all meetings of the
Shareholders and of the Trustees.  In addition, the Chairman of the Trustees
shall be the chief executive officer of the Trust and shall have general charge
and supervision of the business, property and affairs of the Trust and such
other powers and duties as the Trustees shall prescribe.

SECTION 3.6  Vice Chairman.  If the Trustees shall elect one or more Vice
Chairmen, the Vice Chairman or if there shall be more than one, such Vice
Chairmen in the order of their seniority or as otherwise designated by the
Trustees, shall preside at meetings of the Shareholders and of the Trustees, and
shall exercise such other powers and duties of the Chairman as the Trustees
shall determine.

SECTION 3.7  President.  The President of each Series shall be the chief
executive officer of the Trust for matters pertaining to that particular Series
and shall have general charge and supervision of the business, property and
affairs of a Series and such other powers and duties as the Trustees shall
prescribe.

SECTION 3.8  Vice Presidents.  In the absence or disability of the President or
a Vice President of a Series, if there shall be more than one, the Vice
Presidents in the order of their seniority or as otherwise designated by the
Trustees, shall exercise all of the powers and duties of the President.  The
Vice Presidents of a particular Series and shall do and perform such other
duties as the Trustees or the President of such series shall direct.

SECTION 3.9  Treasurer and Assistant Treasurers.  The Treasurer shall be the
chief financial officer of the Trust, and shall have the custody of the Trust
Property, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Trust and shall deposit all moneys and
other valuable effects in the name and to the credit of the Trust in such
depositories as may be designated by the Trustees, taking proper vouchers for
such disbursements, and shall have such other duties and powers as may be
prescribed from time to time by the Trustees, and shall render to the Trustees,
whenever they may require it, an account of all his transactions as Treasurer
and the financial condition of the Trust.  If no controller is elected, the
Treasurer shall also have the duties and powers of the Controller, as provided
in these By-Laws.  Any Assistant Treasurer shall have such duties and powers as
shall be prescribed from time to time by the Trustees or the Treasurer, and
shall be responsible to and shall report to the Treasurer.  In the absence or
disability of the Treasurer, the Assistant Treasurer or, if there shall be more
than one, the Assistant Treasurers in the order of seniority or as otherwise
designated by the Trustees, shall have the powers and duties of the Treasurer.

SECTION 3.10  Controller and Assistant Controller.  If a Controller is elected,
he shall be the chief accounting officer of the Trust, and shall be in charge of
its books of account and accounting records and of its accounting procedures,
and shall have such duties and powers as are commonly incident to the office of
a controller and such other duties and powers as may be prescribed from time to
time by the Trustees.  The Controller shall be responsible to and shall report
to the Trustees, but in the ordinary conduct of the Trust's business, shall be
under the supervision of the Treasurer.  Any Assistant Controller shall have the
duties and powers as shall be prescribed from time to time by the Trustees or
the Controller, the Assistant Controller or, if there shall be more than one,
the Assistant Controllers in the order of their seniority or as otherwise
designated by the Trustees, shall have the powers and duties of the Controller.

SECTION 3.11  Secretary and Assistant Secretaries.  The Secretary shall, if and
to the extent requested by the Trustees, attend all meetings of the Trustees,
any Committee of the Trustees and /or Shareholders and record all votes and the
minutes of proceedings in a book to be kept for that purpose, and shall give or
cause to be given notice of all meetings of the Trustees, any Committee of the
Trustees, and of the Shareholders, and shall perform such other duties as may be
prescribed by the Trustees.  The Secretary, or in his absence any Assistant
Secretary, shall affix the Trust's seal to any instrument requiring it, and when
so affixed, it shall be attested by the signature of the Secretary or an
Assistant Secretary.  The Secretary shall be the custodian of the Share records
and all other books, records and papers of the Trust (other than financial) and
shall see that all books, reports, statements, certificates and other documents
and records required by law are properly kept and filed.  In the absence or
disability of the Secretary, the Assistant Secretary or, if there shall be more
than one, the Assistant Secretaries in the order of their seniority or as
otherwise designated by the Trustees, shall have the powers and duties of the
Secretary.

SECTION 3.12  Substitutions.  In case of the absence or disability of any
officer of the Trust, or for any other reason that the Trustees may deem
sufficient, the Trustees may delegate, for the time being, the powers or duties,
or any of them, of such officer to any other officer, or to any Trustee.

SECTION 3.13  Execution of Deeds, etc.  Except as the Trustees may generally or
in particular cases otherwise authorize or direct, all deeds, leases, transfers,
contracts, proposals, bonds, notes, checks, drafts and other obligations made,
accepted or endorsed by the Trust shall be signed or endorsed on behalf of the
Trust by the Chairman or the Treasurer.

SECTION 3.14  Power to Vote Securities.  Unless otherwise ordered by the
Trustees, the Chairman of the Trustees, Presidents,  Vice Presidents, if any, or
the Treasurer shall have full power and authority on behalf of the Trust to give
proxies for, and/or to attend and to act and to vote at, any meeting of stock-
holders of any corporation in which the Trust may hold stock, and at any such
meeting any such officer or his proxy shall possess and may exercise any and all
rights and powers incident to the ownership of such stock which, as the owner
thereof, the Trust might have possessed and exercised if present.  The Trustees,
by resolution from time to time, or, in the absence thereof, the Chairman of the
Trustees, Presidents, Vice Presidents, if any, or the Treasurer, may confer like
powers upon any other person or persons as attorneys and proxies of the Trust.

                                   ARTICLE IV

                                   COMMITTEES

SECTION 4.1  Power of Trustees to Designate Committees.  The Trustees, by vote
of a majority of the trustees, may elect from their number an executive
committee and any other committees and may delegate thereto some or all of their
power except those which by law, by the Declaration or by these By-Laws may not
be delegated; provided, that no committee shall be empowered to elect the
Chairman of the Trustees, the President, the Treasurer or the Secretary, to
amend the By-Laws, to exercise the powers of the Trustees under this Section 4.1
or under Section 4.3 hereof, or to perform any act for which the action of a
Majority of the Trustees is required by law, by the Declaration or by these
By-Laws.  The members of any such Committee shall serve at the pleasure of the
Trustees.

SECTION 4.2  Rules for Conduct of Committee Affairs.  Except as otherwise
provided by the Trustees, each Committee elected or appointed pursuant to this
Article IV may adopt such standing rules and regulations for the conduct of its
affairs as it may deem desirable, subject to review and approval of such rules
and regulations by the Trustees at the next succeeding meeting of the Trustees,
but in the absence of any such  action or any contrary provisions by the
trustees, the business of each Committee shall be conducted, so far as
practicable, in the same manner as provided herein and in the Declaration for
the Trustees.

SECTION 4.3  Trustees May Alter, Abolish, etc., Committees. The Trustees may at
any time alter or abolish any Committee, change the membership of any Committee,
or revoke, rescind or modify any action of any Committee or the authority of any
Committee with respect to any matter or class of matters;  provided, that no
such action shall impair the rights of any third parties.

SECTION 4.4  Minutes;  Review by Trustees.  Any Committees to which the Trustees
delegate any of their powers or duties shall keep records of its meetings and
shall report its action to the trustees.

                                   ARTICLE V

                                      SEAL

The seal of the Trust shall consist of a flat-faced circular die with the word
"Massachusetts," together with the name of the Trust, the words "Trust Seal,"
and the year of its organization cut or engraved thereon, but, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.

                                   ARTICLE VI

                                     SHARES

SECTION 6.1  Issuance of Shares.  The Trustees may issue Shares of any or all
Series either in certificated or uncertificated form, they may issue
certificates to the holders of Shares of a Series which was originally issued in
uncertificated form, they may at any time discontinue the issuance of Share
certificates for such Series and may, by written notice to such Shareholders of
such Series, require the surrender of their Share certificates to the Trust for
cancellation, which surrender and cancellation shall not affect the ownership of
Shares for such Series.

SECTION 6.2  Uncertificated Shares.  For any Series of Shares for which the
Trustees issue Shares without certificates, the Trust or the Transfer Agent may
either issue receipts therefor or may keep account upon the books of the Trust
for the record holders of such Shares, who shall in either case be deemed, for
all purposes hereunder, to be the holders of such Shares as if they had received
certificates therefor and shall be held to have expressly assented and agreed to
the terms hereof and of the Declaration.

SECTION 6.3  Share Certificates.  For any Series of Shares for which the
Trustees shall issue Share certificates, each Shareholder of such Series shall
be entitled to a certificate stating the number of Shares owned by him in such
form as shall be prescribed from time to time by the Trustees.  Such
certificates shall be signed by the Chairman or a Vice Chairman, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or Assistant Secretary, of the Trust.  Such signatures may be
facsimiles if the certificate is countersigned by the Transfer Agent, or by a
registrar, other than a Trustee, officer or employee of the Trust.  In case any
officer who has signed or whose facsimile signature has been placed on such
certificate is issued, it may be issued by the Trust with the same effect as if
he were such officer at the time of its issue.

SECTION 6.4  Lost, Stolen, etc., Certificates.  If any certificate for
certificated Shares shall be lost, stolen, destroyed or mutilated, the Trustees
may authorize the issuance of a new certificate of the same tenor and for the
same number of Shares in lieu thereof.  The Trustees shall require the surrender
of any mutilated certificate in respect of which a new certificate is issued,
and may, in their discretion, before the issuance of new certificate, require
the owner of a lost, stolen or destroyed certificate, or the owner's legal
representative, to make an affidavit or affirmation setting forth such facts as
to the loss, theft or destruction as they deem necessary, and to give the Trust
a bond, in such reasonable sum as the Trustees direct, in order to indemnify the
Trust.

SECTION 6.5  Record Transfer of Pledged Shares.  A pledge of Shares pledged as
collateral security shall be entitled to a new certificate in his name as
pledgee, in the case of certificated Shares, or to be registered as the holder
in pledge of such Shares in the case of uncertificated Shares;  provided, that
the instrument of pledge substantially describes the debt or duty that is
intended to be secured thereby. Any such new certificate shall express on its
face that it is held as collateral security, and the name of the pledgor shall
be stated thereon, and any such registration of uncertificated Shares shall be
in a form which indicates that the registered holder holds such Shares in
pledge.  After such issue or registration, and unless and until such pledge is
released, such pledgee and his successors and assigns shall alone be entitled to
the rights of Shareholder, and entitled to vote such Shares.

                                  ARTICLE VII

                                   AMENDMENTS

SECTION 7.1  By-Laws Subject to Amendment.  These By-Laws may be altered,
amended or repealed, in whole or in part, at any time by vote of the holders of
a majority of the Shares (or whenever there shall be more than one Series of
Shares, of the holders of majority of the Shares of each Series) issued,
outstanding and entitled to vote.  The Trustees, by vote of a Majority of
Trustees, may alter, amend or repeal these By-Laws adopted by the Shareholders,
except with respect to any provisions hereof which by law, the Declaration or
these By-Laws requires action by the Shareholders.  By-Laws adopted by the
Trustees may be altered, amended or repealed by the Shareholders.

SECTION 7.2  Notice of Proposal to Amend By-Laws Required.  No proposal to amend
or repeal these By-Laws or to adopt new By-Laws shall be acted upon at a meeting
unless either (i) such proposal is stated in the notice or in waiver of notice,
as the case may be, of the meeting or in the Trustees or Shareholders at which
such action is taken, or (ii) all of the Trustees or Shareholders, as the case
may be, are present at such meeting and all agree to consider such proposal
without protesting the lack of notice.



                                   EXHIBIT 5

                         INVESTMENT ADVISORY AGREEMENT


                         INVESTMENT ADVISORY AGREEMENT

THIS AGREEMENT, entered into as of the 1st day of April, 1994, by and between
the ALBEMARLE INVESTMENT TRUST (the "Trust"), a Massachusetts Business Trust,
and BOYS ARNOLD & COMPANY, INC., a North Carolina corporation (the "Advisor"),
registered as an investment advisor under the Investment Advisors Act of 1940,
as amended (the "Advisors Act").

WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and

WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to THE NORTH CAROLINA TAX FREE BOND FUND series of
the Trust, and the Advisor is willing to so furnish such services;

NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:

1.   Appointment.  The Trust hereby appoints the Advisor to act as Investment
     Advisor to THE NORTH CAROLINA TAX FREE BOND FUND (the "Fund") series of the
     Trust for the period and on the terms set forth in this Agreement. The
     Advisor accepts such appointment and agrees to furnish the services herein
     set forth, for the compensation herein provided.

2.   Delivery of Documents.  The Trust has furnished the Investment Advisor with
     copies properly certified or authenticated of each of the following:

     (a) The Trust's Declaration of Trust, as filed with the State of
         Massachusetts (such Declaration, as presently in effect and as it shall
         from time to time be amended, is herein called the "Declaration");

     (b) The Trust's By-Laws (such By-Laws, as presently in effect and as they
         shall from time to time be amended, are herein called the "By-Laws");

     (c) Resolutions of the Trust's Board of Trustees and the resolution
         approved by a majority of the outstanding shares of the Fund
         authorizing the appointment of the Advisor and approving this
         Agreement;

     (d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
         under the Securities Act of 1933 as amended, (the "1933 Act"), relating
         to shares of beneficial interest of the Fund (herein called the
         "Shares") as filed with the Securities and Exchange Commission ("SEC")
         and all amendments thereto;

     (e) The Fund's Prospectus (such Prospectus, as presently in effect and all
         amendments and supplements thereto are herein called the "Prospectus").

     The Trust will furnish the Advisor from time to time with copies, properly
     certified or authenticated, of all amendments of or supplements to the
     foregoing at the same time as such documents are required to be filed with
     the SEC.

3.   Management.  Subject to the supervision of the Trust's Board of Trustees,
     the Advisor will provide a continuous investment program for the Fund,
     including investment research and management with respect to all
     securities, investments, cash and cash equivalents in the Fund.  The
     Advisor will also monitor the performance and investment policies of any
     Sub-Advisor and will recommend from time to time whether the Sub-Advisor
     should be retained or removed by the Fund.  The Advisor will determine from
     time to time what securities and other investments will be purchased,
     retained or sold by the Fund.  The Advisor will provide the services under
     this Agreement in accordance with the Fund's investment objectives,
     policies and restrictions as stated in its Prospectus.  The Advisor further
     agrees that it:

     (a) Will conform its activities to all applicable Rules and Regulations of
         the Securities and Exchange Commission and will, in addition, conduct
         its activities under this Agreement in accordance with regulations of
         any other Federal and State agencies which may now or in the future
         have jurisdiction over its activities under this Agreement;

     (b) Will place orders pursuant to its investment determinations for the
         Fund either directly with the issuer or with any broker or dealer. In
         placing orders with brokers or dealers, the Advisor will attempt to
         obtain the best net price and the most favorable execution of its
         orders.  Consistent with this obligation, when the Advisor believes two
         or more brokers or dealers are comparable in price and execution, the
         Advisor may prefer: (i) brokers and dealers who provide the Fund with
         research advice and other services, or who recommend or sell Trust
         shares, and (ii) brokers who are affiliated with the Fund or its
         Advisor; provided, however, that in no instance will portfolio
         securities be purchased from or sold to the Advisor or any affiliated
         person of the Advisor in principal transactions;

     (c) Will provide certain executive personnel for the Fund as may be
         mutually agreed upon from time to time with the Board of Trustees, the
         salaries and expenses of such personnel to be borne by the Advisor
         unless otherwise mutually agreed upon; and

     (d) Will provide, at its own cost, all office space, facilities and
         equipment necessary for the conduct of its advisory activities on
         behalf of the Fund.

4.   Services Not Exclusive.  The advisory services furnished by the Advisor
     hereunder are not to be deemed exclusive, and the Advisor shall be free to
     furnish similar services to others so long as its services under this
     Agreement are not impaired thereby; provided, however, that without the
     written consent of the Trustees, the Advisor will not serve as investment
     advisor to any other investment company having a similar investment
     objective to that of the Fund.

5.   Books and Records.  In compliance with the requirements of Rule 31a-3 under
     the 1940 Act, the Advisor hereby agrees that all records which it maintains
     for the benefit of the Fund are the property of the Fund and further agrees
     to surrender promptly to the Fund any of such records upon the Fund's
     request.  The Advisor further agrees to preserve for the periods prescribed
     by Rule 31a-2 under the 1940 Act the records required to be maintained by
     it pursuant to Rule 31a-1 under the 1940 Act that are not maintained by
     others on behalf of the Fund.

6.   Expenses.  During the term of this Agreement, the Advisor will pay all
     expenses incurred by it in connection with its investment advisory services
     pertaining to the Fund.  In the event that there is no distribution plan
     under Rule 12b-1 of the 1940 Act in effect for the Fund, the Advisor will
     pay, out of the Advisor's resources generated from sources other than fees
     received from the Fund, the entire cost of the promotion and sale of Trust
     shares.

     Notwithstanding the foregoing, the Fund shall pay the expenses and costs of
     the following:

     (a) Taxes, interest charges and extraordinary expenses;
     (b) Brokerage fees and commissions with regard to portfolio transactions
         of the Fund;
     (c) Fees and expenses of the custodian of the Fund's portfolio
         securities;
     (d) Fees and expenses of the Fund's administrator, transfer and dividend
         disbursing agent and the Fund's fund accounting agent or, if the Fund
         performs any such services without an agent, the costs of the same;
     (e) Auditing and legal expenses;
     (f) Cost of maintenance of the Fund's existence as a legal entity;
     (g) Compensation of trustees who are not interested persons of the
         Advisor as that term is defined by law;
     (h) Costs of Trust meetings;
     (i) Federal and State registration or qualification fees and expenses;
     (j) Costs of setting in type, printing and mailing Prospectuses, reports
         and notices to existing shareholders;
     (k) The investment advisory fee payable to the Advisor, as provided in
         paragraph 7 herein; and
     (l) Plan of Distribution expenses, but only in accordance with the Plan
         of Distribution as approved by the shareholders of the Fund.

     It is understood that the Trust may desire to register the Fund's shares
     for sale in certain states which impose expense limitations on mutual
     funds.  The Trust agrees that it will register the Fund's shares in such
     states only with the prior written consent of the Advisor.

7.   Compensation.  The Trust will pay the Advisor and the Advisor will accept
     as full compensation an investment advisory fee, based upon the daily
     average net assets of each Fund, computed at the end of each month and
     payable within five (5) business days thereafter, based upon the schedule
     attached hereto as Exhibit A.

8.(a)Limitation of Liability.  The Advisor shall not be liable for any error of
     judgment, mistake of law or for any other loss whatsoever suffered by the
     Fund in connection with the performance of this Agreement, except a loss
     resulting from a breach of fiduciary duty with respect to the receipt of
     compensation for services or a loss resulting from wilful misfeasance, bad
     faith or gross negligence on the part of the Advisor in the performance of
     its duties or from reckless disregard by it of its obligations and duties
     under this Agreement.

8.(b)Indemnification of Advisor.  Subject to the limitations set forth in this
     Subsection 8(b), the Fund shall indemnify, defend and hold harmless (from
     the assets of the Trust or Trusts to which the conduct in question
     relates) the Advisor against all loss, damage and liability, including but
     not limited to amounts paid in satisfaction of judgments, in compromise or
     as fines and penalties, and expenses, including reasonable accountants'
     and counsel fees, incurred by the Advisor in connection with the defense
     or disposition of any action, suit or other proceeding, whether civil or
     criminal, before any court or administrative or legislative body, related
     to or resulting from this Agreement or the performance of services
     hereunder, except with respect to any matter as to which it has been
     determined that the loss, damage or liability is a direct result of (i) a
     breach of fiduciary duty with respect to the receipt of compensation for
     services; or (ii) willful misfeasance, bad faith or gross negligence on
     the part of the Advisor in the performance of its duties or from reckless
     disregard by it of its duties under this Agreement (either and both of the
     conduct described in clauses (i) and (ii) above being referred to
     hereinafter as "Disabling Conduct").  A determination that the Advisor is
     entitled to indemnification may be made by (i) a final decision on the
     merits by a court or other body before whom the proceeding was brought
     that the Advisor was not liable by reason of Disabling Conduct, (ii)
     dismissal of a court action or an administrative proceeding against the
     Advisor for insufficiency of evidence of Disabling Conduct, or (iii) a
     reasonable determination, based upon a review of the facts, that the
     Advisor was not liable by reason of Disabling Conduct by, (a) vote of a
     majority of a quorum of Trustees who are neither "interested persons" of
     the Fund as the quoted phrase is defined in Section 2(a)(19) of the 1940
     Act nor parties to the action, suit or other proceeding on the same or
     similar grounds that is then or has been pending or threatened (such
     quorum of such Trustees being referred to hereinafter as the "Independent
     Trustees"), or (b) an independent legal counsel in a written opinion.
     Expenses, including accountants' and counsel fees so incurred by the
     Advisor (but excluding amounts paid in satisfaction of judgments, in
     compromise or as fines or penalties), may be paid from time to time by the
     Fund or Trust to which the conduct in question related in advance of the
     final disposition of any such action, suit or proceeding; provided, that
     the Advisor shall have undertaken to repay the amounts so paid if it is
     ultimately determined that indemnification of such expenses is not
     authorized under this Subsection 8(b) and if (i) the Advisor shall have
     provided security for such undertaking, (ii) the Fund shall be insured
     against losses arising by reason of any lawful advances, or (iii) a
     majority of the Independent Trustees, or an independent legal counsel in
     a written opinion, shall have determined, based on a review of readily
     available facts (as opposed to a full trial-type inquiry), that there is
     reason to believe that the Advisor ultimately will be entitled to
     indemnification hereunder.

     As to any matter disposed of by a compromise payment by the Advisor
     referred to in this Subsection 8(b), pursuant to a consent decree or
     otherwise, no such indemnification either for said payment or for any
     other expenses shall be provided unless such indemnification shall be
     approved (i) by a majority of the Independent Trustees or (ii) by an
     independent legal counsel in a written opinion.  Approval by the
     Independent Trustees pursuant to clause (i) shall not prevent the recovery
     from the Advisor of any amount paid to the Advisor in accordance with
     either of such clauses as indemnification of the Advisor is subsequently
     adjudicated by a court of competent jurisdiction not to have acted in good
     faith in the reasonable belief that the Advisor's action was in or not
     opposed to the best interest of the Fund or to have been liable to the
     Fund or its Shareholders by reason of willful misfeasance, bad faith,
     gross negligence or reckless disregard of the duties involved in its
     conduct under the Agreement.

     The right of indemnification provided by this Subsection 8(b) shall not be
     exclusive of or affect any of the rights to which the Advisor may be
     entitled.  Nothing contained in this Subsection 8(b) shall affect any
     rights to indemnification to which Trustees, officers or other personnel
     of the Fund, and other persons may be entitled by contract or otherwise
     under law, nor the power of the Fund to purchase and maintain liability
     insurance on behalf of any such person.

     The Board of Trustees of the Trust shall take all such action as may be
     necessary and appropriate to authorize the Fund hereunder to pay the
     indemnification required by this Subsection 8(b) including, without
     limitation, to the extent needed, to determine whether the Advisor is
     entitled to indemnification hereunder and the reasonable amount of any
     indemnity due it hereunder, or employ independent legal counsel for that
     purpose.

8.(c)The provisions contained in Section 8 shall survive the expiration or
     other termination of this Agreement, shall be deemed to include and
     protect the Advisor and its directors, officers, employees and agents and
     shall inure to the benefit of its/their respective successors, assigns and
     personal representatives.

9.   Duration and Termination.  This Agreement shall become effective on April
     1, 1994 and, unless sooner terminated as provided herein, shall continue
     in effect for one year.  Thereafter, this Agreement shall be renewable for
     successive periods of one year each, provided such continuance is
     specifically approved annually:

     (a) By the vote of a majority of those members of the Board of Trustees
         who are not parties to this Agreement or interested persons of any
         such party (as that term is defined in the 1940 Act), cast in person
         at a meeting called for the purpose of voting on such approval; and

     (b) By vote of either the Board of Trustees or a majority (as that term
         is defined in the 1940 Act) of the outstanding voting securities of
         the Fund.

     Notwithstanding the foregoing, this Agreement may be terminated by the
     Fund or by the Advisor at any time on sixty (60) days' written notice,
     without the payment of any penalty, provided that termination by the Fund
     must be authorized either by vote of the Board of Trustees or by vote of
     a majority of the outstanding voting securities of the Fund.  This
     Agreement will automatically terminate in the event of its assignment (as
     that term is defined in the 1940 Act).

10.  Amendment of this Agreement.  No provision of this Agreement may be
     changed, waived, discharged or terminated orally, but only by a written
     instrument signed by the party against which enforcement of the change,
     waiver, discharge or termination is sought.  No material amendment of this
     Agreement shall be effective until approved by vote of the holders of a
     majority of the Fund's outstanding voting securities (as defined in the
     1940 Act).

11.  Miscellaneous.  The captions in this Agreement are included for
     convenience of reference only and in no way define or limit any of the
     provisions hereof or otherwise affect their construction or effect.  If
     any provision of this Agreement shall be held or made invalid by a court
     decision, statute, rule or otherwise, the remainder of the Agreement shall
     not be affected thereby.  This Agreement shall be binding and shall inure
     to the benefit of the parties hereto and their respective successors.

12.  Applicable Law.  This Agreement shall be construed in accordance with, and
     governed by, the laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

ATTEST:                            ALBEMARLE INVESTMENT TRUST


By:                                By:


Title:                             Title:


ATTEST:                            BOYS, ARNOLD & COMPANY, INC.


By:                                By:


Title:                             Title:


                            EXHIBIT A

           INVESTMENT ADVISOR'S COMPENSATION SCHEDULE

For the services delineated in the INVESTMENT ADVISORY AGREEMENT, the Investment
Advisor shall be compensated monthly, as of the last day of each month, within
five business days of the month end, a fee based upon net assets according to
the following schedule.


                                        Annual
          Net Assets                     Fee

     On all assets                      0.35%


                                   Exhibit 8

                               Custody Agreement



                               CUSTODY AGREEMENT
                                 (Mutual Funds)

THIS AGREEMENT is made as of January 1, 1993, by and between Albemarle
Investment Trust (the "Trust"), a Massachusetts business trust, with respect to
its existing series as of the date of this Agreement, and such other series as
shall be designated from time to time by the Trust (the "Fund" or "Funds"), and
WACHOVIA BANK OF NORTH CAROLINA, N.A., a national banking association (the
"Custodian").

The Trust desires that its securities and funds shall be hereafter held and
administered by the Custodian pursuant to the terms of this Agreement, and,
pursuant to a separate agreement, The Nottingham Company, Inc., a North Carolina
corporation ("Nottingham"), has agreed to perform the duties of Transfer Agent,
Accounting Services Agent, Dividend Disbursing Agent and Administrator for the
Fund.

In consideration of the mutual agreements herein, the Trust and the Custodian
agree as follows:

1.    DEFINITIONS.

      As used herein, the following words and phrases shall have the meanings
      shown in this Section 1:

      "Securities" includes stocks, shares, bonds, debentures, bills, notes,
      mortgages, certificates of deposit, bank time deposits, bankers'
      acceptances, commercial paper, scrip, warrants, participation
      certificates, evidences of indebtedness, or other obligations and any
      certificates, receipts, warrants or other instruments representing rights
      to receive, purchase, or subscribe for the same, or evidencing or
      representing any other rights or interests therein, or in any property or
      assets.

      "Oral Instructions" shall mean an authorization, instruction, approval,
      item or set of data, or information of any kind transmitted to the
      Custodian in person or by telephone, telegram, telecopy or other
      mechanical or documentary means lacking original signature, by an officer
      or employee of the Trust or an employee of Nottingham in its capacity as
      Transfer Agent, Accounting Services Agent, Administrator and Dividend
      Disbursing Agent who has been authorized by a resolution of the Board of
      Trustees of the Trust or the Board of Directors of Nottingham, as the case
      may be, to give Written Instructions on behalf of the Trust.

      "Written Instructions" shall mean an authorization, instruction, approval,
      item or set of data, or information of any kind transmitted to the
      Custodian containing original signatures or a copy of such document
      transmitted by telecopy including transmission of such signature,
      reasonably believed by the Custodian to be the signature of an officer or
      employee of the Trust or an employee of Nottingham in its capacity as
      Transfer Agent, Accounting Services Agent, Administrator or Dividend
      Disbursing Agent who has been authorized by a resolution of the Board of
      Trustees of the Trust or Board of Directors of Nottingham, as the case may
      be, to give Written Instructions on behalf of the Trust.

      "Securities Depository" shall mean a system for the central handling of
      securities where all securities of any particular class or series of any
      issuer deposited within the system are treated as fungible and may be
      transferred or pledged by bookkeeping entry without physical delivery of
      securities.

      "Officers' Certificate" shall mean a direction, instruction or
      certification in writing signed in the name of the Trust by the President,
      Secretary or Assistant Secretary, or the Treasurer or Assistant Treasurer
      of the Trust, or any other persons duly authorized to sign by the Board of
      Trustees or the Executive Committee of the Trust.

      "Book-Entry Securities" shall mean securities issued by the Treasury of
      the United States of America and federal agencies of the United States of
      America which are maintained in the book-entry system as provided in
      Subpart O of Treasury Circular No. 300, 31 CFR 306, Subpart B of 31 CFR
      Part 350, and the book-entry regulations of federal agencies substantially
      in the form of Subpart O, and the term Book-Entry Account shall mean an
      account maintained by a Federal Reserve Bank in accordance with the
      aforesaid Circular and regulations.

2.    DOCUMENTS TO BE FILED BY TRUST.

      The Trust shall from time to time file with the Custodian a certified copy
      of each resolution of its Board of Trustees authorizing execution of
      Written Instructions and the number of signatories required, together with
      certified signatures of the officers and other signatories authorized to
      sign, which shall constitute conclusive evidence of the authority of the
      officers and other signatories designated therein to act, and shall be
      considered in full force and effect and the Custodian shall be fully
      protected in acting in reliance thereon until it receives a new certified
      copy of a resolution adding or deleting a person or persons with authority
      to give Written Instructions. If the certifying officer is authorized to
      sign Written Instructions, the certification shall also be signed by a
      second officer of the Trust.  The Trust also agrees that the Custodian may
      rely on Written Instructions received from Nottingham as Agent for the
      Trust if those Written Instructions are given by persons having authority
      pursuant to resolutions of the Board of Trustees of the Trust.

      The Trust shall from time to time file with the Custodian a certified copy
      of each resolution of the Board of Trustees authorizing the transmittal of
      Oral Instructions and specifying the person or persons authorized to give
      Oral Instructions in accordance with this Agreement.  The Trust agrees
      that the Custodian may rely on Oral Instructions received from Nottingham,
      as agent for the Trust, if those instructions are given by persons
      reasonably believed by the Custodian to have such authority.  Any
      resolution so filed with the Custodian shall be considered in full force
      and effect and the Custodian shall be fully protected in acting in
      reliance thereon until it actually receives a new certified copy of a
      resolution adding or deleting a person or persons with authority to give
      Oral Instructions.  If the certifying officer is authorized to give Oral
      Instructions, the certification shall also be signed by a second officer
      of the Trust.

3.    RECEIPT AND DISBURSEMENT OF FUNDS.

      (a)         The Custodian shall open and maintain a separate account or
                  accounts in the name of each Fund of the Trust, subject only
                  to draft or order by the Custodian acting pursuant to the
                  terms of this Agreement.  The Custodian shall hold in
                  safekeeping in such account or accounts, subject to the
                  provisions hereof, all funds received by it from or for the
                  account of the Trust.  The Trust will deliver or cause to be
                  delivered to the Custodian all funds owned by the Trust,
                  including cash received for the issuance of its shares during
                  the period of this Agreement.  The Custodian shall make
                  payments of funds to, or for the account of, the Trust from
                  such funds only:

            (i)         for the purchase of securities for the portfolio of the
                        Trust upon the delivery of such securities to the
                        Custodian (or to any bank, banking firm or trust company
                        doing business in the United States and designated by
                        the Custodian as its sub-custodian or agent for this
                        purpose or any foreign bank qualified under Rule 17f-5
                        of the Investment Company Act of 1940 and acting as
                        sub-custodian), registered (if registerable) in the name
                        of the Trust or of the nominee of the Custodian referred
                        to in Section 8 or in proper form for transfer, or, in
                        the case of repurchase agreements entered into between
                        the Trust and the Custodian or other bank or broker
                        dealer (A) against delivery of the securities either in
                        certificate form or through an entity crediting the
                        Custodian's account at the Federal Reserve Bank with
                        such securities or (B) upon delivery of the receipt
                        evidencing purchase by the Trust of securities owned by
                        the Custodian along with written evidence of the
                        agreement by the Custodian bank to repurchase such
                        securities from the Trust;

            (ii)        for the payment of interest, dividends, taxes,
                        management or supervisory fees, or operating expenses
                        (including, without limitation, Board of Trustees' fees
                        and expenses, and fees for legal, accounting and
                        auditing services) and for redemption or repurchase of
                        shares of the Trust;

            (iii)       for payments in connection with the conversion, exchange
                        or surrender of securities owned or subscribed to by the
                        Trust held by or to be delivered to the Custodian;

            (iv)        for the payment to any bank of interest on all or any
                        portion of the principal of any loan made by such bank
                        to the Trust;

            (v)         for the payment to any person, firm or corporation who
                        has borrowed the Trust's portfolio securities the amount
                        deposited with the Custodian as collateral for such
                        borrowing upon the delivery of such securities to the
                        Custodian, registered (if registerable) in the name of
                        the Trust or of the nominee of the Custodian referred to
                        in Section 8 or in proper form for transfer; or

            (vi)        for other proper purposes of the Trust.

            Before making any such payment the Custodian shall receive (and may
            rely upon) Written Instructions or Oral Instructions directing such
            payment and stating that it is for a purpose permitted under the
            terms of this subsection (a).  In respect of item (vi), the
            Custodian will take such action only upon receipt of an Officers'
            Certificate and a certified copy of a resolution of the Board of
            Trustees or the Executive Committee of the Trust signed by an
            officer of the Trust and certified by the Secretary or an Assistant
            Secretary, specifying the amount of such payment, setting forth the
            purpose for which such payment is to be made.  In respect of item
            (v), the Custodian shall make payment to the borrower of securities
            loaned by the Trust of part of the collateral deposited with the
            Custodian upon receipt of Written Instructions from the Trust or
            Nottingham stating that the market value of the securities loaned
            has declined and specifying the amount to be paid by the Custodian
            without receipt or return of any of the securities loaned by the
            Trust.  In respect of item (i), in the case of repurchase agreements
            entered into with a bank which is a member of the Federal Reserve
            System, the Custodian may transfer funds to the account of such
            bank, which may be itself, prior to receipt of written evidence that
            the securities subject to such repurchase agreement have been
            transferred by book-entry to the Custodian's non-proprietary account
            at the Federal Reserve Bank, or in the case of repurchase agreements
            entered into with the Custodian, of the safekeeping receipt and
            repurchase agreement, provided that such securities have in fact
            been so transferred by book-entry, or in the case of repurchase
            agreements entered into with the Custodian, the safekeeping receipt
            is received prior to the close of business on the same day.

      (b)         Notwithstanding anything herein to the contrary, the Custodian
                  may at any time or times with the written approval of the
                  Board of Trustees, appoint (and may at any time remove without
                  the written approval of the Trust) any other bank or trust
                  company as its sub-custodian or agent to carry out such of the
                  provisions of Subsection (a) of this Section 3 as instructions
                  from the Trust may from time to time request; provided,
                  however, that the appointment of such sub-custodian or agent
                  shall not relieve the Custodian of any of its responsibilities
                  hereunder; and provided, further, that the Custodian shall not
                  enter into any arrangement with any subcustodian unless such
                  sub-custodian meets the requirements of Section 26 of the
                  Investment Company Act of 1940 and Rule 17f-5 thereunder, if
                  applicable.

      (c)         The Custodian is hereby authorized to endorse and collect all
                  checks, drafts or other orders for the payment of money
                  received by the Custodian for the accounts of the Trust.

4.    RECEIPT OF SECURITIES.

      (a)         The Custodian shall hold in safekeeping in a separate account,
                  and physically segregated at all times from those of any other
                  persons, firms, corporations or trusts or any other series of
                  the Trust, pursuant to the provisions hereof, all securities
                  received by it from or for the account of each series of the
                  Trust, and the Trust will deliver or cause to be delivered to
                  the Custodian all securities owned by the Trust.  All such
                  securities are to be held or disposed of by the Custodian
                  under, and subject at all times to the instructions pursuant
                  to, the terms of this Agreement.  The Custodian shall have no
                  power or authority to assign, hypothecate, pledge, lend or
                  otherwise dispose of any such securities and investments,
                  except pursuant to instructions and only for the account of
                  the Trust as set forth in Section 5 of this Agreement.

      (b)         Notwithstanding anything herein to the contrary, the Custodian
                  may at any time or times with the written approval of the
                  Board of Trustees, appoint (and may at any time without the
                  written approval of such Board of Trustees remove) any other
                  bank or trust company as its sub-custodian or agent to carry
                  out such of the provisions of Subsection (a) of this Section 4
                  and of Section 5 of this Agreement, as instructions may from
                  time to time request, provided, however, that the appointment
                  of such sub-custodian or agent shall not relieve the Custodian
                  of any of its responsibilities hereunder, and provided,
                  further, that the Custodian shall not enter into arrangement
                  with any sub-custodian unless such sub-custodian meets the
                  requirements of Section 26 of the Investment Company Act of
                  1940 or Rule 17f-5 thereunder, if applicable.

5.    TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES.

      The Custodian shall have sole power to release or deliver any Securities
      of the Trust held by it pursuant to this Agreement.  The Custodian agrees
      to transfer, exchange or deliver Securities held by it on behalf of the
      Trust hereunder only:

      (a)         for sales of such Securities for the account of the Trust upon
                  receipt by the Custodian of Payment therefor;

      (b)         when such securities mature or are called, redeemed or retired
                  or otherwise become payable;

      (c)         for examination by any broker selling any such securities in
                  accordance with "street delivery" custom;

      (d)         in exchange for or upon conversion into other Securities alone
                  or other securities and cash whether pursuant to any plan of
                  merger, consolidation, reorganization, recapitalization or
                  readjustment, or otherwise;

      (e)         upon conversion of such Securities pursuant to their terms
                  into other Securities;

      (f)         upon exercise of subscription, purchase or other similar
                  rights represented by such Securities;

      (g)         for the purpose of exchanging interim receipts for temporary
                  Securities for definitive securities;

      (h)         for the purpose of effecting a loan of the portfolio
                  Securities to any person, firm, corporation or trust upon the
                  receipt by the Custodian of cash or cash equivalent collateral
                  at least equal to the market value of the securities loaned;

      (i)         to any bank for the purpose of collateralizing the obligation
                  of the Trust to repay any moneys borrowed by the Trust from
                  such bank; provided, however, that the Custodian may at the
                  option of such lending bank keep such collateral in its
                  possession, subject to the rights of such bank given to it by
                  virtue of any promissory note or agreement executed and
                  delivered by the Trust to such bank; or

      (j)         for other proper purposes of the Trust.

      As to any deliveries made by the Custodian pursuant to items (a), (b),
      (c), (d), (e), (f), (g) and (h), Securities or funds receivable in
      exchange therefor shall be deliverable to the Custodian.  Before making
      any such transfer, exchange or delivery, the Custodian shall receive (and
      may rely upon) instructions requesting such transfer, exchange, or
      delivery and stating that it is for a purpose permitted under the terms
      (a), (b), (c), (d), (e), (f), (g), (h), or (i) of this Section 5, and, in
      respect of item (j), upon receipt of instructions of a certified copy of a
      resolution of the Board of Trustees of the Trust, signed by an officer of
      the Trust and certified by its Secretary or an Assistant Secretary,
      specifying the Securities to be delivered, setting forth the purpose for
      which such delivery is to be made, declaring such purpose to be a proper
      purpose of the Trust, and naming the person or persons to whom delivery of
      such Securities shall be made.  In respect of item (h), the instructions
      shall state the market value of the Securities to be loaned and the
      corresponding amount of collateral to be deposited with the Custodian;
      thereafter, upon receipt of instructions stating that the market value of
      the Securities loaned has increased and specifying the amount of increase,
      the Custodian shall collect from the borrower additional cash collateral
      in such amount. 6.    FEDERAL RESERVE BOOK-ENTRY SYSTEM.

      Notwithstanding any other provisions of this Agreement, it is expressly
      understood and agreed that the Custodian is authorized in the performance
      of its duties hereunder to deposit in the book-entry deposit system
      operated by the Federal Reserve Bank (the "System"), United States
      government, instrumentality and agency securities and any other Securities
      deposited in the System and to use the facilities of the System, as
      permitted by Rule 17f-4 under the Investment Company Act of 1940, in
      accordance with the following terms and provisions:

      (a)         The Custodian may keep Securities of the Trust in the System
                  provided that such Securities are represented in an account
                  ("Account") of the Custodian's in the System which shall not
                  include any assets of the Custodian other than assets held in
                  a fiduciary or custodian capacity.

      (b)         The records of the Custodian with respect to the participation
                  in the System through the Custodian shall identify by
                  Book-Entry Securities belonging to the Trust which are
                  included with other Securities deposited in the Account and
                  shall at all times during the regular business hours of the
                  Custodian be open for inspection by duly authorized officers,
                  employees or agents of the Trust and employees and agents of
                  the Securities and Exchange Commission.

      (c)         The Custodian shall pay for Securities purchased for the
                  account of the Trust upon:

            (i)         receipt of advice from the System that such Securities
                        have been transferred to the Account; and

            (ii)        the making of an entry on the records of the Custodian
                        to reflect such payment and transfer for the account of
                        the Trust.  The Custodian shall transfer Securities sold
                        for the account of the Trust upon:

                  (1)        receipt of advice from the System that payment for
                             such Securities has been transferred to the
                             Account; and

                  (2)        the making of an entry on the records of the
                             Custodian to reflect such transfer and payment for
                             the account of the Trust.  The Custodian shall send
                             the Trust a confirmation of any transfers to or
                             from the account of the Trust.

      (d)         The Custodian will provide the Trust with any report obtained
                  by the Custodian on the System's accounting system, internal
                  accounting control and procedures for safeguarding Securities
                  deposited in the System.  The Custodian will provide the Trust
                  with reports by independent public accountants on the
                  accounting system, internal accounting control and procedures
                  for safeguarding Securities, including Securities deposited in
                  the System relating to the services provided by the Custodian
                  under this Agreement; such reports shall detail material
                  inadequacies disclosed by such examination, and, if there are
                  no such inadequacies, shall so state, and shall be of such
                  scope and in such detail as the Trust may reasonably require
                  and shall be of sufficient scope to provide reasonable
                  assurance that any material inadequacies would be disclosed.

7.    USE OF CLEARING FACILITIES.

      Notwithstanding any other provisions of the Agreement, the Custodian may,
      in connection with transactions in portfolio Securities by the Trust, use
      the facilities of the Depository Trust Company ("DTC"), and the
      Participants Trust Company ("PTC"), as permitted by Rule 17f-4 under the
      Investment Company Act of 1940, if such facilities have been approved by
      the Board of Trustees of the Trust in accordance with the following:

      (a)         DTC and PTC may be used to receive and hold eligible
                  Securities owned by the Trust;

      (b)         payment for Securities purchased may be made through the
                  clearing medium employed by DTC and PTC for transactions of
                  participants acting through them;

      (c)         Securities of the Trust deposited in DTC and PTC will at all
                  times be segregated from any assets and cash controlled by the
                  Custodian in other than a fiduciary or custodian capacity but
                  may be commingled with other assets held in such capacities.
                  Subject to the provisions of the Agreement with regard to
                  instructions, the Custodian will pay out money only upon
                  receipt of Securities or notification thereof and will deliver
                  Securities only upon the receipt of money or notification
                  thereof;

      (d)         all books and records maintained by the Custodian which relate
                  to the participation in DTC and PTC shall identify by
                  Book-Entry Securities belonging to the Trust which are
                  deposited in DTC and PTC and shall at all times during the
                  Custodian's regular business hours be open to inspection by
                  the duly authorized officers, employees, agents and auditors,
                  and the Trust will be furnished with all the information in
                  respect of the services rendered to it as it may require;

      (e)         the Custodian will make available to the Trust copies of any
                  internal control reports concerning DTC and PTC delivered to
                  it by either internal or external auditors within ten days
                  after receipt of such a report by the Custodian; and

      (f)         confirmations of transactions using the facilities of DTC and
                  PTC shall be provided as set forth in Rule 17f-4 of the
                  Investment Company Act of 1940.

8.    CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.

      Unless and until the Custodian receives instructions to the contrary, the
      Custodian shall on behalf of the Trust:

      (a)         Present for payment all coupons and other income items held by
                  it for the account of the Trust which call for payment upon
                  presentation and hold the funds received by it upon such
                  payment for the Trust;

      (b)         collect interest and cash dividends received, with notice to
                  the Trust, for the accounts of the Trust;

      (c)         hold for the accounts of the Trust hereunder all stock
                  dividends, rights and similar Securities issued with respect
                  to any securities held by it hereunder;

      (d)         execute as agent on behalf of the Trust all necessary
                  ownership certificates required by the Internal Revenue Code
                  or the Income Tax Regulations of the United States Treasury
                  Department or under the laws of any state now or hereafter in
                  effect, inserting the name of such certificates as the owner
                  of the Securities covered thereby, to the extent it may
                  lawfully do so;

      (e)         transmit promptly to the Trust all reports, notices and other
                  written information received by the Custodian from or
                  concerning issuers of the portfolio Securities; and

      (f)         collect from the borrower the Securities loaned and delivered
                  by the Custodian pursuant to item (h) of Section 5 hereof, any
                  interest or cash dividends paid on such Securities, and all
                  stock dividends, rights and similar Securities issued with
                  respect to any such loaned Securities.

      With respect to Securities of foreign issuers, it is expected that the
      Custodian will use its best efforts to effect collection of dividends,
      interest and other income, and to notify the Trust of any call for
      redemption, offer of exchange, right of subscription, reorganization, or
      other proceedings affecting such Securities, or any default in payments
      due thereon.  It is understood, however, that the Custodian shall be under
      no responsibility for any failure or delay in effecting such collections
      or giving such notice with respect to Securities of foreign issuers,
      regardless of whether or not the relevant information is published in any
      financial service available to it unless (a) such failure or delay is due
      to the Custodians' or any sub-custodians' negligence or (b) any relevant
      sub-custodian has acted in accordance with established industry practices.
      Collections of income in foreign currency are, to the extent possible, to
      be converted into United States dollars unless otherwise instructed in
      writing, and in effecting such conversion the Custodian may use such
      methods or agencies as it may see fit, including the facilities of its own
      foreign division at customary rates.  All risk and expenses incident to
      such collection and conversion is for the accounts of the Trust and the
      Custodian shall have no responsibility for fluctuations in exchange rates
      affecting any such conversion.

9.    REGISTRATION OF SECURITIES.

      Except as otherwise directed by instructions, the Custodian shall register
      all Securities, except such as are in bearer form, in the name of a
      registered nominee of the Custodian, as defined in the Internal Revenue
      Code and any Regulation of the Treasury Department issued thereunder or in
      any provision of any subsequent Federal tax law exempting such transaction
      from liability for stock transfer taxes, and shall execute and deliver all
      such certificates in connection therewith as may be required by such laws
      or Regulations or under the laws of any State.  The Custodian shall use
      its best efforts to the end that the specific securities held by it
      hereunder shall be at all times identifiable in its records.

      The Trust or Nottingham shall from time to time furnish to the Custodian
      appropriate instruments to enable the Custodian to hold or deliver in
      proper form for transfer, or to register in the name of its registered
      nominee, any securities which it may hold for the accounts of the Trust
      and which may from time to time be registered in the name of the Trust.

10.         SEGREGATED ACCOUNT.

      The Custodian shall upon receipt of written instructions from the Trust or
      Nottingham establish and maintain a segregated account or accounts for and
      on behalf of the Trust, into which account or accounts may be transferred
      cash and/or Securities, including Securities maintained in an account by
      the Custodian pursuant to Section 4 hereof,

            (i)         in accordance with the provisions of any agreement among
                        the Trust, the Custodian and a broker-dealer registered
                        under the Securities and Exchange Act of 1934 and a
                        member of the NASD (or any futures commission merchant
                        registered under the Commodity Exchange Act), relating
                        to compliance with the rules of The Options Clearing
                        Corporation and of any registered national securities
                        exchange (or the commodity Futures Trading Commission or
                        any registered contract market), or of any similar
                        organization or organizations, regarding escrow or other
                        arrangements in connection with transactions by the
                        Trust;

            (ii)        for purposes of segregating cash or government
                        securities in connection with options purchased, sold or
                        written by the Trust or commodity futures contracts or
                        options thereon purchased or sold by the Trust;

            (iii)       for the purposes of compliance by the Trust with the
                        procedures required by the Investment Company Act
                        Release No. 10666, or any subsequent release or releases
                        of the Securities and Exchange Commission relating to
                        the maintenance of segregated accounts by registered
                        investment companies; and

            (iv)        for other proper corporate purposes, but only, in the
                        case of clause (iv), upon receipt of, in addition to an
                        Officer's Certificate, a certified copy of a resolution
                        of the Board of Trustees signed by an officer of the
                        Trust and certified by the Secretary or an Assistant
                        Secretary, setting forth the purpose or purposes of such
                        segregated account and declaring such purposes to be
                        proper corporate purposes.

11.         VOTING AND OTHER ACTIONS.

      Neither the Custodian nor any nominee of the Custodian shall vote any of
      the Securities held hereunder by or for the accounts of the Trust, except
      in accordance with instructions.  The Custodian shall execute and deliver,
      or cause to be executed and delivered, to the appropriate investment
      advisor of each series of the Trust, all notices, proxies and proxy
      soliciting materials with relation to such Securities (excluding any
      Securities loaned and delivered by the Custodian pursuant to item (h) of
      Section 5 hereof), such proxies to be executed by the registered holder of
      such Securities (if registered otherwise than in the name of the Trust),
      but without indicating the manner in which such proxies are to be voted.
      Such proxies shall be delivered by regular mail to the appropriate
      investment advisor of each series of the Trust.

12.         TRANSFER TAX AND OTHER DISBURSEMENTS.

      The Trust shall pay or reimburse the Custodian from time to time for any
      transfer taxes payable upon transfers of securities made hereunder and for
      all other necessary and proper disbursements and expenses made or incurred
      by the Custodian in the performance of this Agreement.  The Custodian
      shall execute and deliver such certificates in connection with Securities
      delivered to it or by it under this Agreement as may be required under the
      provisions of the Internal Revenue Code and any Regulations of the
      Treasury Department issued thereunder, or under the laws of any State, to
      exempt from taxation any exemptible transfers and/or deliveries of any
      such securities.

13.         CONCERNING THE CUSTODIAN.

      (a)         The Custodian's compensation shall be paid by the Trust. The
                  Custodian shall not be liable for any action taken in good
                  faith upon receipt of instructions as herein defined or a
                  certified copy of any resolution of the Board of Trustees, and
                  may rely on the genuineness of any such document which it may
                  in good faith believe to have been validly executed.

      (b)         The Custodian shall not be liable for any loss or damage,
                  resulting from its action or omission to act or otherwise,
                  except for any such loss or damage arising out of its own
                  negligence or willful misconduct and except that the Custodian
                  shall be responsible for the acts of any sub-custodian, or
                  agent appointed hereunder and approved by the Board of
                  Trustees of the Trust.  At any time, the Custodian may seek
                  advice from legal counsel for the Trust whose legal fees shall
                  be paid at the sole expense of the Trust, with respect to any
                  matter arising in connection with this Agreement, and it shall
                  not be liable for any action taken or not taken or suffered by
                  it in good faith in accordance with the opinion of counsel for
                  the Trust.  The Trust and not the Custodian shall be
                  responsible for any fee or charges by counsel for the Trust in
                  connection with any such opinion rendered to the Custodian.

      (c)         Without limiting the generality of the foregoing, the
                  Custodian shall be under no duty or obligation to inquire
                  into, and shall not be liable for:

            (i)         The validity of the issue of any Securities purchased by
                        or for the Trust, the legality of the purchase thereof,
                        or the propriety of the amount paid therefor;

            (ii)        The legality of the issue or sale of any Securities by
                        or for the Trust, or the propriety of the amount for
                        which the same are sold;

            (iii)       The legality of the issue or sale of any shares of the
                        Trust, or the sufficiency of the amount to be received
                        therefor;

            (iv)        The legality of the redemption of any shares of the
                        Trust, or the propriety of the amount to be paid
                        therefor;

            (v)         The legality of the declaration of any dividend or
                        distribution by the Trust, or the legality of the issue
                        of any Securities of the Trust in payment of any
                        dividend or distribution in shares;

            (vi)        The legality of the delivery of any Securities held for
                        the Trust for the purpose of collateralizing the
                        obligation of the Trust to repay any moneys borrowed by
                        the Trust; or

            (vii)       The legality of the delivery of any Securities held for
                        the Trust for the purpose of lending said securities to
                        any person, firm or corporation.

      (d)         The Custodian shall not be under any duty or obligation to
                  take action to effect collection of any amount, if the
                  Securities upon which such amount is payable are in default,
                  or if payment is refused after due demand or presentation by
                  the Custodian on behalf of the Trust, unless and until

            (i)         the Custodian shall be directed to take such action by
                        written instructions signed in the name of the Trust on
                        behalf of the Trust by one of its executive officers;
                        and

            (ii)        the Custodian shall be assured to its satisfaction of
                        reimbursement of its costs and expenses in connection
                        with any such action.

      (e)         The Custodian shall not be under any duty or obligation to
                  ascertain whether any securities at any time delivered to or
                  held by it for the account of the Trust, are such as may
                  properly be held by the Trust under the provisions of the
                  Trust's Declaration of Trust or By-Laws as amended from time
                  to time.

      (f)         The Trust agrees to indemnify and hold harmless the Custodian
                  and its nominees, sub-custodians, depositories and agent from
                  all taxes, charges, expenses, assessments, liabilities, and
                  losses (including counsel fees) incurred or assessed against
                  it or its nominees, sub-custodians, depositories and agents in
                  connection with the performance of this Agreement, except such
                  as may arise from its or its nominee's, sub-custodian's,
                  depositories' and agent's own negligent action, negligent
                  failure to act, breach of this agreement or willful
                  misconduct.  The Custodian is authorized to charge any account
                  of the Trust for such items; provided, however, that, except
                  for overdrafts as to which the Custodian shall have the
                  immediate right of offset, prior to charging any such account
                  for such items, the Custodian shall first have forwarded an
                  invoice for such item to the Trust and 30 days shall have
                  elapsed from the date of such invoice to the Trust without
                  payment of the same having been received by the Custodian.  In
                  the event of any advance of funds for any purpose made by the
                  Custodian resulting from orders or instructions of the Trust,
                  or in the event that the Custodian or its nominees,
                  sub-custodians, depositories and agents shall incur or be
                  assessed any taxes, charges, expenses, assessments, claims or
                  liabilities in connection with the performance of this
                  Agreement, except such as may arise from its or its nominee's
                  own negligent action, negligent failure to act or willful
                  misconduct any property at any time held for the accounts of
                  the Trust shall be security therefor.  Nothing in this
                  paragraph, however, shall be deemed to apply to transaction
                  and asset holding fees or out of pocket expenses of the
                  Custodian which are payable by Nottingham, and as to such fees
                  and expenses the Custodian shall have no right of offset or
                  security under this paragraph.

      (g)         The Custodian agrees to indemnify and hold harmless the Trust
                  and Trust's Trustees and officers from all taxes, charges,
                  expenses, assessments, claims liabilities, and losses
                  (including counsel fees) incurred or assumed against any of
                  them as a result of any breach or violation of this Agreement
                  by the Custodian or any act or omission by the Custodian or
                  its Trustees, officers, employees and agents and resulting
                  from their negligence or willful misconduct.

      (h)         In the event that, pursuant to this Agreement, instructions
                  direct the Custodian to pay for securities on behalf of the
                  Trust, the Trust hereby grants to the Custodian a security
                  interest in such Securities, until the Custodian has been
                  reimbursed by the Trust in immediately available funds.  The
                  instructions designating the Securities to be paid for shall
                  be considered the requisite description and designation of the
                  Securities pledged to the Custodian for purposes of the
                  requirements of the Uniform Commercial Code.

            (i)         The Custodian represents that it is qualified to act as
                        such under section 26(a) of the Investment Company Act
                        of 1940.

14.         REPORTS BY THE CUSTODIAN.

      (a)         The Custodian shall furnish the Trust and the appropriate
                  investment advisor of each series of the Trust, daily with a
                  statement summarizing all transactions and entries for the
                  accounts of the Trust.  The Custodian shall furnish the Trust
                  at the end of every month with a list of the portfolio
                  Securities held by it as Custodian for the Trust, adjusted for
                  all commitments confirmed by instructions as of such time. The
                  books and records of the Custodian pertaining to its actions
                  under this Agreement shall be open to inspection and audit at
                  reasonable times by officers of the Trust, its independent
                  public accountants and officers of its investment advisers.

      (b)         The Custodian will maintain such books and records relating to
                  transactions effected by it as are required by the Investment
                  Company Act of 1940, as amended, and any rule or regulation
                  thereunder; or by any other applicable provision of the law to
                  be maintained by the Trust or its Custodian, with respect to
                  such transactions, and preserving or causing to be preserved,
                  any such books and records for such periods as may be required
                  by any such rule or regulation.

15.         TERMINATION OR ASSIGNMENT.

      This agreement may be terminated by the Trust, or by the Custodian, on
      sixty (60) days' notice, given in writing and sent by registered mail to
      the Custodian, or to the Trust, as the case may be, at the address
      hereinafter set forth.  Upon any termination of this Agreement, pending
      appointment by the Trust of a successor to the Custodian or a vote of the
      shareholders of the Trust to dissolve or to function without a Custodian
      of its funds, the Custodian shall not deliver funds, Securities or other
      property of the Trust to the Trust, but may deliver them to a bank or
      trust company of its own selection having an aggregate capital, surplus,
      and undivided profits, as shown by its last published report of not less
      than ten million dollars ($10,000,000) and otherwise qualified to act as a
      custodian to a registered investment company as a Custodian for the Trust
      to be held under terms similar to those of this Agreement; provided,
      however, that the Custodian shall not be required to make any such
      delivery or payment until full payment shall have been made to the
      Custodian of all its contractual fees, compensations, costs and expenses,
      except for fees and expenses all as set forth in Section 13 of this
      Agreement.

16.         MISCELLANEOUS.

      (a)         Any notice or other instrument in writing, authorized or
                  required by this Agreement to be given to the Custodian, shall
                  be sufficiently given if addressed to the Custodian and mailed
                  or delivered to it at its office at Wachovia Bank of North
                  Carolina, 301 North Main Street, Winston-Salem, North Carolina
                  27150, Attention: Corporate Custody (Mail Code NC31013), or at
                  such other place as the Custodian may from time to time
                  designate in writing.

      (b)         Any notice or other instrument in writing, authorized or
                  required by this Agreement to be given to the Trust, shall be
                  sufficiently given if addressed to the Trust and mailed or
                  delivered to it at 105 N. Washington Street, Rocky Mount,
                  North Carolina 27802, or at-such other place as the Trust may
                  from time to time designate in writing.

      (c)         This Agreement may not be amended or modified in any manner
                  except by a written agreement executed by both parties with
                  the same formality as this Agreement, and authorized or
                  approved by a resolution of the Board of Trustees of the
                  Trust.

      (d)         This Agreement shall extend to and shall be binding upon the
                  parties hereto and their respective successors and assigns,
                  provided, however, that this Agreement shall not be assignable
                  by the Trust without the written consent of the Custodian or
                  by the Custodian without the written consent of the Trust,
                  authorized or approved by a resolution of its Board of
                  Trustees.

      (e)         This Agreement may be executed in any number of counterparts,
                  each of which shall be deemed to be an original, but such
                  counterparts shall, together, constitute but one instrument.

      (f)         This Agreement and the rights and obligations of the Trust and
                  the Custodian hereunder shall be construed and interpreted in
                  accordance with the laws of the State of North Carolina.

      (g)         The Declaration of Trust of the Trust has been filed with the
                  Secretary of State of the Commonwealth of Massachusetts.  The
                  obligations of the Trust on behalf of the Funds are not
                  personally binding upon, nor shall resort be had to the
                  private property of any of the Trustees, shareholders,
                  officers, employees or agents of the Trust, but only the
                  Trust's property shall be bound.

IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed and witnessed by duly authorized persons as of the date first written
above.  Executed in several counterparts, each of which is an original.


Attest:
___________________________________





Attest:
___________________________________WACHOVIA BANK OF NORTH CAROLINA, N.A.

By:________________________________
Title:_____________________________



ALBEMARLE INVESTMENT TRUST

By:________________________________
Title:_____________________________




                                  Exhibit 9(a)

                     Fund Accounting, Dividend Disbursing &
                  Transfer Agent and Administration Agreement




                                FUND ACCOUNTING,
                      DIVIDEND DISBURSING & TRANSFER AGENT
                          AND ADMINISTRATION AGREEMENT

THIS AGREEMENT, made and entered into on this 17th day of November 1992 by and
between the ALBEMARLE INVESTMENT TRUST, a Massachusetts business trust (the
"Trust"), and THE NOTTINGHAM COMPANY, INC., a North Carolina corporation (the
"Administrator").

WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and

WHEREAS, the Administrator is in the business of providing administrative
services to investment companies.

NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:

1.    Employment.  The Trust hereby employs Administrator to act as fund
      accountant, dividend disbursing and transfer agent and fund administrator
      for each Fund of the Trust, unless the Administrator and an individual
      Fund of the Trust determine it is in the best interests of that individual
      Fund to negotiate a separate Agreement.  Administrator, at its own
      expense, shall render the services and assume the obligations herein set
      forth subject to being compensated therefor as herein provided.

2.    Delivery of Documents.  The Trust has furnished the Administrator with
      copies properly certified or authenticated of each of the following:

      (a)  The Trust's Declaration of Trust, as filed with the State of
      Massachusetts (such Declaration, as presently in effect and as it shall
      from time to time be amended, is herein called the "Declaration"); (b) The
      Trust's By-Laws (such By-Laws, as presently in effect and as they shall
      from time to time be amended, are herein called the "By-Laws"); (c)
      Resolutions of the Trust's Board of Trustees authorizing the appointment
      of the Administrator and approving this Agreement; and (d)  The Trust's
      Registration Statement on Form N-1A under the 1940 Act and under the
      Securities Act of 1933 as amended, (the "1933 Act"), including all
      exhibits, relating to shares of beneficial interest of, and containing the
      Prospectus of, each Fund of the Trust (herein called the "Shares") as
      filed with the Securities and Exchange Commission and all amendments
      thereto.

      The Trust will furnish the Administrator with copies, properly certified
      or authenticated, of all amendments of or supplements to the foregoing.

3.    Duties of the Administrator.  Subject to the policies and direction of the
      Trust's Board of Trustees, the Administrator will provide a continuous
      executive management program and day to day supervision for each of the
      Trust's Funds.  Services to be provided shall be in accordance with the
      Trust's organizational and registration documents as listed in paragraph 2
      hereof and with the Prospectus of each Fund of the Trust.  The
      Administrator further agrees that it:

      (a)  Will conform with all applicable Rules and Regulations of the
      Securities and Exchange Commission and will, in addition, conduct its
      activities under this Agreement in accordance with regulations of any
      other Federal and State agencies which may now or in the future have
      jurisdiction over its activities;

      (b)  Will maintain, except as may be required to be maintained by third
      parties hired by the Trust under Rule 31a-3 of the 1940 Act, the account
      books and records of the Trust and each Fund of the Trust as required by
      Rule 31a-1 of the 1940 Act and will preserve such records in accordance
      with Rule 31a-2 of the 1940 Act;

      (c)  Will provide, at its expense the necessary non-executive personnel
      and data processing equipment and software to perform the Portfolio
      Accounting Services, Expense Accrual and Payment Services, Fund Valuation
      and Financial Reporting Services, Tax Accounting Services and Compliance
      Control Services shown on Exhibit A hereof;

      (d)  Will provide, at its expense the non-executive personnel and data
      processing equipment and software necessary to perform the Shareholder
      Servicing functions shown on Exhibit B hereof;

      (e)  Will provide, at its expense, certain executive personnel for the
      Trust as may be agreed upon from time to time with the Board of Trustees;
      and

      (f) Will provide all office space and general office equipment necessary
      for the activities of the Trust except as may be provided by third parties
      pursuant to separate agreements with the Trust.

      Notwithstanding anything contained in this Agreement to the contrary, the
      Administrator (including its directors, officers, employees and agents)
      shall not be required to perform any of the duties of, assume any of the
      obligations or expenses of, or be liable for any of the acts or omissions
      of, any investment advisor of a Fund of the Trust or other third party
      subject to separate agreements with the Trust.  It is the express intent
      of the parties hereto that the Administrator shall not have control over
      or be responsible for the placement (except as specifically directed by a
      Shareholder of the Trust), investment or reinvestment of the assets of any
      Fund of the Trust. The Administrator may from time to time, subject to the
      approval of the Trustees, obtain at its own expense the services of
      consultants or other third parties to perform part or all of its duties
      hereunder, and such parties may be affiliates of the Administrator.

4.    Services Not Exclusive.  The management and administrative services
      furnished by the Administrator hereunder are not to be deemed exclusive,
      and the Administrator shall be free to furnish similar services to others
      so long as its services under this Agreement are not impaired thereby.

5.    Books and Records.  In compliance with the requirements of Rule 31a-3
      under the 1940 Act, the Administrator hereby agrees that all records which
      it maintains for the Trust are the property of the Trust and further
      agrees to surrender promptly to the Trust any of such records upon the
      Trust's request.

6.    Expenses.  During the term of this Agreement, the Administrator will pay
      all expenses incurred by it in connection with the performance of its
      obligations under this Agreement.

      Notwithstanding the foregoing, the Trust shall pay the expenses and costs
      of the following:

      (a)         Taxes;

      (b)         Brokerage fees and commissions with regard to portfolio
                  transaction of the Funds;

      (c)         Interest charges, fees and expenses of the custodian of the
                  Funds' portfolio securities;

      (d)         Fees and expenses of the Trust's dividend disbursing and
                  transfer agent, fund accounting agent and administrator, in
                  accordance with paragraph 7 herein;

      (e)         Costs, as may be allocable to and agreed upon in advance by
                  the Trustees and the Administrator, of all non-executive and
                  clerical personnel and all data processing equipment and
                  software in connection with the provision of fund accounting
                  and recordkeeping services and shareholder servicing functions
                  as contemplated herein;

      (f)         Auditing and legal expenses of the Trust;

      (g)         Cost of maintenance of the Trust's existence as a legal
                  entity;

      (h)         Cost of special forms, stationery and telephone services (but
                  not telephone equipment) for the Trust;

      (i)         Compensation of Independent Trustees who are not interested
                  persons of the Trust as that term is defined by law;

      (j)         Costs of Trust meetings;

      (k)         Federal and State registration fees and expenses;

      (l)         Costs of setting in type, printing and mailing Prospectuses,
                  reports and notices to existing shareholders;

      (m)         The Advisory fees payable to each Funds' Investment Adviser;
                  and

      (o)         Actual out-of-pocket expenses of the Administrator as may be
                  agreed upon in writing from time to time by the Administrator
                  and the Trustees, but including, as a minimum, direct costs in
                  connection with Trust activities such as  the costs of long
                  distance telephone and wire charges, postage and the printing
                  of special forms and stationery.

7.    Compensation.  For the services provided and the expenses assumed by the
      Administrator pursuant to this Agreement, the Trust will pay the
      Administrator and the Administrator will accept as full compensation the
      administrative fees and expenses as set forth on Exhibit C attached
      hereto.  Special projects, not included herein and requested in writing by
      the Trustees, shall be completed by the Administrator and invoiced to the
      Trust as mutually agreed upon.

8.(a) Limitation of Liability.  The Administrator shall not be liable for any
      loss, damage or liability related to or resulting from the placement
      (except as specifically directed by a Shareholder of the Trust),
      investment or reinvestment of assets in any Fund of the Trust or the acts
      or omissions of any Fund's investment advisor or any other third party
      subject to separate agreements with the Trust. Further, the Administrator
      shall not be liable for any error of judgment or mistake of law or for any
      loss or damage suffered by the Trust in connection with the performance of
      this Agreement or any agreement with a third party, except a loss
      resulting directly from (i) a breach of fiduciary duty on the part of the
      Administrator with respect to the receipt of compensation for services; or
      (ii) willful misfeasance, bad faith or gross negligence on the part of the
      Administrator in the performance of its duties or from reckless disregard
      by it of its duties under this Agreement.

8.(b) Indemnification of Administrator.  Subject to the limitations set forth in
      this Subsection 8(b), the Trust shall indemnify, defend and hold harmless
      (from the assets of the Fund or Funds to which the conduct in question
      relates) the Administrator against all loss, damage and liability,
      including but not limited to amounts paid in satisfaction of judgments, in
      compromise or as fines and penalties, and expenses, including reasonable
      accountants' and counsel fees, incurred by the Administrator in connection
      with the defense or disposition of any action, suit or other proceeding,
      whether civil or criminal, before any court or administrative or
      legislative body, related to or resulting from this Agreement or the
      performance of services hereunder, except with respect to any matter as to
      which it has been determined that the loss, damage or liability is a
      direct result of (i) a breach of fiduciary duty on the part of the
      Administrator with respect to the receipt of compensation for services; or
      (ii) willful misfeasance, bad faith or gross negligence on the part of the
      Administrator in the performance of its duties or from reckless disregard
      by it of its duties under this Agreement (either and both of the conduct
      described in clauses (i) and (ii) above being referred to hereinafter as
      "Disabling Conduct").  A determination that the Administrator is entitled
      to indemnification may be made by (i) a final decision on the merits by a
      court or other body before whom the proceeding was brought that the
      Administrator was not liable by reason of Disabling Conduct, (ii)
      dismissal of a court action or an administrative proceeding against the
      Administrator for insufficiency of evidence of Disabling Conduct, or (iii)
      a reasonable determination, based upon a review of the facts, that the
      Administrator was not liable by reason of Disabling Conduct by, (a) vote
      of a majority of a quorum of Trustees who are neither "interested persons"
      of the Trust as the quoted phrase is defined in Section 2(a)(19) of the
      1940 Act nor parties to the action, suit or other proceeding on the same
      or similar grounds that is then or has been pending or threatened (such
      quorum of such Trustees being referred to hereinafter as the "Independent
      Trustees"), or (b) an independent legal counsel in a written opinion.
      Expenses, including accountants' and counsel fees so incurred by the
      Administrator (but excluding amounts paid in satisfaction of judgments, in
      compromise or as fines or penalties), shall be paid from time to time by
      the Fund or Funds to which the conduct in question related in advance of
      the final disposition of any such action, suit or proceeding; provided,
      that the Administrator shall have undertaken to repay the amounts so paid
      unless it is ultimately determined that it is entitled to indemnification
      of such expenses under this Subsection 8(b) and if (i) the Administrator
      shall have provided security for such undertaking, (ii) the Trust shall be
      insured against losses arising by reason of any lawful advances, or (iii)
      a majority of the Independent Trustees, or an independent legal counsel in
      a written opinion, shall have determined, based on a review of readily
      available facts (as opposed to a full trial-type inquiry), that there is
      reason to believe that the Administrator ultimately will be entitled to
      indemnification hereunder.

      As to any matter disposed of by a compromise payment by the Administrator
      referred to in this Subsection 8(b), pursuant to a consent decree or
      otherwise, no such indemnification either for said payment or for any
      other expenses shall be provided unless such indemnification shall be
      approved (i) by a majority of the Independent Trustees or (ii) by an
      independent legal counsel in a written opinion.  Approval by the
      Independent Trustees pursuant to clause (i) shall not prevent the recovery
      from the Administrator of any amount paid to the Administrator in
      accordance with either of such clauses as indemnification of the
      Administrator is subsequently adjudicated by a court of competent
      jurisdiction not to have acted in good faith in the reasonable belief that
      the Administrator's action was in or not opposed to the best interests of
      the Trust or to have been liable to the Trust or its Shareholders by
      reason of willful misfeasance, bad faith, gross negligence or reckless
      disregard of the duties involved in its conduct under the Agreement.

      The right of indemnification provided by this Subsection 8(b) shall not be
      exclusive of or affect any of the rights to which the Administrator may be
      entitled.  Nothing contained in this Subsection 8(b) shall affect any
      rights to indemnification to which Trustees, officers or other personnel
      of the Trust, and other persons may be entitled by contract or otherwise
      under law, nor the power of the Trust to purchase and maintain liability
      insurance on behalf of any such person.

      The Board of Trustees of the Trust shall take all such action as may be
      necessary and appropriate to authorize the Trust hereunder to pay the
      indemnification required by this Subsection 8(b) including, without
      limitation, to the extent needed, to determine whether the Administrator
      is entitled to indemnification hereunder and the reasonable amount of any
      indemnity due it hereunder, or employ independent legal counsel for that
      purpose.

8.(c) The provisions contained in Section 8 shall survive the expiration or
      other termination of this Agreement, shall be deemed to include and
      protect the Administrator and its directors, officers, employees and
      agents and shall inure to the benefit of its/their respective successors,
      assigns and personal representatives.

9.    Duration and Termination.  This Agreement shall become effective upon
      effectiveness of the Fund's registration statement and shall continue in
      force and effect for a period of one year thereafter and shall be
      continued on its terms from year to year thereafter unless sooner
      terminated as permitted herein.  This Agreement may be terminated at any
      time, without payment of any penalty, by the Trust or the Administrator
      upon ninety days' written notice to the other party.

10.   Amendment.  This Agreement may be amended by mutual written consent of the
      parties.  If, at any time during the existence of this Agreement, the
      Trust deems it necessary or advisable in the best interests of the Trust
      that any amendment of this Agreement be made in order to comply with the
      recommendations or requirements of the Securities and Exchange Commission
      or state regulatory agencies or other governmental authority, or to obtain
      any advantage under state or federal laws, and shall notify the
      Administrator of the form of Amendment which it deems necessary or
      advisable and the reasons therefor, and if the Administrator declines to
      assent to such amendment, the Trust may terminate this Agreement
      forthwith.

11.   Notice.  Any notice that is required to be given by the parties to each
      other under the terms of this Agreement shall be in writing, addressed or
      delivered, or mailed postpaid to the other party at the principal place of
      business of such party.

12.   Construction.  This Agreement shall be governed and enforced in accordance
      with the laws of the State of North Carolina.  If any provision of this
      Agreement, or portion thereof, shall be determined to be void or
      unenforceable by any court of competent jurisdiction, then such
      determination shall not affect any other provision of this Agreement, or
      portion thereof, all of which other provisions and portions thereof shall
      remain in full force and effect.  If any provision of this Agreement, or
      portion thereof, is capable of two interpretations, one of which would
      render the provision, or portion thereof, void and the other of which
      would render the provision, or portion thereof, valid, then the provision,
      or portion thereof, shall have the meaning which renders it valid.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers on the date first above written.

Attest:                                        ALBEMARLE INVESTMENT TRUST



                                           By:
(SEAL)



Attest:                                        THE NOTTINGHAM COMPANY, INC.



                                           By:
(SEAL)


                                   Exhibit A

                   FUND ACCOUNTING AND RECORDKEEPING SERVICES

Portfolio Accounting Services:

(1)  Maintain portfolio records on a trade date basis using security trade
     information communicated from the investment manager on a timely basis.
(2)  For each valuation date, obtain prices from a pricing source approved by
     the Board of Trustees and apply those prices to the portfolio positions.
     For those securities where market quotations are not readily available, the
     Board of Trustees shall approve, in good faith, the method for determining
     the fair market value for such securities.
(3)  Identify interest and dividend accrual balances as of each valuation date
     and calculate gross earnings on investments for the accounting period.
(4)  Determine gain/loss on security sales and identify them as to short-short,
     short or long term status.  Account for periodic distributions of gain to
     shareholders and maintain undistributed gain or loss balances as of each
     valuation date.

Expense Accrual and Payment Services:

(5)  For each valuation date, calculate the expense accrual amounts as directed
     by the Trust as to methodology, rate, or dollar amount.
(6)  Issue payments for Fund expenses upon receipt of funds from the Trust's
     Custodian.
(7)  Account for Fund expenditures and maintain expense accrual balances at the
     level of accounting detail specified by the Fund.
(8)  Support periodic expense accrual review, i.e., comparison of actual expense
     activity versus accrual amounts.
(9)  Provide expense accrual and payment reporting.

Fund Valuation and Financial Reporting Services:

(10) Account for Fund share purchases, sales, exchanges, transfers, dividend
     reinvestments, and other Fund share activity, for each of the Funds, as
     reported by the Trust on a timely basis.
(11) Determine net investment income (earnings) for each of the Funds as of each
     valuation date.  Account for periodic distributions of earnings to
     shareholders and maintain undistributed net investment income balances as
     of each valuation date.
(12) Maintain a general ledger for each of the Funds in the form defined by the
     Trust and produce a set of financial statements as may be agreed upon from
     time to time as of each valuation date.
(13) For each day the Funds are opened as defined in the prospectuses, determine
     the net asset value of each of the Funds according to the accounting
     policies and procedures set forth in the prospectuses.
(14) Calculate per share net asset value, per share net earnings, and other per
     share amounts reflective of fund operation at such time as required by the
     nature and characteristics of the Funds.  Perform the calculations using
     the number of shares outstanding reported by the Trust to be applicable at
     the time of calculation.
(15) Communicate, at an agreed upon time, the per share price for each valuation
     date to parties as agreed upon from time to time.
(16) Prepare monthly reports which document the adequacy of accounting detail to
     support month-end ledger balances.

Tax Accounting Services:

(17) Maintain tax accounting records for each of the Funds investment portfolio
     so as to support tax reporting required for IRS defined regulated
     investment companies.
(18) Maintain tax lot detail for the investment portfolio.
(19) Calculate taxable gain/loss on security sales using the tax cost basis
     defined for each Fund.
(20) Report the taxable components of income and capital gains distributions to
     the Trust to support tax reporting to the shareholders.

Compliance Control Services:

(21) Maintain accounting records to support compliance monitoring by the Trust.
(22) Support reporting to regulatory bodies and support financial statement
     preparation by making the Fund accounting records available to the Trust,
     the Securities and Exchange Commission, and the outside auditors.
(23) Maintain accounting records according to the Investment Company Act of 1940
     and regulations provided thereunder.

                                   Exhibit B

                        SHAREHOLDER SERVICING FUNCTIONS

(1)  Process new accounts.
(2)  Process purchases, both initial and subsequent in accordance with
     conditions set forth in the Fund's prospectus.
(3)  Transfer shares of capital stock to an existing account or to a new account
     upon receipt of required documentation in good order.
(4)  Issue and/or cancel certificates as instructed; replace lost, stolen or
     destroyed certificates upon receipt of satisfactory indemnification or
     bond.
(5)  Distribute dividends and/or capital gain distributions.  This includes
     disbursement as cash or reinvestment and to change the disbursement option
     at the request of shareholders.
(6)  Process exchanges between funds, (process and direct purchase/redemption
     and initiate new account or process to existing account).
(7)  Make miscellaneous changes to records, including, but not necessarily
     limited to, address changes and changes in plans (such as systematic
     withdrawal, dividend reinvestment, etc.).
(8)  Prepare and mail a year-to-date confirmation and statement as each
     transaction is recorded in a shareholder account as follows:  original to
     shareholder.  Duplicate confirmations to be available on request within
     current year.
(9)  Handle telephone calls and correspondence in reply to shareholder requests
     except those items otherwise set forth herein.
(10) Daily control and reconciliation of Fund shares.
(11) Prepare address labels or confirmations for four reports to shareholders
     per year.
(12) Mail and tabulate proxies for one Meeting of Shareholders annually,
     including preparation of certified shareholder list and daily report to
     Fund management, if required.
(13) Prepare and mail annual Form 1099, Form W-2P and 5498 to shareholders to
     whom dividends or distributions are paid, with a copy for the IRS.
(14) Provide readily obtainable data which may from time to time be requested
     for audit purposes.
(15) Replace lost or destroyed checks.
(16) Continuously maintain all records for active and closed accounts.
(17) Furnish shareholder data information for a current calendar year in
     connection with IRA and Keogh Plans in a format suitable for mailing to
     shareholders.

                                   Exhibit C

                     ADMINISTRATOR'S COMPENSATION SCHEDULE

For the services delineated in the Fund Accounting and Administration Agreement,
the Administrator shall be compensated monthly, as of the last day of each
month, within five business days of the month end, a base fee plus a fee based
upon net assets according to the following schedule.  The fee is calculated
based upon the Trust's average daily net assets of the Fund:

   Base Fee:                                               $1,750 per month

                                                                    Annual
        Net Assets                                                    Fee

   Oak Value Fund:
            On the first $10 million                                 0.25%
            On the next $15 million                                  0.20%
            On all assets over $25 milllion                          0.15%

   The Trust Company of the South Equity Funds:
            On the first $10 million                                 0.25%
            On the next $15 million                                  0.20%
            On all assets over $25 milllion                          0.15%

   The Trust Company of the South Bond Funds
            On all assets                                            0.15%

   The Alabama Tax Free Bond Fund
            On all assets                                            0.25%

   The North Carolina Tax Free Bond Fund
            On all assets                                            0.25%


IRA Accounts

$15 per year


Securities Pricing

$0.40 per bond per pricing day priced using Merrill Lynch
$0.20 per bond per pricing day using matrix pricing
$0.15 per pricing day for equity and listed securities
$2.00 per equity per month for S&P On-Line Dividend Record





                                  Exhibit 9(b)

              Amendment to Fund Accounting, Dividend Disbursing &
                  Transfer Agent and Administration Agreement


                         AMENDMENT TO FUND ACCOUNTING,
                      DIVIDEND DISBURSING & TRANSFER AGENT
                          AND ADMINISTRATION AGREEMENT


THIS AMENDMENT, made and entered into effective as of the 28th day of September,
1995, by and between ALBEMARLE INVESTMENT TRUST, a Massachusetts business trust
(the "Trust"), and THE NOTTINGHAM COMPANY, LLC, a North Carolina limited
liability company (the "Administrator").

WHEREAS, the parties have previously entered into that certain Fund Accounting,
Dividend Disbursing & Transfer Agent and Administration Agreement dated November
17, 1992 with respect to all series of the Trust (the "Agreement").

WHEREAS, the Agreement has been continued from time to time by the parties as
provided therein, with amendments from time to time to Exhibit C thereof,
reflecting the Administrator's Compensation Schedule.

WHEREAS, the parties desire to again amend Exhibit C thereof, all as provided
herein.

NOW THEREFORE,  the Trust and the Administrator do mutually promise and agree as
follows:

         1.       Amendments.  The Agreement is hereby amended by deleting
                  Exhibit C thereof and substituting in lieu thereof a new
                  Exhibit C in the form attached hereto.

         2.       Ratification.  Except as continued and provided above, the
                  Agreement shall continue in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment to be signed by their
duly authorized officers on the date first above written.




ATTEST:                                   ALBEMARLE INVESTMENT TRUST


                                 By:
(Seal)


ATTEST:                                  THE NOTTINGHAM COMPANY, LLC


                                 By:
(Seal)


                                   Exhibit C

                     ADMINISTRATOR'S COMPENSATION SCHEDULE


For the services delineated in the FUND ACCOUNTING, DIVIDEND DISBURSING &
TRANSFER AGENT AND ADMINISTRATION AGREEMENT, the Administrator shall be
compensated monthly, as of the last day of each month, within five business days
of the month end, a base fee plus a fee based upon net assets according to the
following schedule.  The fee is calculated based upon the average daily net
assets of each Fund:

Base Fee:         $1,750 per month

The North Carolina Tax Free Bond Fund
                                                        Annual
              Net Assets                                 Fee

         On all assets                                  0.15%

Shareholder Recordkeeping Fee

$9.00 per shareholder per year

Securities Pricing

$0.20    per equity security per pricing day
$0.20    per corporate bond, government bond, medium-term bond or mortgage
         backed security per pricing day
$0.40    per CMO or asset backed securities per pricing day
$0.40    per municipal security per pricing day
$2.00    per equity per month for corporate action coverage

Blue Sky Administration

$100 per Fund per state registration per year

IRA Accounts

$15 per year (billed directly to the shareholder)



                                  Exhibit 9(c)

                           Shareholder Servicing Plan


                         SHAREHOLDER SERVICING FEE PLAN

WHEREAS, Albemarle Investment Trust, an unincorporated business trust organized
and existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and

WHEREAS, the Trust has issued and intends to offer a series of such Shares
representing interests in the North Carolina Tax Free Bond Fund (the "Series")
of the Trust;

WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and

WHEREAS, the Trustees of the Trust wish to promote activities designed to
benefit the shareholders of the Series and encourage individuals, firms, banks
and investment advisors in those activities beneficial to the servicing and
maintenance of shareholders of the Series;

NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with the 1940
Act, on the following terms and conditions:

          1.       Servicing Activities.  Subject to the supervision of the
Trustees of the Trust, the Trust may compensate individuals, firms, banks or
investment advisors directly or indirectly for personal service and/or the
maintenance of accounts of shareholders of the Series and other shareholder
liaison services not otherwise provided by the Trust's custodian or transfer
agent, including but not limited to, responding to shareholder inquiries,
providing information on shareholders' investments in the Series, and providing
such other shareholder services as the Trust may reasonably request;  the Trust
is authorized to engage in the activities listed above, and in any other
activities primarily intended to result in servicing and maintenance of
shareholders of the Series, either directly or through other persons with which
the Trust has entered into agreements related to this Plan.

         2.       Maximum Expenditures.  The expenditures to be made by the
Trust pursuant to this Plan and the basis upon which payment of such
expenditures will be made shall be determined by the Trustees of the Trust, but
in no event may such expenditures exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Series for each year or portion
thereof included in the period for which the computation is being made, elapsed
since the inception of this Plan to the date of such expenditures, and in no
event may such expenditures paid by the Trust to any person who sells shares of
the Series exceed an amount calculated at the rate of 0.25% of the average
annual net asset value of such Shares.  Such payments for servicing activities
may be made directly by the Trust or to other persons with which the Trust has
entered into agreements related to this Plan.

         3.       Term and Termination.

         (a)     This Plan shall become effective on the date hereof.  Unless
         terminated as herein provided, this Plan shall continue in effect for
         one year from the date hereof and shall continue in effect for
         successive periods of one year thereafter, but only so long as each
         such continuance is specifically approved by votes of a majority of
         both (i) the Trustees of the Trust and (ii) the Non-Interested
         Trustees, cast at a meeting called for the purpose of voting on such
         approval.

         (b)     This Plan may be terminated at any time with respect to the
         Series by a vote of a majority of the Non-Interested Trustees or by a
         vote of a majority of the outstanding voting securities of the Series
         as defined in the 1940 Act.

         4.       Amendments.  This Plan may not be amended to increase
materially the maximum expenditures permitted by Section 2 hereof unless such
amendment is approved by a vote of the majority of the outstanding voting
securities of the Series as defined in the 1940 Act with respect to which a
material increase in the amount of expenditures is proposed, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 3(a) hereof.

         5.       Quarterly Reports.  The Treasurer of the Trust shall provide
to the Trustees of the Trust and the Trustees shall review quarterly a written
report of the amounts expended pursuant to this Plan and any related agreement
and the purposes for which such expenditures were made.

         6.       Record Keeping.  The Trust shall preserve copies of this Plan
and any related agreement and all reports made pursuant to Section 5 hereof, for
a period of not less than six years from the date of this Plan.  Any such
related agreement or such reports for the first two years will be maintained in
an easily accessible place.

         7.       Limitation of Liability.  It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
Trustees, officers or shareholders of the Trust personally, but shall bind only
the assets and property of the Trust.  The term "Albemarle Investment Trust"
means and refers to the Trustees from time to time serving under the Agreement
and Declaration of Trust of the Trust dated August 11, 1992, a copy of which is
on file with the Secretary of The Commonwealth of Massachusetts.  The execution
and delivery of this Agreement has been authorized by the Trustees, and this
Agreement has been signed on behalf of the Trust by an authorized officer of the
Trust, acting as such and not individually, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Trust as
provided in the Agreement and Declaration of Trust.

IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.


Attest:                                        ALBEMARLE INVESTMENT TRUST



By____________________________________



Attest:                               THE NORTH CAROLINA TAX FREE BOND FUND



By___________________________________




                                   Exhibit 10

                               Opinion of Counsel


                                December 5, 1995

Albemarle Investment Trust
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina  27802-0069

Ladies and Gentlemen:

This opinion is being delivered to you in connection with your Post-Effective
Amendment No. 25 to the Registration Statement on Form N-1A under the Securities
Act of 1933, as amended (SEC File No. 33-13133; 811-5098) (the "Registration
Statement"), under which you have registered an indefinite number of shares of
beneficial interest (the "Shares"), relating to The North Carolina Tax Free Bond
Fund, pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended, plus the 807,134 Shares registered pursuant to such Post-Effective
Amendment No. 25 to the Registration Statement.

We have made such inquiry of your officers and trustees and have examined such
corporate documents, records and certificates and other documents and such
questions of law as we have deemed necessary for the purposes of this opinion.
In rendering this opinion, we have relied, with your approval, as to all
questions of fact material to this opinion, upon certificates of public
officials and of your officers and have assumed, with your approval, that the
signatures on all documents examined by us are genuine, which facts we have not
independently verified.

Based upon and subject to the foregoing, we are of the opinion that the Shares,
when issued for valid consideration, will be legally and validly issued, fully
paid and nonassessable.

With respect to the opinion stated above, we wish to point out that the
shareholders of a Massachusetts business trust may, under some circumstances, be
subject to assessment at the instance of creditors to pay the obligations of
such trust if its assets are insufficient for the purpose.

We hereby consent to your filing this opinion as an exhibit to the Registration
Statement.  In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.

Very truly yours,

POYNER & SPRUILL, L.L.P.




                                   Exhibit 11

                              Consent of Auditors


                         Independent Auditor's Consent


To the Board of Trustees and Shareholders
The North Carolina Tax Free Bond Fund

We consent to the use of our report dated September 29, 1995 included in the
registration statement on Form N-1A of The North Carolina Tax Free Bond Fund, a
series of the Albemarle Investment Trust, and to the reference to our firm under
the heading "Financial Highlights" in the prospectus.


KPMG Peat Marwick LLP


Richmond, Virginia
December 8, 1995



                                   Exhibit 16

                           Computation of Performance


                     THE NORTH CAROLINA TAX FREE BOND FUND

From time to time, the total return and yield of the Fund may be quoted in
advertisements, sales literature, shareholder reports or other communications to
shareholders.  The Fund computes its "average annual total return" by
determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by determining the ending redeemable value of a
hypothetical $1,000 initial payment. This calculation is as follows:

        P(1+T)n = ERV

Where:  T =    average annual total return.
        ERV =  ending redeemable value at the end of the period covered by the
               computation of a hypothetical $1,000 payment made at the
               beginning of the period.
        P =    hypothetical initial payment of $1,000 from which the maximum
               sales load is deducted.
        n =    period covered by the computation, expressed in terms of years

The Fund may also compute its aggregate total return, which is calculated in a
similar manner, except that the results are not annualized.

The calculation of average annual total return and aggregate total return assume
that there is a reinvestment of all dividends and capital gain distributions on
the reinvestment dates during the period.  The ending redeemable value is
determined by assuming complete redemption of the hypothetical investment and
the deduction of all nonrecurring charges at the end of the period covered by
the computations.

The yield of the Fund is computed by dividing the net investment income per
share earned during the period stated in the yield quotation by the maximum
offering price per share on the last day of the period.  For the purpose of
determining net investment income, the calculation includes, among expenses of
the Fund, all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated.  In particular, yield is
determined according to the following formula:

                           Yield = 2[(A - B + 1)6-1]
                                       CD

Where: A equals dividends and interest earned during the period; B equals
expenses accrued for the period (net of reimbursements); C equals average daily
number of shares outstanding during the period that were entitled to receive
dividends; D equals the maximum offering price per share on the last day of the
period.  A tax equivalent yield is computed by dividing the tax-exempt yield
figure described above by 1 minus a stated income tax rate and adding the
product to the taxable portion (if any) of the Fund's yield.

The average annual total return for the Fund for the year ended August 31, 1995
was 8.16%.  The average annual total return for the Fund since inception
(January 13, 1993) through August 31, 1995 was 7.11%.  The cumulative total
return for the Fund since inception through August 31, 1995 and since April 1,
1994 (the effective date of the Advisory Agreement with the Advisor for the
Fund) through August 31, 1995 was 15.69% and 10.24%, respectively.  For the
thirty day period ended August 31, 1995, the yield of the Fund was 4.55%.  The
yield required of a taxable security that would produce an after tax yield
equivalent to that earned by the Fund of 4.55% (considering both North Carolina
and federal taxes) would be 7.00%, assuming a combined federal and North
Carolina tax rate of 35%.

Cumulative Total Return

 (ERV - P)/P = TR

 Where:  ERV  =  ending redeemable value at the end of the period covered by the
                 computation of a hypothetical $1,000 payment made at the
                 beginning of the period
         P    =  hypothetical initial payment of $1,000 from which the maximum
                 sales load is deducted
         TR   =  total return


Average Annual Total Return:

Inception through August 31, 1995            Year ended August 31, 1995

1,000(1+T)2.65    =  1,156.88                1,000(1+T)1  =  1,081.56
              T   =  (1,156.88/1,000)2.65-1            T  =  (1,081.56/1,000)1-1
              T   =  0.0507                            T  =  0.8156

              T   =  5.07%                             T   =  8.16%
              ERV =  1,156.88                          ERV =  1,081.56
              P   =  1,000                             P   =  1,000
              n   =  2.65                              n   =  1


Cumulative Total Return

   Inception through August 31, 1995

              (1,156.88 - 1,000)/1,000 = 0.1568

              ERV    =   1,156.88
              P      =   1,000
              TR     =   15.69%

   April 1, 1994 through August 31, 1995

              (1,102.37 - 1,000)/1,000 = 0.1024

              ERV    =   1,102.37
              P      =   1,000
              TR     =   10.24%



                                   Exhibit 17

                               Powers of Attorney

                           ALBEMARLE INVESTMENT TRUST

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned trustees of Albemarle
Investment Trust hereby appoint Frank P. Meadows III, with full power of
substitution, their true and lawful attorney to execute in their name, place and
stead on their behalf a registration statement on Form N-1A for the
registration, pursuant to the Securities Act of 1933 and the Investment Company
Act of 1940, of said Trust's shares of beneficial interest, and any and all
amendments to said Registration Statement (including post-effective amendments),
and all instruments necessary or incidental in connection therewith and to file
the same with the U. S. Securities and Exchange Commission.  Said attorney shall
have full power and authority to do and perform in the name and on behalf of the
undersigned every act whatsoever requisite or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do, the undersigned hereby ratifying and approving all such acts of such
attorney.

IN WITNESS WHEREOF, the undersigned have executed this instrument this 17th day
of October 1994.


Edwin B. Armstrong

J. Finley Lee, Jr.

Jon L. Vannice

<TABLE> <S> <C>

<ARTICLE> 6

       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          AUG-31-1995
<PERIOD-END>                               AUG-31-1995
<INVESTMENTS-AT-COST>                          3972575
<INVESTMENTS-AT-VALUE>                         4093069
<RECEIVABLES>                                    62890
<ASSETS-OTHER>                                   30935
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                 4186894
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                         3745
<TOTAL-LIABILITIES>                               3745
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                       4163428
<SHARES-COMMON-STOCK>                           403672
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                     (102294)
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                              0
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                        120494
<NET-ASSETS>                                   4183149
<DIVIDEND-INCOME>                                    0
<INTEREST-INCOME>                               159592
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                   25065
<NET-INVESTMENT-INCOME>                         134527
<REALIZED-GAINS-CURRENT>                       (83088)
<APPREC-INCREASE-CURRENT>                       161103
<NET-CHANGE-FROM-OPS>                           212542
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                       133006
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                         262514
<NUMBER-OF-SHARES-REDEEMED>                     261060
<SHARES-REINVESTED>                              10102
<NET-CHANGE-IN-ASSETS>                          174560
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                      (19206)
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                            10321
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                  81310
<AVERAGE-NET-ASSETS>                           2948865
<PER-SHARE-NAV-BEGIN>                            10.02
<PER-SHARE-NII>                                      0
<PER-SHARE-GAIN-APPREC>                              0
<PER-SHARE-DIVIDEND>                              0.45
<PER-SHARE-DISTRIBUTIONS>                         0.34
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.36
<EXPENSE-RATIO>                                   0.85
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        


</TABLE>


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