THE NORTH CAROLINA TAX FREE BOND FUND
[LOGO]
A NO-LOAD MUTUAL FUND
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
February 28, 1998
(Unaudited)
- --------------------------------------------------------------------------------
Investment Adviser
Boys, Arnold & Company
Post Office Drawer 5255
1272 Hendersonville Road
Asheville, North Carolina 28813-5255
1.800.286.8038
Fund Administrator
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1.800.841.0987
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
[LOGO]
- --------------------------------------------------------------------------------
Post Office Box 5354 . Cincinnati, Ohio 45201-5354 . 800.841.0987
March 31, 1998
Dear Shareholder:
We are pleased to enclose your copy of the Semi-Annual report for The North
Carolina Tax Free Bond Fund for the period ended February 28, 1998.
Over the last six months your fund continued to perform well within a modestly
declining interest rate environment. In fact, municipal bonds experienced
positive returns in every month of the period. The supply of new municipal bond
issues both nationally and in North Carolina has remained at the lower range of
historical levels. This limited supply has reduced the volatility of the
municipal market and kept prices relatively stable.
For the six months ended February 28, 1998, the Fund had a total return of
+5.49% (which includes both income and price change) after all expenses. This
Fund's total return compared favorably with the Lehman Municipal Bond Index
which increased +5.04%, as well as, with the average total return of +4.88% for
the 40 North Carolina Municipal Debt Funds ranked by Lipper Analytical Services,
Inc. for the same period. The net asset value of the Fund on February 28, 1998
was $10.98 and the tax-free dividend income paid during the period was $0.23 per
share.
The Fund remains invested in a well-diversified portfolio of high quality North
Carolina municipal bonds with an intermediate to long term average maturity. The
portfolio's overall quality is AAA as measured by Standard and Poor's
Corporation quality ratings and the average maturity is currently about fifteen
years.
Looking forward, we expect interest rates to move in a flat to downward trend
over the balance of the year given our outlook for a healthy but moderating
economy with modest inflationary pressures. We believe that inflation
expectations manifested in bond yields remain too high and do not fully reflect
the current low inflationary environment. Interest rates should also continue to
benefit from the recent drop in oil prices, the currency crisis in Asia, which
should restrain exports and increase global competition, and the reduced
borrowing demands of the Federal Government. Concerns over labor tightness have
been mitigated in some measure by increased productivity. The threat of an
overheating economy seems less likely due to the Asian crisis and the extended
nature of this economic cycle in its eighth year of expansion.
Municipal bonds provide one of the few remaining alternatives for investors to
reduce their tax obligations. We encourage investors to maintain a long-term
outlook toward their investment in the Fund and to consider a plan of regular
investment through dollar-cost averaging.
As of March 1, 1998 the Fund's Administrator was changed to Countrywide Fund
Services, Inc. of Cincinnati, Ohio. If you have questions about your specific
account with the Fund, contact Countrywide at 800-841-0987. If you would like
information on the Fund, including the current prospectus, please call us at
800-286-8038. Also, you can find the Fund's daily NAV quotation on over 280,000
market data terminals by using the Fund's ticker symbol which is: NCTFX.
We appreciate your continued trust and support and we welcome your questions and
comments.
Sincerely,
/s/ John B. Kuhns /s/ Jon L. Vannice
John B. Kuhns Jon L. Vannice
President Vice President
Past performance is no guarantee of future results. During the period covered
the Fund's Advisor waived a portion of its fees which increased the total return
and yield of the Fund.
- --------------------------------------------------------------------------------
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1998
(Unaudited)
ASSETS
Investments, at value (cost $10,251,812) $10,734,788
Interest receivable 168,241
Prepaid expenses 9,700
-----------
Total assets 10,912,729
-----------
LIABILITIES
Accrued expenses 5,140
Payable for investment purchases 98,843
Due to advisor (note 2) 1,712
Distributions in excess of cash on demand deposits 32,401
-----------
Total liabilities 138,096
-----------
NET ASSETS
(applicable to 981,051 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $10,774,633
===========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($10,774,633 / 981,051 shares) $ 10.98
===========
NET ASSETS CONSIST OF
Paid-in capital $10,255,743
Accumulated net realized gain on investments 35,914
Net unrealized appreciation on investments 482,976
-----------
$10,774,633
===========
See accompanying notes to financial statements
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
STATEMENT OF OPERATIONS
Period ended February 28, 1998
(Unaudited)
INVESTMENT INCOME
Income
Interest $ 261,264
---------
Expenses
Investment advisory fees (note 2) 17,982
Fund administration fees (note 2) 7,706
Shareholder service fees (note 3) 12,844
Custody fees 731
Registration and filing administration fees (note 2) 149
Fund accounting fees (note 2) 10,500
Audit fees 3,650
Legal fees 6,970
Securities pricing fees 2,202
Shareholder recordkeeping fees 519
Shareholder servicing expenses (note 2) 2,565
Registration and filing expenses 236
Printing expenses 450
Trustee fees and meeting expenses 3,181
Other operating expenses 885
---------
Total expenses 70,570
---------
Less:
Investment advisory fees waived (note 2) (16,092)
Shareholder service fees waived (note 3) (12,844)
---------
Net expenses 41,634
---------
Net investment income 219,630
---------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 97,012
Increase in unrealized appreciation/depreciation on investments 236,329
---------
Net realized and unrealized gains on investments 333,341
---------
Net increase in net assets resulting from operations $ 552,971
=========
See accompanying notes to financial statements
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period ended
February 28, Year ended
1998 August 31,
(Unaudited) 1997
------------ -----------
INCREASE IN NET ASSETS
<S> <C> <C>
Operations
Net investment income $ 219,630 $ 341,923
Net realized gains from security transactions 97,012 32,653
Increase in unrealized appreciation/depreciation on investments 236,329 190,154
------------ -----------
Net increase in net assets resulting from operations 552,971 564,730
------------ -----------
Distributions to shareholders from
Net investment income (219,630) (341,923)
------------ -----------
Capital share transactions
Increase in net assets resulting from capital share transactions(a) 486,997 3,330,981
------------ -----------
Total increase in net assets 820,338 3,553,788
NET ASSETS
Beginning of period 9,954,295 6,400,507
------------ -----------
End of period $ 10,774,633 $ 9,954,295
============ ===========
</TABLE>
(a) A summary of capital share activity follows:
<TABLE>
<CAPTION>
Period ended Year ended
February 28, 1998 August 31, 1997
Shares Value Shares Value
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold 82,693 $ 899,322 363,128 $ 3,821,326
Shares issued for reinvestment
of distributions 16,027 174,289 25,239 266,015
-------- ----------- -------- -----------
98,720 1,073,611 388,367 4,087,341
Shares redeemed (54,013) (586,614) (71,933) (756,360)
-------- ----------- -------- -----------
Net increase 44,707 $ 486,997 316,434 $ 3,330,981
======== =========== ======== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Period ended
February 28, Year ended Year ended
1998 August 31, August 31,
(Unaudited) 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.63 $ 10.32 $ 10.36
Income (loss) from investment operations
Net investment income 0.23 0.47 0.48
Net realized and unrealized gains (losses) on investments 0.35 0.31 (0.04)
----------- ----------- -----------
Total from investment operations 0.58 0.78 0.44
----------- ----------- -----------
Distributions to shareholders from
Net investment income (0.23) (0.47) (0.48)
----------- ----------- -----------
Net asset value, end of period $ 10.98 $ 10.63 $ 10.32
=========== =========== ===========
Total return 5.49% 7.71% 4.33%
=========== =========== ===========
Ratios/supplemental data
Net assets, end of period $10,774,633 $ 9,954,295 $ 6,400,507
=========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.37%(a) 1.68% 2.24%
After expense reimbursements and waived fees 0.81%(a) 0.85% 0.85%
Ratio of net investment income to average net assets
Before expense reimbursements and waived fees 3.71%(a) 3.65% 3.21%
After expense reimbursements and waived fees 4.28%(a) 4.49% 4.60%
Portfolio turnover rate 14.07% 19.72% 9.96%
</TABLE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
For the
period from
January 13, 1993
(commencement of
Year ended Year ended operations) to
August 31, August 31, August 31,
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
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 gains (losses) on investments 0.34 (0.38) 0.40
----------- ----------- -----------
Total from investment operations 0.79 0.04 0.64
----------- ----------- -----------
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 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%
</TABLE>
(a) Annualized.
See accompanying notes to financial statements
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
February 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity Value
Amount Rate Date (note 1)
-------- ------ -------- --------
MUNICIPAL OBLIGATIONS - 97.83%
<S> <C> <C> <C> <C>
Appalachian State University, North Carolina
Utility System Revenue $150,000 5.90% 05-15-08 $164,145
Asheville, North Carolina
Water System Revenue 150,000 5.50% 08-01-11 159,954
Buncombe County, North Carolina
Solid Waste System Special Obligation Revenue 200,000 5.60% 03-01-11 215,118
Cabarrus County, North Carolina
General Obligation 250,000 5.40% 02-01-17 260,619
Charlotte, North Carolina
Law Enforcement Facilities Project Series A
Certificate of Participation 100,000 6.10% 12-01-15 108,872
Charlotte, North Carolina
Public Improvements 400,000 5.30% 04-01-08 428,391
Charlotte, North Carolina
Water & Sewer General Obligation 400,000 5.60% 05-01-20 427,025
Concord, North Carolina
Utilities System Revenue 125,000 5.50% 12-01-14 131,183
Concord, North Carolina
Utilities System Revenue 200,000 5.75% 12-01-17 210,423
Cumberland County, North Carolina
General Obligation 400,000 4.90% 03-01-12 406,436
Currituck County, North Carolina
General Obligation 300,000 5.40% 04-01-14 313,786
Dare County, North Carolina
Utilities System Revenue 100,000 5.75% 06-01-14 106,330
Durham, North Carolina
General Obligation Revenue 200,000 5.80% 02-01-12 218,821
Forsyth County, North Carolina
General Obligation 300,000 4.75% 02-01-13 300,705
Gaston County, North Carolina
General Obligation 250,000 5.70% 03-01-11 270,044
Gastonia, North Carolina
Police Station Project Certificate of Participation 100,000 5.70% 08-01-15 105,840
Gastonia, North Carolina
Street Improvements General Obligation 200,000 5.50% 05-01-13 213,356
Greensboro, North Carolina
General Obligation Unlimited 500,000 5.00% 03-01-12 510,505
High Point, North Carolina
General Obligation 200,000 5.00% 03-01-15 200,903
High Point, North Carolina
General Obligation Revenue 100,000 5.60% 03-01-13 106,817
</TABLE>
(Continued)
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
February 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity Value
Amount Rate Date (note 1)
-------- ------ -------- --------
MUNICIPAL OBLIGATIONS - (Continued)
<S> <C> <C> <C> <C>
Johnston County, North Carolina
General Obligation $500,000 5.00% 05-01-08 $497,893
Lincolnton, North Carolina
Enterprise System Revenue 200,000 5.38% 05-01-16 206,709
Mecklenburg County, North Carolina
General Obligation 500,000 4.70% 04-01-11 503,519
Mecklenburg County, North Carolina
Public Improvement General Obligation 200,000 5.50% 04-01-11 214,649
Morganton, North Carolina
Water & Sewer General Obligation Revenue 100,000 5.70% 06-01-14 107,346
North Carolina Central University
Housing System Revenue 200,000 5.80% 11-01-17 213,079
North Carolina Housing Finance Agency
Multifamily Series A Revenue 100,000 5.80% 07-01-13 103,939
North Carolina Municipal Power Agency -
Number 1 - Catawba Electric Revenue 100,000 6.00% 01-01-09 111,553
North Carolina Municipal Power Agency -
Number 1 - Catawba Electric Revenue 100,000 5.75% 01-01-15 105,135
North Carolina State
Clean Water Series A General Obligation 100,000 5.20% 06-01-10 105,774
North Carolina State
Clean Water Series A General Obligation 100,000 5.80% 06-01-16 107,889
North Carolina State
General Obligation 400,000 5.10% 06-01-10 420,783
North Carolina State
Series A General Obligation 300,000 5.10% 03-01-07 318,358
North Carolina State University
Centennial Campus B Revenue 500,000 5.13% 12-15-16 502,261
Pitt County, North Carolina
Memorial Hospital Revenue 100,000 5.50% 12-01-15 104,224
Raleigh, North Carolina
General Obligation 500,000 5.25% 06-01-13 525,151
Raleigh, North Carolina
General Obligation Unlimited 200,000 5.25% 06-01-12 211,108
Salisbury, North Carolina
Water & Sewer General Obligation 100,000 5.30% 05-01-11 104,480
Transylvania County, North Carolina
General Obligation 400,000 4.75% 02-01-14 394,597
Union County, North Carolina
Series B General Obligation 100,000 5.30% 05-01-15 103,589
</TABLE>
(Continued)
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
February 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity Value
Amount Rate Date (note 1)
-------- ------ -------- --------
MUNICIPAL OBLIGATIONS - (Continued)
<S> <C> <C> <C> <C>
Wilmington, North Carolina
General Obligation Revenue $100,000 5.60% 06-01-11 $106,600
Winston-Salem, North Carolina
General Obligation 100,000 5.50% 06-01-12 106,447
Winston-Salem, North Carolina
Water & Sewer System Revenue 500,000 4.80% 06-01-10 506,133
Total Municipal Obligations (Cost $ 10,057,513) $10,540,489
-----------
INVESTMENT COMPANY - 1.80%
Federated North Carolina Municipal Money Market Portfolio $194,229 $194,299
(Cost $ 194,299) -----------
Total Value of Investments (Cost $10,251,812 (a)) 99.63% $10,734,788
Other Assets In Excess of Liabilities 0.37% 39,845
------ -----------
Net Assets 100.00% $10,774,633
====== ===========
</TABLE>
(a) Aggregate cost for financial reporting and federal income tax purposes
is the same. Unrealized appreciation (depreciation) of investments for
financial reporting and federal income tax purposes is as follows:
Unrealized appreciation $ 483,959
Unrealized depreciation (983)
---------
Net unrealized appreciation $ 482,976
=========
See accompanying notes to financial statements
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1998
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
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-ended investment company which was
organized in 1992 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940, (the "Act") as amended. The Fund began
operations on January 13, 1993. The investment objective is 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. 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 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, 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 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 December
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.
The Fund has capital loss carryforwards for federal income tax
purposes of $45,273 and $15,825 which expire in the year 2003 and
2005, respectively. 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.
(Continued)
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1998
(Unaudited)
Of the $219,630 of distributions to shareholders ($0.23 per share)
during the period ended February 28, 1998, the Fund has determined
that all distributions made 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.
E. USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
of assets, liabilities, expenses, and revenues reported in the
financial statements. Actual results could differ from those
estimates.
F. 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 Act.
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. For the period ending February 28, 1998, the
Advisor has voluntarily waived a portion of its fees amounting to $16,092
($0.02 per share).
(Continued)
<PAGE>
THE NORTH CAROLINA TAX FREE BOND FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1998
(Unaudited)
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 contract
with the Administrator provides that the aggregate fees for the
aforementioned administrative, accounting, and recordkeeping services shall
not be less than $3,000 per month. The Administrator also charges the Fund
for certain expenses involved with the daily valuation of portfolio
securities. Effective March 1, 1998, the Fund changed Administrators to
Countrywide Fund Services, Inc.
Certain trustees and officers of the Trust are also officers or directors
of the Advisor and/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 Act, 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. Such fees of $12,844 were waived in
their entirety for the period ended February 28, 1998.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $2,060,265 and $1,417,164, respectively, for the period ended
February 28, 1998.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000812073
<NAME> NORTH CAROLINA TAX-FREE BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 10,251,812
<INVESTMENTS-AT-VALUE> 10,734,788
<RECEIVABLES> 168,241
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 9,700
<TOTAL-ASSETS> 10,912,729
<PAYABLE-FOR-SECURITIES> 98,843
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,253
<TOTAL-LIABILITIES> 138,096
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,255,743
<SHARES-COMMON-STOCK> 981,051
<SHARES-COMMON-PRIOR> 936,344
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 35,914
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 482,976
<NET-ASSETS> 10,744,633
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 261,264
<OTHER-INCOME> 0
<EXPENSES-NET> 41,634
<NET-INVESTMENT-INCOME> 219,630
<REALIZED-GAINS-CURRENT> 97,012
<APPREC-INCREASE-CURRENT> 236,329
<NET-CHANGE-FROM-OPS> 552,971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 219,630
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 82,693
<NUMBER-OF-SHARES-REDEEMED> 54,013
<SHARES-REINVESTED> 16,027
<NET-CHANGE-IN-ASSETS> 820,338
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (61,098)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17,982
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 70,570
<AVERAGE-NET-ASSETS> 10,360,228
<PER-SHARE-NAV-BEGIN> 10.63
<PER-SHARE-NII> .23
<PER-SHARE-GAIN-APPREC> .35
<PER-SHARE-DIVIDEND> .23
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 10.98
<EXPENSE-RATIO> .81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
