BILTMORE FUNDS
N-30D, 1995-01-31
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                             COMBINED PROSPECTUS
                               JANUARY 31, 1995

The Investment Shares of Biltmore Money Market Fund (the ``Money Market
Fund''), Biltmore Tax-Free Money Market Fund (the ``Tax-Free Fund''), and
Biltmore U.S. Treasury Money Market Fund (the ``U.S. Treasury Fund'')
(individually referred to as a ``Fund'' and collectively as the ``Funds'')
offered by this prospectus represent interests in three separate diversified
portfolios of securities with distinct investment objectives and policies. The
Funds are three of a series of investment portfolios comprising The Biltmore
Funds (the ``Trust''), an open-end management investment company (a mutual
fund).


AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THE FUNDS ATTEMPT TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO DO SO.

The investment objective of the Money Market Fund is to provide current income
consistent with stability of principal and liquidity. The Money Market Fund
pursues this investment objective by investing exclusively in money market
instruments maturing in 397 days or less.

The investment objective of the Tax-Free Fund is to provide current income
exempt from federal regular income tax consistent with stability of principal
and liquidity. The Tax-Free Fund pursues this investment objective by investing
in a diversified portfolio of short-term municipal securities.

The investment objective of the U.S. Treasury Fund is to provide current income
consistent with stability of principal and liquidity. The U.S. Treasury Fund
seeks to achieve its objective by investing in a portfolio of short-term U.S.
government securities with an average maturity of 90 days or less.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY, WACHOVIA BANK OF NORTH CAROLINA, N.A. OR ITS
AFFILIATES OR SUBSIDIARIES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (``FDIC''), THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT
AGENCY.


This prospectus contains the information you should read and know before you
invest in Investment Shares of the Funds. Keep this prospectus for future
reference.


                          BILTMORE MONEY MARKET FUND
                     BILTMORE TAX-FREE MONEY MARKET FUND
                   BILTMORE U.S. TREASURY MONEY MARKET FUND

                      (PORTFOLIOS OF THE BILTMORE FUNDS)
                              INVESTMENT SHARES


Each Fund has also filed a Combined Statement of Additional Information for
Investment Shares and Institutional Shares, dated January 31, 1995, with the
Securities and Exchange Commission. The information contained in the Combined
Statements of Additional Information is incorporated by reference into this
prospectus. You may request a copy of any of the Combined Statements of
Additional Information free of charge, obtain other information, or make
inquiries about the Funds, by calling 1-800-994-4414 or writing to The Biltmore
Service Center, 101 Greystone Boulevard, SC-9215, Columbia, South Carolina
29226, or contacting your Wachovia Bank (as defined herein) account
representative.


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.


================================================================================
            TABLE OF CONTENTS

- ---------------------------------------------------
BILTMORE MONEY MARKET FUND
  SUMMARY OF FUND EXPENSES                                                     1
- ---------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
  SUMMARY OF FUND EXPENSES                                                     2
- ---------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
  SUMMARY OF FUND EXPENSES                                                     3
- ---------------------------------------------------
BILTMORE MONEY MARKET FUND
  FINANCIAL HIGHLIGHTS--INVESTMENT SHARES                                      4
- ---------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
  FINANCIAL HIGHLIGHTS--INVESTMENT SHARES                                      5
- ---------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
  FINANCIAL HIGHLIGHTS--INVESTMENT SHARES                                      6
- ---------------------------------------------------

GENERAL INFORMATION                                                            7

- ---------------------------------------------------
INVESTMENT INFORMATION                                                         7
Money Market Fund                                                              7
     Investment Objective                                                      7
     Investment Policies                                                       7
       Acceptable Investments                                                  7
          U.S. Government Obligations                                          8
          Variable Rate Demand Notes                                           8
          Bank Instruments                                                     8
          Short-Term Credit Facilities                                         8
       Ratings                                                                 8
       Restricted and Illiquid Securities                                      8
     Investment Risks                                                          9
  Tax-Free Fund                                                                9
     Investment Objective                                                      9
     Investment Policies                                                       9
       Acceptable Investments                                                  9
     Municipal Securities                                                     10
       Variable Rate Demand Notes                                             10
       Participation Interests                                                10
       Municipal Leases                                                       10
     Ratings                                                                  10
     Restricted and Illiquid Securities                                       11
     Temporary Investments                                                    11
     Investment Risks                                                         11
  U.S. Treasury Fund                                                          11
     Investment Objective                                                     11
     Investment Policies                                                      11
       Acceptable Investments                                                 12
  All Funds                                                                   12
     Investing in Securities of Other
       Investment Companies                                                   12
     Repurchase Agreements                                                    12
     When-Issued and Delayed Delivery
       Transactions                                                           12
  Money Market and Tax-Free Funds                                             12
     Concentration of Investments                                             12
     Demand Features                                                          12
     Credit Enhancement                                                       13
  Money Market and U.S. Treasury Funds                                        13
     Lending of Portfolio Securities                                          13
  Money Market Fund                                                           13
     Investment Limitations                                                   13
  Tax-Free Fund                                                               13

     Investment Limitations                                                   13

  U.S. Treasury Fund                                                          14

     Investment Limitation                                                    14

  Regulatory Compliance (All Funds)                                           14
- ---------------------------------------------------
THE BILTMORE FUNDS INFORMATION                                                14
  Management of the Trust                                                     14
     Board of Trustees                                                        14
     Investment Adviser                                                       14
       Advisory Fees                                                          14
       Adviser's Background                                                   14
  Distribution of Investment Shares                                           15
     Distribution Plan                                                        15
     Administrative Arrangements                                              15
  Administration of the Funds                                                 16
     Administrative Services                                                  16
     Custodian                                                                16
     Transfer Agent, Dividend Disbursing
       Agent and Portfolio Accounting
       Services                                                               16
     Legal Services                                                           16
     Independent Auditors                                                     16
  Expenses of the Funds and Investment
     Shares                                                                   16
- ---------------------------------------------------
NET ASSET VALUE                                                               17
- ---------------------------------------------------
INVESTING IN INVESTMENT SHARES                                                17
  Share Purchases                                                             17

     Through Wachovia Investments, Inc.                                       17

       By Mail                                                                17
       By Wire                                                                17
     Through the Wachovia Banks or
       Other Service Organizations                                            17
  Minimum Investment Required                                                 18
  What Shares Cost                                                            18
  Certificates and Confirmations                                              18
  Dividends                                                                   19
  Capital Gains                                                               19
- ---------------------------------------------------
EXCHANGES                                                                     19
================================================================================

================================================================================
                           TABLE OF CONTENTS (CONT'D)

- ---------------------------------------------------
REDEEMING INVESTMENT SHARES                                                   19
  Through Wachovia Investments, Inc.                                          19
     By Telephone                                                             20
     By Mail                                                                  20
     Through the Wachovia Banks                                               20
       By Telephone                                                           20
       Via Sweep Agreement                                                    20
     Through Service Organizations                                            21
       By Telephone                                                           21
  Accounts with Low Balances                                                  21
- ---------------------------------------------------
SHAREHOLDER INFORMATION                                                       21
  Voting Rights                                                               21
  Massachusetts Business Trusts                                               21
- ---------------------------------------------------
EFFECT OF BANKING LAWS                                                        22
- ---------------------------------------------------
TAX INFORMATION                                                               22
  Money Market and U.S. Treasury Funds                                        22
  Tax-Free Fund                                                               23
  State and Local Taxes                                                       23

- ---------------------------------------------------
PERFORMANCE INFORMATION                                                       23
- ---------------------------------------------------
OTHER CLASSES OF SHARES                                                       24
- ---------------------------------------------------
BILTMORE MONEY MARKET FUND
  FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES                                  25
- ---------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
  FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES                                  26
- ---------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
  FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES                                  27
- ---------------------------------------------------
FINANCIAL STATEMENTS--BILTMORE MONEY MARKET FUND                              28
- ---------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND                                           33
- ---------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND                                      42
- ---------------------------------------------------

REPORT OF ERNST & YOUNG LLP,
  INDEPENDENT AUDITORS                                                        49

- ---------------------------------------------------
ADDRESSES                                                             BACK COVER

================================================================================
                           BILTMORE MONEY MARKET FUND
                            SUMMARY OF FUND EXPENSES

                                INVESTMENT SHARES
                        SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S>                                                                                              <C>        <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)                           None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)                                                                   None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)                                                 None
Redemption Fees (as a percentage of amount redeemed, if applicable)                                   None
Exchange Fee                                                                                          None
</TABLE>

                  ANNUAL INVESTMENT SHARES OPERATING EXPENSES
                    (As a percentage of average net assets)

<TABLE>
<S>                                                                                              <C>        <C>
Management Fee (after waiver) (1)                                                                     0.16%
12b-1 Fees (after waiver) (2)                                                                         0.30%
Other Expenses (after waiver & assumption) (3)                                                        0.22%
     Total Investment Shares Operating Expenses (after waivers & assumption) (4)                      0.68%
</TABLE>


(1)  The management fee has been reduced to reflect the voluntary waiver by the
     investment adviser. The adviser can terminate this voluntary waiver at any
     time at its sole discretion. The maximum management fee is 0.50%.


(2)  The Fund can pay up to 0.40% of average daily net assets of Investment
     Shares as a 12b-1 fee. For the foreseeable future, the Fund plans to incur
     12b-1 payments of 0.30% of average daily net assets.


(3)  Other Expenses would have been 0.28% absent the voluntary waiver and the
     voluntary assumption by the administrator. The administrator may terminate
     the voluntary waiver and voluntary assumption at any time at its sole
     discretion.



(4)  The Annual Investment Shares Operating Expenses would have been 1.18%,
     absent the voluntary waivers and assumption described above in notes 1, 2,
     and 3.



The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Investment Shares of the Money Market
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "The Biltmore Funds Information" and
"Investing in Investment Shares."


Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted under the rules of the National Association of
Securities Dealers, Inc. However, in order for a Fund investor to exceed the
NASD's maximum front-end sales charge of 6.25%, a continuous investment in the
Fund for 125 years would be required.

<TABLE>
<CAPTION>
Example                                                             1 year     3 years    5 years   10 years
<S>                                                                <C>        <C>        <C>        <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period. The Fund charges no redemption fees for
Investment Shares.                                                    $7         $22        $38        $85
</TABLE>

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


The information set forth in the foregoing table and example relates only to
Investment Shares of the Money Market Fund. The Fund also offers another class
of shares called Institutional Shares. Investment Shares and Institutional
Shares are subject to certain of the same expenses, however, Institutional
Shares are not subject to a 12b-1 fee. See "Other Classes of Shares."


================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND
                            SUMMARY OF FUND EXPENSES

                               INVESTMENT SHARES
                        SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S>                                                                                              <C>        <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)                           None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)                                                                   None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)                                                 None
Redemption Fees (as a percentage of amount redeemed, if applicable)                                   None
Exchange Fee                                                                                          None
</TABLE>

                  ANNUAL INVESTMENT SHARES OPERATING EXPENSES
                    (As a percentage of average net assets)

<TABLE>
<S>                                                                                              <C>        <C>
Management Fee (after waiver) (1)                                                                     0.05%
12b-1 Fees (after waiver) (2)                                                                         0.30%
Other Expenses                                                                                        0.27%
     Total Investment Shares Operating Expenses (after waivers) (3)                                   0.62%
</TABLE>


(1)  The management fee has been reduced to reflect the voluntary waiver by the
     investment adviser. The adviser can terminate this voluntary waiver at any
     time at its sole discretion. The maximum management fee is 0.50%.


(2)  The Fund can pay up to 0.40% of average daily net assets of Investment
     Shares as a 12b-1 fee. For the foreseeable future, the Fund plans to incur
     12b-1 payments of 0.30% of average daily net assets.


(3)  The Annual Investment Shares Operating Expenses were 0.68% for the fiscal
     year ended November 30, 1994. The Annual Investment Shares Operating
     Expenses in the table above reflect an anticipated reduction in the
     voluntary waiver of the administrative fee for the fiscal year ending
     November 30, 1995. The Annual Investment Shares Operating Expenses are
     expected to be 1.17% absent the voluntary waivers described above in notes
     1 and 2.


The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of the Investment Shares of the Tax-Free
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "The Biltmore Funds Information" and
"Investing in Investment Shares."

Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted under the rules of the National Association of
Securities Dealers, Inc. However, in order for a Fund investor to exceed the
NASD's maximum front-end sales charge of 6.25%, a continuous investment in the
Fund for 125 years would be required.

<TABLE>
<CAPTION>
Example                                                             1 year     3 years    5 years   10 years
<S>                                                                <C>        <C>        <C>        <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period. As shown in the table above, the Fund charges
no redemption fees for Investment Shares.                             $6         $20        $35        $77
</TABLE>

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

The information set forth in the foregoing table and example relates only to
Investment Shares of the Tax-Free Fund. The Fund also offers another class of
shares called Institutional Shares. Investment Shares and Institutional Shares
are subject to certain of the same expenses, however, Institutional Shares are
not subject to a 12b-1 fee. See "Other Classes of Shares."

================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                            SUMMARY OF FUND EXPENSES

                               INVESTMENT SHARES
                        SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S>                                                                                              <C>        <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)                           None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)                                                                   None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)                                                 None
Redemption Fees (as a percentage of amount redeemed, if applicable)                                   None
Exchange Fee                                                                                          None
</TABLE>

                  ANNUAL INVESTMENT SHARES OPERATING EXPENSES
                    (As a percentage of average net assets)

<TABLE>
<S>                                                                                              <C>        <C>
Management Fee (after waiver) (1)                                                                     0.05%
12b-1 Fees (after waiver) (2)                                                                         0.30%
Other Expenses                                                                                        0.27%
     Total Investment Shares Operating Expenses (after waivers) (3)                                   0.62%
</TABLE>

(1)  The management fee has been reduced to reflect the voluntary waiver by the
     investment adviser. The adviser can terminate this voluntary waiver at any
     time at its sole discretion. The maximum management fee is 0.50%.

(2)  The Fund can pay up to 0.40% of average daily net assets of Investment
     Shares as a 12b-1 fee. For the foreseeable future, the Fund plans to incur
     12b-1 payments of 0.30% of average daily net assets.


(3)  The Annual Investment Shares Operating Expenses were 0.66% for the fiscal
     year ended November 30, 1994. The Annual Investment Shares Operating
     Expenses in the table above reflect an anticipated reduction in the
     voluntary waivers of the administrative fee for the fiscal year ending
     November 30, 1995. The Annual Investment Shares Operating Expenses are
     expected to be 1.17%, absent the voluntary waiver described above in notes
     1 and 2.


The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Investment Shares of the U.S. Treasury
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "The Biltmore Funds Information" and
"Investing in Investment Shares."

Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted under the rules of the National Association of
Securities Dealers, Inc. However, in order for a Fund investor to exceed the
NASD's maximum front-end sales charge of 6.25%, a continuous investment in the
Fund for 125 years would be required.

<TABLE>
<CAPTION>
Example                                                             1 year     3 years    5 years   10 years
<S>                                                                <C>        <C>        <C>        <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period. The Fund charges no redemption fees for
Investment Shares.                                                    $6         $20        $35        $77
</TABLE>

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

The information set forth in the foregoing table and example relates only to
Investment Shares of the U.S. Treasury Fund. The Fund also offers another class
of shares called Institutional Shares. Investment Shares and Institutional
Shares are subject to certain of the same expenses, however, Institutional
Shares are not subject to a 12b-1 fee. See "Other Classes of Shares."


================================================================================

                BILTMORE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                               INVESTMENT SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 49.


<TABLE>
<CAPTION>
                                                   Year Ended November 30,    1994       1993       1992*
<S>                                                                         <C>        <C>        <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                           $ 1.00     $ 1.00     $ 1.00
Income from investment operations
  Net investment income                                                          0.03       0.03       0.01
Less distributions
  Dividends to shareholders from net investment income                          (0.03)     (0.01)
                                                                            ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                                 $ 1.00     $ 1.00     $ 1.00
                                                                            ---------  ---------  ---------
Total Return**                                                                  3.46%      2.74%      1.48%
Ratios to Average Net Assets
  Expenses                                                                      0.68%      0.55%   0.48%(a)
  Net investment income                                                         3.44%      2.70%   3.44%(a)
  Expense waiver/reimbursement (b)                                              0.50%      0.66%   0.75%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                   $  56,105  $   9,842  $   3,106
</TABLE>

 * Reflects operations for the period from June 9, 1992 (date of initial public
   investment) to November 30, 1992.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

 (a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.


(See Notes which are an integral part of the Financial Statements)


================================================================================

            BILTMORE TAX-FREE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                               INVESTMENT SHARES


                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)


Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 49.


<TABLE>
<CAPTION>
                                              Year Ended November 30,    1994       1993       1992*
<S>                                                                    <C>        <C>        <C>        <C>
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                   $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                     0.02       0.02       0.01
Less distributions
  Dividends to shareholders from net investment income                     (0.02)     (0.02)     (0.01)
                                                                       ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                            $ 1.00     $ 1.00     $ 1.00
                                                                       ---------  ---------  ---------
Total Return**                                                              2.11%      1.99%      1.29%
RATIOS TO AVERAGE NET ASSETS
  Expenses                                                                 0.68%      0.59%   0.50%(a)
  Net investment income                                                    2.11%      1.98%   2.37%(a)
  Expense waiver/reimbursement (b)                                         0.55%      0.70%   0.88%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                $42,820    $23,976     $5,338
</TABLE>

 * Reflects operations for the period from May 20, 1992 (date of initial public
   investment) to November 30, 1992.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)


================================================================================

         BILTMORE U.S. TREASURY MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                               INVESTMENT SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 49.


<TABLE>
<CAPTION>
                                                  Year Ended November 30,       1994             1993*
<S>                                                                        <C>              <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                              $1.00            $1.00
Income from investment operations
  Net investment income                                                            0.03             0.01
Less distributions
  Dividends to shareholders from net investment income                            (0.03)           (0.01)
                                                                                -------          -------
NET ASSET VALUE, END OF PERIOD                                                    $1.00            $1.00
                                                                                -------          -------
Total Return**                                                                     3.39%            1.42%
Ratios to Average Net Assets
  Expenses                                                                         0.66%         0.65%(a)
  Net investment income                                                            3.42%         2.50%(a)
  Expense waiver/reimbursement (b)                                                 0.61%         0.73%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                          $46,396          $16,941
</TABLE>

 * Reflects operations for the period from May 12, 1993 (date of initial public
   investment) to November 30, 1993.

** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) The voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.


(See Notes which are an integral part of the Financial Statements)



================================================================================
                              GENERAL INFORMATION


The Biltmore Funds was established as a Massachusetts business trust under a
Declaration of Trust dated November 19, 1991. The Declaration of Trust permits
the Trust to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. As of the date of this prospectus, the Board
of Trustees (the "Trustees") has established two classes of shares of the Money
Market Fund, the Tax-Free Fund and the U.S. Treasury Fund: Investment Shares and
Institutional Shares. This prospectus relates only to Investment Shares of the
Funds.



Investment Shares of the Money Market and the U.S. Treasury Funds are designed
primarily for individual investors, corporations, or partnerships as a
convenient means of participating in a professionally-managed, diversified
portfolio limited to money market instruments maturing in 397 days or less.
Investment Shares of the Tax-Free Fund are designed primarily for individual
investors, corporations, or partnerships as a convenient means of participating
in a professionally-managed, diversified portfolio limited to short-term
municipal securities.


Investment Shares of each of the Funds may be purchased through Wachovia
Investments, Inc., through Wachovia Bank of North Carolina, N.A., Wachovia Bank
of Georgia, N.A., Wachovia Bank of South Carolina, N.A. (formerly known as The
South Carolina National Bank), and their affiliates (collectively, the "Wachovia
Banks"), or through other Service Organizations (as hereinafter defined). A
minimum initial investment of $1,000 in Investment Shares of any of the Funds is
required, except that for investors purchasing Investment Shares in any of the
Funds via a sweep account program, initial investment minimums may be modified
under the applicable account agreement.


Each Fund attempts to stabilize the value of its shares at $1.00. Investment
Shares are currently sold and redeemed at that price.


The other portfolios in the Trust are Biltmore Balanced Fund, Biltmore Emerging
Markets Fund, Biltmore Equity Fund, Biltmore Equity Index Fund, Biltmore Fixed
Income Fund, Biltmore Prime Cash Management Fund (Institutional Shares),
Biltmore Quantitative Equity Fund, Biltmore Short-Term Fixed Income Fund, and
Biltmore Special Values Fund.


================================================================================
                             INVESTMENT INFORMATION

MONEY MARKET FUND

INVESTMENT OBJECTIVE

The investment objective of the Money Market Fund is to provide current income
consistent with stability of principal and liquidity. The investment objective
cannot be changed without approval of shareholders. While there is no assurance
that the Money Market Fund will achieve its investment objective, it endeavors
to do so by following the investment policies described in this prospectus.


INVESTMENT POLICIES
The Money Market Fund pursues its investment objective by investing exclusively
in a portfolio of money market instruments maturing in 397 days or less. The
average maturity of money market instruments in the Money Market Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less.

Unless indicated otherwise, the investment policies of the Money Market Fund may
be changed by the Trustees without the approval of shareholders. Shareholders
will be notified before any material changes in these policies become effective.

ACCEPTABLE INVESTMENTS. The Money Market Fund invests in high quality money
market instruments that are rated in the highest short-term rating categories by
one or more nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:

 commercial paper (including Canadian Commercial Paper and Europaper);
 certificates of deposit, demand and time deposits, saving shares, bankers'
 acceptances, and other instruments of domestic and foreign banks and other
 deposit institutions;

 corporate debt obligations, including variable rate demand notes;
 obligations of the U.S. government, its agencies and instrumentalities; and
 repurchase agreements.

The Money Market Fund invests only in instruments denominated and payable in
U.S. dollars.


For further discussion of the instruments described above, consult the Money
Market Fund's Combined Statement of Additional Information.


U.S. Government Obligations. The types of U.S. government obligations in which
the Money Market Fund may invest generally include direct obligations of the
U.S. Treasury (such as U.S. Treasury bills, notes, and bonds) and obligations
issued or guaranteed by U.S. government agencies or instrumentalities. These
securities are backed by:

 the full faith and credit of the U.S. Treasury;
 the issuer's right to borrow from the U.S. Treasury;
 the discretionary authority of the U.S. government to purchase certain
 obligations of agencies or instrumentalities; or
 the credit of the agency or instrumentality issuing the obligations.


Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are: Farm Credit System, including
the National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks; Federal Home
Loan Mortgage Corporation; Federal National Mortgage Association; Government
National Mortgage Association; and Student Loan Marketing Association.


Variable Rate Demand Notes. Variable rate demand notes are long-term corporate
debt instruments that have variable or floating interest rates and provide the
Money Market Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals (ranging from daily
to annually), and is normally based on an interest rate index or a published
interest rate. Most variable rate demand notes allow the Money Market Fund to
demand the repurchase of the security on not more than seven days prior notice.
Other notes only permit the Money Market Fund to tender the security at the time
of each interest rate adjustment or at other fixed intervals. See "Demand
Features" in this prospectus. The Money Market Fund treats variable rate demand
notes as maturing on the later of the date of the next interest rate adjustment
or the date on which the Money Market Fund may next tender the security for
repurchase.


Bank Instruments. The Money Market Fund only invests in U.S. and foreign bank
instruments either issued by an institution having capital, surplus and
undivided profits over $100 million, or insured by the Bank Insurance Fund
("BIF"), which is administered by the FDIC. Bank instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Money Market Fund will
treat securities credit enhanced with a bank's irrevocable letter of credit or
unconditional guaranty as bank instruments.

Short-Term Credit Facilities. Demand notes are short-term borrowing arrangements
between a corporation and an institutional lender (such as the Money Market
Fund) payable upon demand by either party. The notice period for demand
typically ranges from one to seven days, and the party may demand full or
partial payment. The Money Market Fund may also enter into, or acquire
participations in, short-term revolving credit facilities with corporate
borrowers. Demand notes and other short-term credit arrangements usually provide
for floating or variable rates of interest.


RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1+ or A-1 by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch") are
all considered rated in the highest short-term rating category. The Money Market
Fund will follow applicable regulations in determining whether a security rated
by more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating categories. See "Regulatory Compliance" in this prospectus.

RESTRICTED AND ILLIQUID SECURITIES. The Money Market Fund may invest in
restricted securities. Restricted securities are any securities in which the
Money Market Fund may otherwise invest pursuant to its

investment objective and policies but which are subject to restrictions on
resale under federal securities law. However, the Money Market Fund will limit
investments in illiquid securities, including certain restricted securities not
determined by the Trustees to be liquid, non-negotiable time deposits, and
repurchase agreements providing for settlement in more than seven days after
notice, to 10% of its net assets.

The Money Market Fund may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933. Section 4(2) commercial paper is restricted as to disposition under
federal securities law, and is generally sold to institutional investors, such
as the Money Market Fund, who agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors, like the Money Market Fund,
through or with the assistance of the issuer or investment dealers who make a
market in Section 4(2) commercial paper, thus providing liquidity. The Money
Market Fund believes that Section 4(2) commercial paper and possibly certain
other restricted securities which meet the criteria for liquidity established by
the Trustees are quite liquid. The Money Market Fund intends, therefore, to
treat the restricted securities which meet the criteria for liquidity
established by the Trustees, including Section 4(2) commercial paper, as
determined by the Money Market Fund's investment adviser, as liquid and not
subject to the investment limitation applicable to illiquid securities. In
addition, because Section 4(2) commercial paper is liquid, the Money Market Fund
intends to not subject such paper to the limitation applicable to restricted
securities.

INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, and Europaper are subject to somewhat different risks
than domestic obligations of domestic issuers. Examples of these risks include
international economic and political developments, foreign governmental
restrictions that may adversely affect the payment of principal or interest,
foreign withholding or other taxes on interest income, difficulties in obtaining
or enforcing a judgment against the issuing bank, and the possible impact of
interruptions in the flow of international currency transactions. Different
risks may also exist for ECDs, ETDs, and Yankee CDs because the banks issuing
these instruments, or their domestic or foreign branches, are not necessarily
subject to the same regulatory requirements that apply to domestic banks, such
as reserve requirements, loan limitations, examinations, accounting, auditing,
and recordkeeping, and the public availability of information. These factors
will be carefully considered by the Money Market Fund's investment adviser in
selecting investments for the Money Market Fund.

TAX-FREE FUND

INVESTMENT OBJECTIVE

The investment objective of the Tax-Free Fund is to provide current income
exempt from federal regular income tax consistent with stability of principal
and liquidity. Interest income of the Tax-Free Fund that is exempt from federal
regular income tax retains its tax-free status when distributed to the Tax-Free
Fund's shareholders. While there is no assurance that the Tax-Free Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus. The investment objective
cannot be changed without approval of shareholders.


INVESTMENT POLICIES
The Tax-Free Fund pursues its investment objective by investing primarily in a
diversified portfolio of short-term municipal securities maturing in 397 days or
less. The average maturity of money market instruments in the Tax-Free Fund's
portfolio, computed on a dollar weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies of the Tax-Free Fund may be changed
by the Trustees without the approval of shareholders. Shareholders will be
notified before any material change in these policies becomes effective.

ACCEPTABLE INVESTMENTS. The Tax-Free Fund invests primarily in debt obligations
issued by or on behalf of states, territories and possessions of the United
States, including the District of Columbia, and any political subdivision or
financing authority of any of these, the income from which is, in the opinion of
qualified

legal counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:

 tax and revenue anticipation notes ("TRANs") issued to finance working capital
 needs in anticipation of receiving taxes or other revenues;

 bond anticipation notes ("BANs") that are intended to be refinanced through a
 later issuance of longer-term bonds;

 municipal commercial paper and other short-term notes;

 variable rate demand notes;

 municipal bonds (including bonds having serial maturities and pre-refunded
 bonds) and leases; and

 participation, trust and partnership interests in any of the foregoing
 obligations.


For further discussion of the instruments described above, consult the Tax-Free
Fund's Combined Statement of Additional Information.


MUNICIPAL SECURITIES

Municipal Securities are generally issued to finance public works such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.

Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.

The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.


Variable Rate Demand Notes. Variable rate demand notes are long-term Municipal
Securities that have variable or floating interest rates and provide the
Tax-Free Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear interest
at a rate that is intended to cause the securities to trade at par. The interest
rate may float or be adjusted at regular intervals (ranging from daily to
annually), and is normally based on a municipal interest rate index or a
published interest rate. Most variable rate demand notes allow the Tax-Free Fund
to demand the repurchase of the security on not more than seven days' prior
notice. Other notes only permit the Tax-Free Fund to tender the security at the
time of each interest rate adjustment or at other fixed intervals. See "Demand
Features" in this prospectus. The Tax-Free Fund treats variable rate demand
notes as maturing on the later of the date of the next interest adjustment or
the date on which the Tax-Free Fund may next tender the security for repurchase.


Participation Interests. The Tax-Free Fund may purchase interests in Municipal
Securities from financial institutions such as commercial and investment banks,
savings and loan associations and insurance companies. These interests may take
the form of participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows the Tax-Free Fund
to treat the income from the investment as exempt from federal income tax. The
Tax-Free Fund invests in these participation interests in order to obtain credit
enhancement or demand features that would not be available through direct
ownership of the underlying Municipal Securities.

Municipal Leases. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract or a
participation interest in any of the above.

RATINGS. The Municipal Securities in which the Tax-Free Fund invests must be
rated in the highest short-term rating category by one or more NRSRO or be of
comparable quality to securities having such ratings.


An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated SP-1+, SP-1, A-1+,
or A-1 by S&P, MIG-1, P-1, or VMIG-1 by Moody's, or FIN-1+ or FIN-1 by Fitch are
all considered rated in the highest short-term rating category. The Tax-Free
Fund will follow applicable regulations in determining whether a security rated
by more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance" in this prospectus.

RESTRICTED AND ILLIQUID SECURITIES. The Tax-Free Fund may invest in restricted
securities. Restricted securities are any securities in which the Tax-Free Fund
may invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Tax-Free Fund will limit investments in illiquid securities, including certain
restricted securities not determined by the Trustees to be liquid, and
repurchase agreements providing for settlement in more than seven days after
notice, to 10% of its net assets.

TEMPORARY INVESTMENTS. As a matter of fundamental investment policy, which
cannot be changed without approval of shareholders, the Tax-Free Fund invests
its assets so that at least 80% of its annual interest income is exempt from
federal regular income tax. However, from time to time when the Tax-Free Fund's
investment adviser determines that market conditions call for a temporary
defensive posture, the Tax-Free Fund may invest in short-term temporary
investments. Interest income from temporary investments may be taxable to
shareholders as ordinary income. These temporary investments include:
obligations issued by or on behalf of municipal or corporate issuers having the
same quality characteristics as Municipal Securities purchased by the Tax-Free
Fund; marketable obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities; instruments issued by banks or other depository
institutions which have capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment and if their deposits are insured by BIF
or the Savings Association Insurance Fund (which are administered by the FDIC);
repurchase agreements (arrangements in which the organization is selling the
Tax-Free Fund a temporary investment and agrees at the time of sale to
repurchase it at a mutually agreed upon time and price); and prime commercial
paper rated A-1 by S&P, Prime-1 by Moody's, or F-1 by Fitch and other short-term
credit instruments.

Although the Tax-Free Fund is permitted to make taxable, temporary investments,
there is no current intention of generating income subject to federal regular
income tax. However, the Tax-Free Fund may purchase Municipal Securities, the
interest on which is subject to the federal alternative minimum tax, in an
amount not to exceed 20% of the total net assets of the Tax-Free Fund.

INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Tax-Free Fund to
achieve its investment objective also depends on the continuing ability of the
issuers of Municipal Securities and demand features, or the guarantors of
either, to meet their obligations for the payment of interest and principal when
due.

U.S. TREASURY FUND

INVESTMENT OBJECTIVE

The investment objective of the U.S. Treasury Fund is to provide current income
consistent with stability of principal and liquidity. This investment objective
cannot be changed without approval of shareholders. While there is no assurance
that the U.S. Treasury Fund will achieve its investment objective, it endeavors
to do so by following the investment policies described in this prospectus.


INVESTMENT POLICIES
The U.S. Treasury Fund pursues its investment objective by investing in a
portfolio of short-term U.S. Treasury obligations which are issued by the U.S.
government, and are fully guaranteed as to payment of principal and interest by
the United States. Unless indicated otherwise, the investment policies of the
U.S. Treasury Fund may be changed by the Trustees without approval of
shareholders. Shareholders will be notified before any material changes in these
policies become effective.

ACCEPTABLE INVESTMENTS. The U.S. Treasury Fund invests only in U.S. Treasury
obligations maturing in 397 days or less. The average maturity of the U.S.
Treasury obligations in the U.S. Treasury Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less.

ALL FUNDS

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Funds may invest in
the securities of other investment companies, but they will not own more than 3%
of the total outstanding voting stock of any investment company, invest more
than 5% of their respective total assets in any one investment company, or
invest more than 10% of their respective total assets in investment companies in
general. The Funds will only invest in other investment companies that are money
market funds having investment objectives and policies similar to their own and
primarily for the purpose of investing short-term cash which has not yet been
invested in other portfolio instruments. The investment adviser to the Funds
will waive its investment advisory fee on assets invested in securities of
open-end investment companies.

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to a Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. The Funds or their
custodian will take possession of the securities subject to repurchase
agreements and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from a Fund, that
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by a Fund might be delayed
pending court action. The Funds believe that under the regular procedures
normally in effect for custody of the Funds' portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Funds and allow retention or disposition of such securities. The Funds will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Funds' investment
adviser to be creditworthy pursuant to guidelines established by the Trustees.

As a matter of investment practice, which can be changed without shareholder
approval, repurchase agreements providing for settlement in more than seven days
after notice, along with illiquid obligations, will be limited to not more than
10% of each Fund's respective net assets.


WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Funds may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Funds purchase securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Funds to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date.


The Funds may dispose of a commitment prior to settlement if the Funds'
investment adviser deems it appropriate to do so. In addition, the Funds may
enter into transactions to sell purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Funds may realize short-term profits or losses
upon the sale of such commitments.


MONEY MARKET AND TAX-FREE FUNDS

CONCENTRATION OF INVESTMENTS. The Money Market and Tax-Free Funds may invest
more than 25% of the value of their respective total assets in cash or certain
money market instruments (including instruments issued by a U.S. branch of a
domestic bank having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment), securities issued or guaranteed by the
U.S. government, its agencies, or instrumentalities, or instruments secured by
these money market instruments, such as repurchase agreements.

DEMAND FEATURES. The Money Market and Tax-Free Funds may acquire securities that
are subject to puts and standby commitments ("demand features") to purchase the
securities at their principal amount (usually with accrued interest) within a
fixed period (usually seven days) following a demand by the Funds. The demand
feature may be issued by the issuer of the underlying securities, a dealer in
the securities or by another third party, and may not be transferred separately
from the underlying security. The Money Market

and Tax-Free Funds use these arrangements to provide liquidity and not to
protect against changes in the market value of the underlying securities. The
bankruptcy, receivership or default by the issuer of the demand feature, or a
default on the underlying security or other event that terminates the demand
feature before its exercise, will adversely affect the liquidity of the
underlying security. Demand features that are exercisable even after a payment
default on the underlying security may be treated as a form of credit
enhancement.

CREDIT ENHANCEMENT. Certain of the Money Market and Tax-Free Funds' acceptable
investments may have been credit enhanced by a guaranty, letter of credit or
insurance. The Money Market and Tax-Free Funds typically evaluate the credit
quality and ratings of credit enhanced securities based upon the financial
condition and ratings of the party providing the credit enhancement (the "credit
enhancer"), rather than the issuer. Generally, the Money Market and Tax-Free
Funds will not treat credit enhanced securities as having been issued by the
credit enhancer for diversification purposes. However, under certain
circumstances, applicable regulations may require the Money Market and Tax-Free
Funds to treat the securities as having been issued both by the issuer and the
credit enhancer. The bankruptcy, receivership or default of the credit enhancer
will adversely affect the quality and marketability of the underlying security.

The Tax-Free Fund may have more than 25% of its total assets invested in
securities credit enhanced by banks.

MONEY MARKET AND U.S. TREASURY FUNDS


LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Money Market and U.S. Treasury Funds may lend their portfolio securities, on a
short-term basis, to broker/dealers, banks, or other institutional borrowers of
securities. The Funds will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the Funds' investment adviser
has determined are creditworthy under guidelines established by the Trustees,
and will receive collateral in the form of cash or U.S. Treasury securities
equal to at least 100% of the value of the securities loaned at all times. The
Money Market and U.S. Treasury Funds will limit the amount of portfolio
securities they may lend to not more than one-third of their respective total
assets. There is the risk that when lending portfolio securities, the securities
may not be available to the Funds on a timely basis and the Funds may,
therefore, lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending court
action.


MONEY MARKET FUND

INVESTMENT LIMITATIONS
The Money Market Fund will not:

 borrow money directly or through reverse repurchase agreements (arrangements in
 which the Money Market Fund sells a money market instrument for a percentage of
 its cash value with an agreement to buy it back on a set date) except, under
 certain circumstances, the Money Market Fund may borrow up to one-third of the
 value of its total assets; nor
 with respect to 75% of the value of its total assets, invest more than 5% of
 the value of its total assets in securities of any one issuer (other than cash,
 cash items or securities issued or guaranteed by the government of the United
 States or its agencies or instrumentalities and repurchase agreements
 collateralized by U.S. government securities).

The above investment limitations cannot be changed without shareholder approval.

TAX-FREE FUND

INVESTMENT LIMITATIONS
The Tax-Free Fund will not:

 borrow money directly or through reverse repurchase agreements except, under
 certain circumstances, the Tax-Free Fund may borrow up to one-third of the
 value of its total assets; nor

 with respect to 75% of the value of its total assets, invest more than 5% of
 its total assets in securities of any one issuer (except cash, cash items,
 repurchase agreements collateralized by U.S. government securities and U.S.
 government obligations). The remaining 25% of its total assets may be invested
 in a single issuer if the Fund's investment adviser believes such a strategy is

 prudent.

The above investment limitations cannot be changed without shareholder approval.
The following limitation, however, can be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.

The Tax-Free Fund will not:

 invest more than 5% of the value of its total assets in industrial revenue
 bonds where the payment of principal and interest is the responsibility of
 companies (or guarantors, if applicable) that have records of less than three
 years of continuous operations, including the operation of any predecessor.

U.S. TREASURY FUND


INVESTMENT LIMITATION

The U.S. Treasury Fund will not borrow money directly or through reverse
repurchase agreements except, under certain circumstances, the U.S. Treasury
Fund may borrow up to one-third of the value of its total assets. This
limitation cannot be changed without shareholder approval.

REGULATORY COMPLIANCE (ALL FUNDS)

The Funds may follow non-fundamental operational policies that are more
restrictive than their fundamental investment limitations, as set forth in this
prospectus and the Funds' Combined Statements of Additional Information, in
order to comply with applicable laws and regulations, including the provisions
of and regulations under the Investment Company Act of 1940, as amended. In
particular, the Funds will comply with the various requirements of Rule 2a-7,
which regulates money market mutual funds. The Tax-Free and U.S. Treasury Funds
will determine the effective maturity of their investments, as well as their
ability to consider a security as having received the requisite short-term
ratings by NRSROs, according to Rule 2a-7. The Funds may change these
operational policies to reflect changes in the laws and regulations without the
approval of their shareholders.


================================================================================
                         THE BILTMORE FUNDS INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Board of Trustees is responsible for managing the Trust's
business affairs and for exercising all the Trust's powers except those reserved
for the shareholders.

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Funds are made by Wachovia Investment Management
Group (the "Adviser"), a business unit of Wachovia Bank of North Carolina, N.A.,
subject to direction by the Trustees. The Adviser continually conducts
investment research and supervision of investments for the Funds and is
responsible for the purchase or sale of portfolio instruments, for which it
receives annual fees from the assets of the Funds.

Advisory Fees. The Funds' Adviser receives an annual investment advisory fee
equal to 0.50 of 1% of each Fund's average daily net assets. The investment
advisory contract provides that such fees shall be accrued and paid daily. The
Adviser has undertaken to reimburse the Funds for operating expenses in excess
of limitations established by certain states. The Adviser may voluntarily choose
to waive a portion of its fees or reimburse the Funds for certain other expenses
of the Funds, but reserves the right to terminate such waiver or reimbursement
at any time at its sole discretion.

Adviser's Background. Wachovia Bank of North Carolina, N.A. is a direct,
wholly-owned subsidiary of Wachovia Corporation, a registered bank holding
company headquartered in Winston-Salem, North Carolina and Atlanta, Georgia.
Through offices in eight states, Wachovia Corporation and its subsidiaries
provide a broad range of financial services to individuals and businesses.

Wachovia Bank of North Carolina, N.A. is a national banking association, which
offers a broad range of financial services, including commercial and consumer
loans, corporate, institutional and personal trust services, demand and time
deposit accounts, letters of credit and international financial services.


The Adviser employs an experienced staff of professional investment analysts,
portfolio managers and traders. The Adviser uses fundamental analysis and other
investment management disciplines to identify investment opportunities. Wachovia
Bank of North Carolina, N.A., together with its affiliates, Wachovia Bank of
Georgia, N.A. and Wachovia Bank of South Carolina, N.A., have been managing
trust assets for



over 100 years, with approximately $17.3 billion in managed assets as of
September 30, 1994. Wachovia Investment Management Group has served as
investment adviser for The Biltmore Funds since March 9, 1992. Wachovia Bank of
North Carolina, N.A., also serves as investment adviser to the Biltmore North
Carolina Municipal Bond Fund, a portfolio of The Biltmore Municipal Funds,
another investment company. As part of their regular banking operations, the
Wachovia Banks may make loans to public companies. Thus, it may be possible,
from time to time, for the Funds to hold or acquire the securities of issuers
which are also lending clients of the Wachovia Banks. The lending relationship
will not be a factor in the selection of securities.


DISTRIBUTION OF INVESTMENT SHARES


Federated Securities Corp. is the distributor (the "Distributor") for Investment
Shares of the Funds. It is a Pennsylvania corporation organized on November 14,
1969, and is the distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.


DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940 (the
"Plan"), the Funds will pay Federated Securities Corp. an amount computed at an
annual rate of 0.40 of 1% of the average daily net asset value of the Investment
Shares of each Fund to finance any activity which is principally intended to
result in the sale of Investment Shares.

The Distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan to the extent
the expenses attributable to the Investment Shares exceed such lower expense
limitation as the Distributor may, by notice to the Trust, voluntarily declare
to be effective.

The Distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers ("Service
Organizations") to provide sales and/or administrative services as agent for
their clients or customers who beneficially own Investment Shares.
Administrative services may include, but are not limited to, the following
functions: communicating Fund account openings and closings; entering share
purchase and redemption transactions; electronically transferring and receiving
funds for those transactions; confirming and reconciling all such transactions
and reviewing activity in Fund accounts; posting and reinvesting dividends and
other distributions to Fund accounts; maintaining and distributing current
copies of prospectuses, statements of additional information, and shareholder
reports of the Funds; advertising and marketing assistance; responding to
clients' and potential clients' questions about the Funds; and other sales and
administrative support services to the Funds and their shareholders.

Service Organizations, including the Wachovia Banks, will receive fees from the
Distributor based upon Investment Shares owned by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid will
be determined from time to time by the Distributor.

The Funds' Plan is a compensation type plan. As such, the Funds make no payments
to the Distributor except as described above. Therefore, the Funds do not pay
for unreimbursed expenses of the Distributor, including amounts expended by the
Distributor in excess of amounts received by it from the Funds, interest,
carrying or other financing charges in connection with excess amounts expended,
or the Distributor's overhead expenses. However, the Distributor may be able to
recover such amounts or may earn a profit from future payments made by the Funds
under the Plan.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above or should Congress relax current restrictions on depository institutions,
the Trustees will consider appropriate changes in the service providers.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay Service Organizations
a fee based upon the average net asset value of Investment Shares of their
customers for providing administrative services. This fee is in addition to the
amounts paid under the Plan for administrative services, and if paid, will be
reimbursed by the Adviser and not the Funds.

ADMINISTRATION OF THE FUNDS


ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Funds with the
administrative personnel and services necessary to operate the Funds. Such
services include the preparation of filings with the Securities and Exchange
Commission and other regulatory authorities, assistance with respect to meetings
of the Trustees, shareholder servicing and accounting services, and other
administrative services. Federated Administrative Services provides these at an
annual rate, computed and payable daily, as specified below:


<TABLE>
<CAPTION>
                         Average Aggregate Daily Net
      Maximum            Assets of The Biltmore Funds
Administrative Fee     and The Biltmore Municipal Funds

<S>                  <C>
    0.150 of 1%           on the first $250 million
    0.125 of 1%            on the next $250 million
    0.100 of 1%            on the next $250 million
    0.075 of 1%      on assets in excess of $750 million
</TABLE>


The administrative fee received during any fiscal year for the Funds and each of
the other portfolios of The Biltmore Funds shall aggregate at least $75,000.
Federated Administrative Services may choose voluntarily to waive or reimburse a
portion of its fee at any time.



CUSTODIAN. Wachovia Bank of North Carolina, N.A., Winston-Salem, North Carolina,
is custodian (the "Custodian") for the securities and cash of the Funds. Under
the Custodian Agreement, Wachovia Bank of North Carolina, N.A. holds the Funds'
portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties. For the services provided to the Trust
pursuant to the Custodian Agreement, the Trust pays Wachovia Bank of North
Carolina, N.A. an annual fee based upon the average daily net assets of the
Funds and which is payable monthly. The Custodian will also charge transaction
fees and out-of-pocket expenses.



TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent for the shares of the Funds and dividend disbursing
agent for the Funds. Federated Services Company also provides certain accounting
and recordkeeping services with respect to the Funds' portfolios of investments.


LEGAL SERVICES. Legal services for the Funds are provided by Kirkpatrick &
Lockhart, Washington, D.C. Piper & Marbury, Washington, D.C. serves as counsel
to the independent Trustees.


INDEPENDENT AUDITORS. The independent auditors are Ernst & Young LLP,
Pittsburgh, Pennsylvania.


EXPENSES OF THE FUNDS AND INVESTMENT SHARES
Holders of Investment Shares pay their allocable portion of Fund and Trust
expenses. The Trust expenses for which holders of Investment Shares pay their
allocable portion include, but are not limited to: the cost of organizing the
Trust and continuing its existence; registering the Trust; Trustees' fees;
auditors' fees; the cost of meetings of Trustees; legal fees of the Trust;
association membership dues; and such non-recurring and extraordinary items as
may arise.

Each Fund's expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Funds and shares of the Funds
under state and federal law; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise.

At present, the only expenses allocated to Investment Shares as a class are
expenses under the Funds' Rule 12b-1 Plan. However, the Trustees reserve the
right to allocate certain other expenses to the shareholders of a particular
class as they deem appropriate ("Class Expenses"). In any case, Class Expenses
would be limited to: transfer agent fees as identified by the transfer agent as
attributable to holders of Investment Shares; printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and registration fees paid to states;
expenses related to administrative personnel and services as required to support
holders of Investment Shares; legal fees relating solely to Investment Shares;
and Trustees' fees incurred as a result of issues relating solely to Investment
Shares.

================================================================================

                                NET ASSET VALUE

The Funds attempt to stabilize the net asset value of Investment Shares at $1.00
by valuing the portfolio securities using the amortized cost method. The net
asset value per share of each Fund is determined by adding the interest of the
Investment Shares in the value of all securities and other assets of that Fund,
subtracting the interest of the Investment Shares in the liabilities of that
Fund and those attributable to that Fund's Investment Shares, and dividing the
remainder by the total number of that Fund's Investment Shares outstanding. The
Funds, of course, cannot guarantee that their net asset values will always
remain at $1.00 per share.

================================================================================

                         INVESTING IN INVESTMENT SHARES

SHARE PURCHASES


Investment Shares are sold on days on which the Wachovia Banks, the New York
Stock Exchange and the Federal Reserve Wire System are open for business.
Investment Shares may be purchased through Wachovia Investments, Inc., the
Wachovia Banks or other Service Organizations. Texas residents must purchase,
exchange, and redeem shares through Federated Securities Corp. at
1-800-618-8573. In connection with the sale of Investment Shares, the
Distributor may from time to time offer certain items of nominal value to any
shareholder or investor. The Funds and the Distributor reserve the right to
reject any purchase request.



THROUGH WACHOVIA INVESTMENTS, INC. Customers of Wachovia Investments, Inc. or
Wachovia Brokerage Service may place an order to purchase Investment Shares by
telephoning The Biltmore Service Center at 1-800-994-4414, sending written
instructions, or placing an order in person. Payment may be made by check, by
wire of federal funds (the customer's bank sends money to the Funds' bank
through the Federal Reserve Wire System) or by debiting a customer's account at
Wachovia Investments, Inc. Purchase orders for the Tax-Free Fund must be
communicated to Wachovia Investments, Inc. before 10:00 a.m. (Eastern time), and
purchase oders for the Money Market Fund and the U.S. Treasury Fund must be
communicated to Wachovia Investments, Inc. before 11:00 a.m. (Eastern time).
Payment by federal funds must be received by Wachovia Investments, Inc. before
4:00 p.m. (Eastern time) on the same day as the order to earn dividends that
day. Wachovia Investments, Inc., a wholly-owned subsidiary of Wachovia
Corporation, is a registered broker/dealer and member of the National
Association of Securities Dealers, Inc. Wachovia Brokerage Service is a business
unit of Wachovia Investments, Inc.



By Mail. To purchase Investment Shares of a Fund by mail, send a check made
payable to the appropriate Fund to The Biltmore Service Center, 101 Greystone
Boulevard, SC-9215, Columbia, South Carolina 29226. Orders by mail are
considered received after payment by check is converted by Wachovia Investments,
Inc. into federal funds. This is normally the next business day after Wachovia
Investments, Inc. receives the check.


By Wire. To purchase Investment Shares of a Fund by wire, wire funds as follows:


Wachovia Investments, Inc.
ABA Number 0531-00494
Credit: 8735-001342
Further credit to: (name of appropriate Fund)
Re: (Customer name and brokerage account number)



When payment is made by wire, the order must be communicated by the times
specified above for the Funds, and the wire must be received by Wachovia
Investments, Inc. before 4:00 p.m. (Eastern time) on the same day to earn
dividends that day. Shares of a Fund cannot be purchased on days on which the
Wachovia Banks, the New York Stock Exchange, and the Federal Reserve Wire System
are not open for business.


THROUGH THE WACHOVIA BANKS OR OTHER SERVICE ORGANIZATIONS. Investors may
purchase Investment Shares of the Funds through one of the Wachovia Banks or
through another Service Organization, which will place share

purchase orders as agent for the account of the investor. The Wachovia Banks and
other Service Organizations maintain omnibus accounts with the Funds for shares
of the Funds that are purchased for their clients and customers. The Wachovia
Bank or other Service Organization will take all information from the investor
necessary to the purchase of Investment Shares and is responsible for the prompt
transmission of investor orders to the Funds.


The Wachovia Banks or other Service Organizations may assess fees to their
customers for services or in connection with the accounts through which
Investment Shares are purchased. This prospectus and the Combined Statements of
Additional Information should be read together with any applicable account
agreement with regard to the services provided, the fees charged for those
services, and any restrictions and limitations imposed.


For investors who purchase Investment Shares of the Funds as part of a sweep
account program with one of the Wachovia Banks or another Service Organization,
automatic purchases and redemptions of Investment Shares will be made on behalf
of the investor pursuant to the investor's sweep account agreement.


Other investors who are customers of the Wachovia Banks may place orders to
purchase Investment Shares of the Funds by telephone, through written
instructions, or in person with their account officer in accordance with the
procedures established by the Wachovia Banks pursuant to the relevant account
agreement. Unless otherwise specified by the account agreement, payment may be
made to the Wachovia Banks by check, federal funds, or by debiting a customer's
Wachovia Bank account. Orders are considered received after payment by check is
converted into federal funds and received by the Wachovia Banks, normally the
next business day. When payment is made with federal funds, the order is
considered received when federal funds are received by the Wachovia Banks or
available in the customer's account. Purchase orders must be communicated to the
Wachovia Banks by 10:00 a.m. (Eastern time), in the case of the Tax-Free Fund,
and by 11:00 a.m. (Eastern time), in the case of the Money Market and U.S.
Treasury Funds. Payment by federal funds must be received by the Wachovia Banks
before 4:00 p.m. (Eastern time) on the same day as the order to earn dividends
for that day. Investment Shares cannot be purchased on days on which the
Wachovia Banks, the New York Stock Exchange or the Federal Reserve Wire System
are not open for business.


MINIMUM INVESTMENT REQUIRED

The minimum initial investment in Investment Shares in each Fund is $1,000,
except that, with respect to investments made through a sweep account program
with a Wachovia Bank or another Service Organization, initial investment
minimums may be modified under the relevant account agreement.

WHAT SHARES COST

Investment Shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Funds.


The net asset value for each Fund is determined at 12:00 noon (Eastern time) and
4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days on which
there are not sufficient changes in the value of a Fund's portfolio securities
that its net asset value might be materially affected; (ii) days during which no
Investment Shares are tendered for redemption and no orders to purchase
Investment Shares are received; or (iii) the following holidays: New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.


CERTIFICATES AND CONFIRMATIONS


As transfer agent for the Funds, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued unless
requested in writing to the appropriate Fund.



Federated Services Company provides Wachovia Investments, Inc., the Wachovia
Banks and other Service Organizations, as shareholders of record, with detailed
statements on a monthly basis that include account balances, information on each
purchase or redemption, and a report of dividends paid during the month.
Wachovia Investments, Inc., the Wachovia Banks and other Service Organizations
maintain omnibus accounts for beneficial owners who are their clients or
customers and will provide such owners with statements on a monthly basis that
reflect account activity during the month. These statements will serve as
confirmations of all transactions in the shareholder's account for the statement
period.


DIVIDENDS

Dividends are declared daily and paid monthly. Ordinarily, dividends will be
reinvested on payment dates in additional Investment Shares of the Funds unless
cash payments are requested by writing to Wachovia Investments, Inc., the
Wachovia Banks or other Service Organization through which the shareholder
invested. Those investors who purchase Investment Shares through the Wachovia
Banks or another Service Organization should consult their account agreement for
any special provisions with respect to the receipt of dividends or available
reinvestment options.


CAPITAL GAINS
Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If for some extraordinary reason the
Funds realize net long-term capital gains, they will distribute them at least
once every 12 months.

================================================================================
                                   EXCHANGES


Unless otherwise limited in the shareholder's account agreement with a Wachovia
Bank or the relevant Service Organization, a shareholder may exchange Investment
Shares of one Fund for Investment Shares of any other Fund on the basis of their
respective net asset values by calling or writing the shareholder's account
representative at the Wachovia Bank or other Service Organization, by
telephoning 1-800-
994-4414, or by writing to The Biltmore Service Center, 101 Greystone Boulevard,
SC-9215, Columbia, South Carolina 29226. Telephone exchange instructions may be
recorded. If reasonable procedures are not followed by the Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
Investment Shares purchased by check are eligible for exchange after the
purchase check has cleared, which can take up to ten calendar days. The exchange
feature applies to the Investment Shares of each Fund that does not assess a
sales charge as of the effective offering date of each Fund's Investment Shares.



Orders to exchange Investment Shares of one Fund for Investment Shares of any of
the other Biltmore Funds that do not assess a sales charge will be executed by
redeeming the Investment Shares owned at the net asset value next determined
after receipt of the order, and purchasing Investment Shares of such other Fund
at the net asset value determined after the proceeds from such redemption become
available. Orders for exchanges received by any of the Funds after 12:00 noon
(Eastern time) but prior to 4:00 p.m. (Eastern time) on any day that the Trust
is open for business will be executed at the price determined at 4:00 p.m.
(Eastern time) that day. Orders for exchanges received after 4:00 p.m. (Eastern
time) on any business day will be executed at the price determined at 12:00 noon
(Eastern time) the next business day.


An excessive number of exchanges may be disadvantageous to the Trust. Therefore
the Trust, in addition to its right to reject any exchange, reserves the right
to modify or terminate the exchange privilege of any shareholder who makes more
than five exchanges of shares of any of The Biltmore Funds in a year or three in
a calendar quarter.

An exchange order must comply with the requirements for a redemption and
purchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial investment requirement
of the fund being acquired. An exchange constitutes a sale for federal income
tax purposes.

This exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may be sold. Before the exchange, a
shareholder should review a prospectus of the fund for which the exchange is
being made.

================================================================================
                          REDEEMING INVESTMENT SHARES


THROUGH WACHOVIA INVESTMENTS,INC.


Investment Shares are redeemed at their net asset value next determined after
Wachovia Investments, Inc. receives the redemption request. Redemptions will be
made on days on which the Funds compute their net asset values. Requests for
redemption can be made in person, by telephone, or by writing to The Biltmore
Service Center, 101 Greystone Boulevard, SC-9215, Columbia, South Carolina
29226. Telephone or



written requests for redemption must be received in proper form by Wachovia
Investments, Inc. If at any time the Funds shall determine it necessary to
terminate or modify these methods of redemption, shareholders would be promptly
notified.



BY TELEPHONE. A shareholder who is a customer of Wachovia Investments, Inc. may
redeem Investment Shares by telephoning The Biltmore Service Center at
1-800-994-4414. Shareholders wishing to redeem by telephone will be required to
complete a telephone redemption authorization form available through Wachovia
Investments, Inc. For calls received by Wachovia Investments, Inc. before 10:00
a.m. (Eastern time), for the Tax-Free Fund, and 11:00 a.m. (Eastern time), for
the Money Market Fund and U.S. Treasury Fund, proceeds will normally be credited
the same day to the shareholder's brokerage account at Wachovia Investments,
Inc. Those Investment Shares will not be entitled to the dividend declared that
day. For calls received by Wachovia Investments, Inc. after 10:00 a.m. (Eastern
time), in the case of the Tax-Free Money Market Fund, and 11:00 a.m. (Eastern
time) in the case of the Money Market Fund and the U.S. Treasury Fund, proceeds
will normally be credited to the brokerage account the following business day.
Those Investment Shares will be entitled to the dividend declared on the day the
redemption request was received. In no event will proceeds be credited or paid
more than seven days after a proper request for redemption has been received. In
the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be considered.



Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Funds, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.



BY MAIL. A shareholder who is a customer of Wachovia Investments, Inc. may
redeem Investment Shares by sending a written request to The Biltmore Service
Center, 101 Greystone Boulevard, SC-9215, Columbia, South Carolina 29226. The
written request should include the shareholder's name, the Fund name and class
of shares, the brokerage account number, and the share or dollar amount
requested. Shareholders should call Wachovia Investments, Inc. (at
1-800-994-4414) for assistance in redeeming by mail.


THROUGH THE WACHOVIA BANKS

The Funds redeem Investment Shares at their net asset value next determined
after the Wachovia Banks receive the redemption request. Redemptions will be
made on days on which the Funds compute their net asset values. Requests for
redemption can be made in person, by telephone or by writing to the
shareholder's account officer. If at any time the Funds shall deem it necessary
to terminate or modify these methods of redemption, shareholders would be
promptly notified.


BY TELEPHONE. A shareholder who is a customer of the Wachovia Banks and whose
account agreement
with the Wachovia Banks permits telephone redemption may redeem Investment
Shares by telephoning the shareholder's account officer. For calls received by
the Wachovia Banks before 10:00 a.m. (Eastern time), for the Tax-Free Fund, and
11:00 a.m. (Eastern time), for the Money Market Fund and U.S. Treasury Fund,
proceeds will normally be wired the same day to the shareholder's account at the
Wachovia Banks or a check will be sent to the address of record. Those
Investment Shares will not be entitled to the dividend declared that day. For
calls received by the Wachovia Banks after 10:00 a.m. (Eastern time), in the
case of the Tax-Free Fund, and 11:00 a.m. (Eastern time), in the case of the
Money Market Fund and the U.S. Treasury Fund, proceeds will normally be wired or
a check mailed the following business day. Those Investment Shares will be
entitled to the dividend declared on the day the redemption request was
received. In no event will proceeds be wired or a check mailed more than seven
days after a proper request for redemption has been received. In the event of
drastic economic or market changes, a shareholder may experience difficulty in
redeeming by telephone. If such a case should occur, another method of
redemption should be considered.


An authorization permitting the Wachovia Banks to accept telephone requests is
included as part of the shareholder's account agreement. Telephone redemption
instructions may be recorded. If reasonable procedures are not followed by the
Funds, they may be liable for losses due to unauthorized or fraudulent telephone
instructions.

VIA SWEEP AGREEMENT. Redemptions of Investment Shares held through a sweep
program will be effected through, and in accordance with, the related account
agreement.

THROUGH SERVICE ORGANIZATIONS

The Funds redeem Investment Shares at their net asset value next determined
after the Funds receive the redemption request from the Service Organization.
Redemptions will be made on days on which the Funds compute their net asset
value. Requests for redemption can be made in person, by telephone or by writing
to the customer's account representative who, in turn, will place share
redemption orders as agent for the account of the customer, through the relevant
Service Organization. Service Organizations may charge their customers for their
services. Therefore, this prospectus and the Combined Statements of Additional
Information should be read together with any applicable account agreement with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. If at any time, the Funds shall determine
it necessary to terminate or modify this method of redemption, shareholders will
be promptly notified.



BY TELEPHONE. Shareholders who are customers of Service Organizations, and whose
account agreement with the Service Organization permits telephone redemption,
may redeem shares of the Funds by telephoning their account representative. The
account representative will, in turn, contact the Funds. The Service
Organization is responsible for promptly submitting redemption requests and
providing proper redemption instructions to the Funds. Redemption requests
received by a Service Organization before 10:00 a.m. (Eastern time), in the case
of the Tax-Free Fund, and 11:00 a.m. (Eastern time), in the case of the Money
Market Fund and U.S. Treasury Fund, will normally be paid the same day but will
not earn that day's dividend. Redemption requests received by a Service
Organization after 10:00 a.m. (Eastern time), in the case of the Tax-Free Fund,
and 11:00 a.m. (Eastern time), in the case of the Money Market Fund and U.S.
Treasury Fund, will receive that day's dividend but the monies will not be
credited to the shareholder's account until the following day. In the event of
drastic economic or market changes, a shareholder may experience difficulty in
redeeming by telephone. If such a case should occur, another method of
redemption should be considered.


Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Funds, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.

ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Funds may
redeem Investment Shares in any account and pay the proceeds to the shareholder
if the account balance falls below a required minimum value of $1,000 due to
shareholder redemptions.

================================================================================
                            SHAREHOLDER INFORMATION

VOTING RIGHTS

Each Investment Share of a Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
all classes of each fund in the Trust have equal voting rights, except that in
matters affecting only a particular fund or class, only shares of that fund or
class are entitled to vote. As of January 6, 1995, the Wachovia Banks and their
various affiliates and subsidiaries, acting in various capacities for numerous
accounts, were the owner of record of in excess of 25% of the outstanding Shares
of the Funds, and therefore may, for certain purposes, be deemed to control the
Funds and be able to affect the outcome of certain matters presented for a vote
of shareholders.


As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or the Funds' operations and for the election of Trustees
under certain circumstances.

Trustees may be removed by the Trustees or shareholders at a special meeting. A
special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

MASSACHUSETTS BUSINESS TRUSTS

Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect shareholders,
the Trust has filed legal documents with Massachusetts that expressly disclaim
the liability of shareholders for such acts or obligations of the Trust. These

documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or the Trustees enter into or sign on behalf
of the Funds.

In the unlikely event a shareholder of a Fund is held personally liable for the
Trust's obligations on behalf of that Fund, the Trust is required by the
Declaration of Trust to use the property of that Fund to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder of a Fund for any act or obligation of the Trust
on behalf of that Fund. Therefore, financial loss resulting from liability as a
shareholder of a Fund will occur only if the Trust cannot meet its obligations
to indemnify shareholders and pay judgments against them from the assets of that
Fund.

================================================================================
                             EFFECT OF BANKING LAWS


The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibits banks
generally from issuing, underwriting or distributing most securities. However,
such banking laws and regulations do not prohibit such a holding company or its
bank and non-bank affiliates generally from acting as investment adviser,
transfer agent or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of their customer. The
Funds' investment adviser, Wachovia Investment Management Group, and its
affiliate banks, are subject to such banking laws and regulations.

The Adviser believes, based on the advice of its counsel, that it may perform
the services for the Funds contemplated by its investment advisory and custody
agreements with the Trust without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present or future statutes and regulations,
could prevent the Adviser from continuing to perform all or a part of the above
services for its customers and/or the Funds. If it were prohibited from engaging
in these customer-related activities, the Trustees would consider alternative
service providers and means of continuing available investment services. In such
event, changes in the operation of the Funds may occur, including the possible
termination of any automatic or other fund share investment and redemption
services then being provided by the Adviser. It is not expected that existing
Fund shareholders would suffer any adverse financial consequences (if another
adviser with equivalent abilities to the Adviser is found) as a result of any of
these occurrences.

================================================================================
                                TAX INFORMATION


The Funds expect to pay no federal income tax because they intend to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.


Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
other Funds and other portfolios in the Trust will not be combined for tax
purposes with those realized by each Fund.

Dividends of the Funds representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.

MONEY MARKET AND U.S. TREASURY FUNDS
Unless otherwise exempt, shareholders of the Money Market and U.S. Treasury
Funds will be subject to federal income tax on any dividends and other
distributions received. This applies whether dividends and distributions are
received in cash or as additional shares. Shareholders of the Money Market and
U.S. Treasury Funds are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

TAX-FREE FUND
Shareholders of the Tax-Free Fund will not be subject to the federal regular
income tax on any dividends received from the Tax-Free Fund that represent net
interest on tax-exempt municipal bonds. However, under the Tax Reform Act of
1986, dividends representing net interest earned on some municipal bonds may be
included in calculating the federal individual alternative minimum tax or the
federal alternative minimum tax for corporations.

The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal to
the regular taxable income of the taxpayer increased by certain "tax preference"
items not included in regular taxable income and reduced by only a portion of
the deductions allowed in the calculation of the regular tax.

The Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax preference item for both individuals and
corporations. Unlike traditional governmental purpose municipal bonds, which
finance roads, schools, libraries, prisons and other public facilities, private
activity bonds provide benefits to private parties. The Tax-Free Fund may
purchase all types of municipal bonds, including "private activity" bonds. Thus,
while the Tax-Free Fund has no present intention of purchasing any private
activity bonds, should it purchase any such bonds, a portion of the Tax-Free
Fund's dividends may be treated as a tax preference item.

In addition, in the case of a corporate shareholder, dividends of the Tax-Free
Fund which represent interest on municipal bonds will be subject to the 20%
corporate alternative minimum tax because the dividends are included in
corporation's "adjusted current earnings." The corporate minimum tax treats 75%
of the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any fund dividend, and alternative minimum taxable income does not
include the portion of the Tax-Free Fund's dividend attributable to municipal
bonds which are not private activity bonds, the 75% difference will be included
in the calculation of the corporation's alternative minimum tax.

STATE AND LOCAL TAXES (TAX-FREE FUND ONLY)
Distributions representing net interest received on tax-exempt municipal
securities are not necessarily free from income taxes of any state or local
taxing authority. State laws differ on this issue and shareholders are urged to
consult their own tax advisers.

================================================================================
                            PERFORMANCE INFORMATION

From time to time, the Funds advertise their yield, effective yield and
tax-equivalent yield (for the Tax-Free Fund only) for Investment Shares.

The yield of Investment Shares represents the annualized rate of income earned
on an investment in Investment Shares over a seven-day period. It is the
annualized dividends earned during the period on the investment, shown as a
percentage of the investment. The effective yield is calculated similarly to the
yield, but, when annualized, the income earned by an investment in Investment
Shares is assumed to be reinvested daily. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield of the Tax-Free Fund's Investment Shares
is calculated similarly to the yield, but is adjusted to reflect the taxable
yield that the Tax-Free Fund's Investment Shares would have had to earn to equal
its actual yield, assuming a specific tax rate. The yield and the tax-equivalent
yield do not necessarily reflect income actually earned by Investment Shares
and, therefore, may not correlate to the dividends or other distributions paid
to shareholders.

Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in Investment Shares after reinvesting all distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

Yield, effective yield, and tax-equivalent yield (for the Tax-Free Fund only)
will be calculated separately for Investment Shares and Institutional Shares.
Because Investment Shares are subject to a Rule 12b-1 fee,

the yield and effective yield for Institutional Shares, for the same period,
will exceed that of Investment Shares.

From time to time, the Funds may advertise their performance using certain
financial publications and/or compare their performance to certain indices.

================================================================================
                            OTHER CLASSES OF SHARES

Institutional Shares are offered only to accounts held by the Wachovia Banks in
a fiduciary, agency, custodial, or similar capacity and are subject to a minimum
initial investment as provided in the Wachovia Banks' customer's relevant
account agreement. Institutional Shares are sold at net asset value and are
distributed without a Rule 12b-1 Plan.

Financial institutions and brokers providing sales and/or administrative
services may receive different compensation from one class of shares than from
another class of shares.

The amount of dividends payable to Institutional Shares of a Fund will be
greater than those payable to Investment Shares of the same Fund by the
difference between class expenses and distribution expenses borne by shares of
each respective class. The stated advisory fee is the same for both classes of
shares.

================================================================================

                BILTMORE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                              INSTITUTIONAL SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)


Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 49.


<TABLE>
<CAPTION>
                                                    Year Ended November 30,    1994       1993       1992*
<S>                                                                          <C>        <C>        <C>
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                            $ 1.00     $ 1.00     $ 1.00
Income from investment operations
  Net investment income                                                           0.04       0.03       0.02
Less distributions
  Dividends to shareholders from net investment income                           (0.04)     (0.03)     (0.02)
                                                                             ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                                  $ 1.00     $ 1.00     $ 1.00
                                                                             ---------  ---------  ---------
Total Return**                                                                   3.77%      3.05%      1.71%
Ratios to Average Net Assets
  Expenses                                                                       0.38%      0.25%   0.14%(a)
  Net investment income                                                          3.74%      3.00%   3.38%(a)
  Expense waiver/reimbursement (b)                                               0.40%      0.56%   0.65%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                     $129,233   $177,090    $84,698
</TABLE>

 * Reflects operations for the period from June 2, 1992 (date of initial public
   investment) to November 30, 1992.

** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.

(a) Computed on an annualized basis.


(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.



(See Notes which are an integral part of the Financial Statements)


================================================================================
            BILTMORE TAX-FREE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                              INSTITUTIONAL SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)


Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 49.


<TABLE>
<CAPTION>
                                                    Year Ended November 30,    1994       1993       1992*
<S>                                                                          <C>        <C>        <C>
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                         $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                           0.02       0.02       0.01
Less distributions
  Dividends to shareholders from net investment income                           (0.02)     (0.02)     (0.01)
                                                                             ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                                  $ 1.00     $ 1.00     $ 1.00
                                                                             ---------  ---------  ---------
Total Return**                                                                   2.42%      2.30%      1.49%
Ratios to Average Net Assets
  Expenses                                                                       0.38%      0.29%   0.16%(a)
  Net investment income                                                          2.41%      2.28%   2.71%(a)
  Expense waiver/reimbursement (b)                                               0.45%      0.60%   0.78%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                      $93,867    $59,269    $61,632
</TABLE>

 * Reflects operations for the period from May 14, 1992 (date of initial public
   investment) to
   November 30, 1992.

** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.


(See Notes which are an integral part of the Financial Statements)


================================================================================
         BILTMORE U.S. TREASURY MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                              INSTITUTIONAL SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)


Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 49.


<TABLE>
<CAPTION>
                                                    Year Ended November 30,    1994       1993       1992*
<S>                                                                          <C>        <C>        <C>
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                         $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                           0.04       0.03       0.02
Less distributions
  Dividends to shareholders from net investment income                           (0.04)     (0.03)     (0.02)
                                                                             ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                               $    1.00  $    1.00  $    1.00
                                                                             ---------  ---------  ---------
Total Return**                                                                    3.70%      2.91%      1.90%
Ratios to Average Net Assets
  Expenses                                                                    0.36%         0.28%   0.17%(a)
  Net investment income                                                          3.72%      2.87%   3.24%(a)
  Expense waiver/reimbursement (b)                                               0.51%      0.63%   0.71%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                      $87,531    $65,353    $55,408
</TABLE>

 * Reflects operations for the period from May 7, 1992 (date of initial public
investment) to
   November 30, 1992.

** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.


(See Notes which are an integral part of the Financial Statements)


================================================================================
              BILTMORE MONEY MARKET FUND PORTFOLIO OF INVESTMENTS


                               NOVEMBER 30, 1994


<TABLE>
<CAPTION>
  Principal
   Amount                                                                                     Value
<C>            <S>                                                                        <C>
- --------------------------------------------------------------------------------------------------------
Bankers' Acceptance--1.1%
$   2,000,000  Mellon Bank, 4.88%, 12/22/94                                               $    1,994,307
                                                                                          --------------
Certificates of Deposit--36.7%
    5,000,000  ABN-AMRO Bank, 5.78%, 3/16/95                                                   5,001,799
    4,000,000  Bank of New York, 5.25%, 5/4/95                                                 3,985,480
    4,000,000  CIBC New York, 5.05%, 12/5/94                                                   4,000,000
    5,000,000  Commonwealth Bank of Australia, 4.98%, 12/30/94                                 5,000,344
    5,000,000  Deutsche Bank, Yankee, 5.76%, 4/6/95                                            4,999,375
    5,000,000  Credit Suisse, Yankee, 5.21%, 3/3/95                                            4,998,029
    9,000,000  National Westminster Bank, 5.14%, 12/19/94                                      9,000,178
    8,000,000  Rabobank, Yankee, 5.09%-5.97%, 2/1/95-2/28/95                                   7,998,537
    9,000,000  Societe Generale Bank, 5.20%-5.55%, 1/31/95-2/28/95                             8,997,515
    9,000,000  Swiss Bank of New York, 5.50%, 1/13/95                                          9,000,000
    5,000,000  Union Bank of Switzerland, Yankee, 6.02%, 5/15/95                               5,000,445
                                                                                          --------------
               Total Certificates of Deposit                                                  67,981,702
                                                                                          --------------
*Commercial Paper--36.5%
               FINANCE-AUTOMOTIVE--4.8%
    9,000,000  Ford Motor Credit Corp., 5.57%, 1/9/95                                          8,945,693
                                                                                          --------------
               FINANCE-MISCELLANEOUS--3.2%
    6,000,000  TransAmerica Finance Corp., 5.97%, 2/17/95                                      5,922,390
                                                                                          --------------
               FINANCE-OIL--7.5%
    8,000,000  Chevron Oil Finance Co., 5.18%, 12/12/94                                        7,987,338
    6,000,000  Texaco, Inc., 5.62%, 1/13/95                                                    5,959,723
                                                                                          --------------
               Total                                                                          13,947,061
                                                                                          --------------
               FINANCE-RETAIL--12.9%
    9,000,000  American General Finance Corp., 5.75%, 1/27/95                                  8,918,063
    8,000,000  Associates Corp. of North America, 5.35%, 12/15/94                              7,983,356
    7,000,000  MCA Funding Corp., 5.07%-5.17%, 1/12/95-2/6/95                                  6,951,181
                                                                                          --------------
               Total                                                                          23,852,600
                                                                                          --------------
               FINANCE-TELECOMMUNICATIONS--4.3%
    8,000,000  Bellsouth Capital Funding Corp., 5.00%-5.49%, 12/5/94-2/6/95                    7,956,908
                                                                                          --------------
</TABLE>

================================================================================
                           BILTMORE MONEY MARKET FUND

<TABLE>
<CAPTION>
  Principal
   Amount                                                                                     Value
<C>            <S>                                                                        <C>
- --------------------------------------------------------------------------------------------------------
*Commercial Paper--continued
               FOOD & BEVERAGE--3.8%
$   7,000,000  Sara Lee Corp., 4.70%, 12/2/94                                             $    6,999,086
                                                                                          --------------
               Total Commercial Paper                                                         67,623,738
                                                                                          --------------
Time Deposits--12.9%
               FINANCE-BANKING--12.9%
    8,000,000  First Union Nassau Bank, 5.81%, 12/1/94                                         8,000,000
    8,000,000  NBD Bank, Canada, 5.75%, 12/1/94                                                8,000,000
    8,000,000  Toronto-Dominion Bank, 5.75%, 12/1/94                                           8,000,000
                                                                                          --------------
               Total Time Deposits                                                            24,000,000
                                                                                          --------------
**Variable Rate Notes--9.7%
               FINANCE-BANKING--7.0%
    5,000,000  Boatmens National Bank, St. Louis, 5.72%, 8/16/95                               5,000,000
    3,000,000  Northern Trust Co., 5.75%, 7/20/95                                              2,990,917
    5,000,000  PNC Bank, Kentucky, 5.69%, 5/12/95                                              4,999,421
                                                                                          --------------
               Total                                                                          12,990,338
                                                                                          --------------
               FOOD & BEVERAGE--2.7%
    5,000,000  Coca-Cola Co., 6.10%, 8/29/95                                                   5,000,000
                                                                                          --------------
               Total Variable Rate Notes                                                      17,990,338
                                                                                          --------------
***Repurchase Agreement--7.9%
   14,715,632  Goldman Sachs, 5.65%, dated 11/30/94, due 12/1/94                              14,715,632
                                                                                          --------------
               Total Investments, at amortized cost and value                             $  194,305,717+
                                                                                          --------------
</TABLE>

  * Each issue shows the rate of discount at the time of purchase for discount
    issues, or the coupon for interest bearing issues.

 ** Denotes variable rate securities which show current rate and next demand
    date.

*** Repurchase agreement is fully collateralized by U.S. Treasury obligations
    based on market prices at the date of the portfolio.

   Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of net assets
      ($185,337,876) at November 30, 1994.

(See Notes which are an integral part of the Financial Statements)

================================================================================
         BILTMORE MONEY MARKET FUND STATEMENT OF ASSETS AND LIABILITIES


                               NOVEMBER 30, 1994


<TABLE>
<S>                                                                         <C>           <C>
Assets:
Investments, at amortized cost and value                                                  $  194,305,717
Interest receivable                                                                              837,025
Deferred expenses                                                                                 14,467
                                                                                          --------------
     Total assets                                                                            195,157,209
Liabilities:
Payable for investments purchased                                           $  9,016,713
Dividends payable                                                                743,199
Accrued expenses                                                                  59,421
                                                                            ------------
     Total liabilities                                                                         9,819,333
                                                                                          --------------
Net Assets for 185,337,876 shares of beneficial interest outstanding                      $  185,337,876
                                                                                          --------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares ($129,232,911 / 129,232,911 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
Investment Shares ($56,104,965 / 56,104,965 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
</TABLE>


(See Notes which are an integral part of the Financial Statements)


================================================================================
               BILTMORE MONEY MARKET FUND STATEMENT OF OPERATIONS


                          YEAR ENDED NOVEMBER 30, 1994


<TABLE>
<S>                                                                <C>         <C>           <C>
Investment Income:
Interest income                                                                              $  7,076,136
Expenses:
Investment advisory fee                                                        $    859,936
Trustees' fees                                                                        4,481
Administrative personnel and services fees                                          170,963
Custodian fees                                                                       34,397
Transfer and dividend disbursing agent fees and expenses                             55,002
Fund share registration costs                                                        52,444
Auditing fees                                                                        15,514
Legal fees                                                                           27,234
Printing and postage                                                                 23,938
Portfolio accounting fees                                                            56,919
Insurance premiums                                                                   14,500
Distribution services fees                                                          127,921
Miscellaneous                                                                        19,875
                                                                               ------------
     Total expenses                                                               1,463,124
Deduct--
  Waiver of investment advisory fee                                $  587,479
  Waiver of administrative personnel and services fees                 46,534
  Waiver of distribution services fees                                 31,980
  Reimbursement of other operating expenses by Administrator           52,852       718,845
                                                                   ----------  ------------
     Net expenses                                                                                 744,279
                                                                                             ------------
          Net investment income                                                              $  6,331,857
                                                                                             ------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
         BILTMORE MONEY MARKET FUND STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                              Year Ended November 30,       1994             1993
<S>                                                                    <C>              <C>
- -------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income                                                  $     6,331,857  $     4,207,488
                                                                       ---------------  ---------------
Distributions to Shareholders--
Dividends to shareholders from net investment income:
     Institutional Shares                                                   (5,146,447)      (4,068,438)
     Investment Shares                                                      (1,185,410)        (139,050)
                                                                       ---------------  ---------------
          Change in net assets from distributions to shareholders           (6,331,857)      (4,207,488)
                                                                       ---------------  ---------------
Fund Share (Principal) Transactions--
Net proceeds from sales of shares                                          479,663,256      523,338,578
Cost of shares redeemed                                                   (481,257,539)    (424,210,993)
                                                                       ---------------  ---------------
     Change in net assets from Fund share transactions                      (1,594,283)      99,127,585
                                                                       ---------------  ---------------
          Change in net assets                                              (1,594,283)      99,127,585
Net Assets:
Beginning of period                                                        186,932,159       87,804,574
                                                                       ---------------  ---------------
End of period                                                          $   185,337,876  $   186,932,159
                                                                       ---------------  ---------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
          BILTMORE TAX-FREE MONEY MARKET FUND PORTFOLIO OF INVESTMENTS

                               NOVEMBER 30, 1994


<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
  Principal                                                                     Moody's
   Amount                                                                       or S&P*       Value
<C>            <S>                                                             <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--96.3%
               ALABAMA--6.0%
$   3,210,000  Alabama, HFA, Weekly VRDNs Revenue Refunding Bonds (Series A &
               D)/(SouthTrust Bank of Alabama LOC)                             A-1        $    3,210,000
    5,000,000  Birmingham, AL, Weekly VRDNs GO UT Refunding Bonds (Series
               1992-A)/(First Alabama Bank LOC)                                SP-1+           5,000,000
                                                                                          --------------
               Total                                                                           8,210,000
                                                                                          --------------
               ARKANSAS--3.1%
    1,300,000  Arkansas Hospital Equipment Finance Authority, Weekly VRDNs
               Revenue Bonds (Credit Suisse LOC)                               A-1+            1,300,000
      725,000  Fayetteville, AR Public Facility, Weekly VRDNs Revenue
               Refunding Bonds (Charter Vista Hospital)/(Mitsubishi Bank Ltd.
               LOC)                                                            VMIG1             725,000
    2,200,000  University of Arkansas, Weekly VRDNs Revenue Bonds
               (Law & Medical School Project)/(First Union LOC)                A-1+            2,200,000
                                                                                          --------------
               Total                                                                           4,225,000
                                                                                          --------------
               CALIFORNIA--0.7%
    1,000,000  Orange County, CA, Monthly VRDNs Revenue Bonds
               (Series B) RANs and TANs                                        MIG1            1,000,000
                                                                                          --------------
               CONNECTICUT--1.6%
    2,200,000  Connecticut State Economic Recovery Notes, Weekly VRDNs GO UT
               Refunding Bonds (Series B)/(Industrial Bank Japan SPA)          VMIG1           2,200,000
                                                                                          --------------
               FLORIDA--13.3%
    1,800,000  Bay County, FL, Hospital System Revenue, Daily VRDNs (Bay
               Medical Center Project)/(Citibank, NY LOC)                      MIG1            1,800,000
    5,000,000  Broward County, FL, HFA, Weekly VRDNs Revenue Bonds (Welleby
               Apt. Project)/(Security Pacific National Bank LOC)              VMIG1           5,000,000
    4,100,000  Collier County, FL, HFA, Weekly VRDNs Revenue Bonds (River
               Beach Project)/(Morgan Guaranty LOC)                            VMIG1           4,100,000
      900,000  Florida Escambia County Facility Authority, IDR, Monthly VRDNs
               Revenue Refunding Bonds (Florida Convalescent Center
               Project)/(Series A)/(Toronto Dominion LOC)                      P-1               900,000
    1,500,000  Martin County, FL, School District, 4.35% TANs, 6/30/95         MIG1            1,503,761
    2,000,000  Palm Beach County, FL, School District, 4.75%, 9/13/95          MIG1            2,012,053
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
  Principal                                                                     Moody's
   Amount                                                                       or S&P*       Value
<C>            <S>                                                             <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
               FLORIDA--CONTINUED
$     850,000  Polk County, FL, IDA, Monthly VRDNs Revenue Refunding Bonds
               (Florida Convalescent Center Project)/(Toronto Dominion LOC)    P-1        $      850,000
    2,000,000  St. Lucie County, FL, 3.20% (Florida Power & Light Project),
               1/30/95                                                         VMIG1           2,000,000
                                                                                          --------------
               Total                                                                          18,165,814
                                                                                          --------------
               GEORGIA--12.0%
    3,000,000  Burke County, GA, Development Pollution Authority, 3.60%-3.80%
               Revenue Refunding Bonds (Oglethorpe Power Corp.
               Project)/(Series A), 1/24/95-2/23/95 (Credit Suisse LOC)        P-1             3,000,000
    4,000,000  Cobb County, GA, 3.50% GO UT Bonds, TANs, 12/30/94              SP-1+           4,001,865
    5,000,000  De Kalb Private Hospital Authority, GA Weekly VRDNs (Engleston
               Childrens' Hospital)/(Series B)/(Trust Company Bank LOC)        A-1+            5,000,000
    1,500,000  Georgia State, 6.75% GO UT Bonds (Series E), 12/1/95                            1,529,940
    1,895,000  Marietta, GA, HFA, VRDNs Revenue Bonds (Falls at Bells
               Ferry)/(Guardian S&L LOC)                                       VMIG1           1,895,000
    1,000,000  Newton County, GA, IDA, Weekly VRDNs Refunding Bonds (John H.
               Harland Co. Project)/(NationsBank, GA LOC)                      A-1             1,000,000
                                                                                          --------------
               Total                                                                          16,426,805
                                                                                          --------------
               ILLINOIS--8.1%
    1,000,000  Chicago, IL, School Finance Authority, 7.75% GO UT Refunding
               Bonds, 6/1/95                                                   AAA             1,038,744
    3,000,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
               (Aurora Central Catholic High School)/(Northern Trust Co. LOC)  AA+             3,000,000
    1,000,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
               Refunding Bonds (Catholic Charities Housing)/ (Series
               B)/(National Westminster LOC)                                   VMIG1           1,000,000
    1,500,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
               (Little City Foundation Special Facilities)/(LaSalle National
               Bank LOC)                                                       AA+             1,500,000
    1,500,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
               (St. Ignatius College Prep.)/(Northern Trust Co. LOC)           A-1+            1,500,000
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
  Principal                                                                     Moody's
   Amount                                                                       or S&P*       Value
<C>            <S>                                                             <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
               ILLINOIS--CONTINUED
$   3,000,000  Illinois State Toll Highway Authority, Weekly VRDNs Revenue
               Refunding Bonds (Series B)/(Societe Generale LOC)               VMIG1      $    3,000,000
                                                                                          --------------
               Total                                                                          11,038,744
                                                                                          --------------
               INDIANA--1.7%
    2,300,000  Indianapolis, IN, Weekly VRDNs Revenue Refunding Bonds (Canal
               Square Project)/(Societe Generale LOC)                          VMIG1           2,300,000
                                                                                          --------------
               IOWA--0.5%
      600,000  Indianola, IA, IDR, Monthly VRDNs Revenue Bonds
               (HY-VEE Foods)/(Rabobank Nederland LOC)                         A-1+              600,000
                                                                                          --------------
               KANSAS--1.6%
    2,175,000  Topeka, KS, 4.50% GO UT Bonds (Series A), 6/1/95                MIG1            2,183,828
                                                                                          --------------
               KENTUCKY--0.7%
      900,000  City of Georgetown, KY, Educational Institutional Weekly VRDNs
               Revenue Bonds (Georgetown College Project)/(PNC Bank, KY LOC)   VMIG1             900,000
                                                                                          --------------
               LOUISIANA--5.9%
    1,700,000  Calcasieu Parish, LA, Weekly VRDNs Revenue Bonds (Citgo
               Petroleum Corp.)/(Sumitomo Bank LOC)                            A1              1,700,000
    2,800,000  Lake Charles, LA Harbor & Terminal District, Weekly VRDNs
               Revenue Bonds (Citgo Petroleum Corp.)/(National Westminster
               Bank LOC)                                                       P-1             2,800,000
    3,600,000  Louisiana State Recovery District Sales Tax Revenue, Daily
               VRDNs (Swiss Bank SPA)                                          VMIG1           3,600,000
                                                                                          --------------
               Total                                                                           8,100,000
                                                                                          --------------
               MARYLAND--4.4%
    6,000,000  Maryland State Health and Higher Education Facility Anne
               Arundel Hospital, Weekly VRDNs Revenue Bonds
               (Series B)/(Mellon Bank LOC)                                    VMIG1           6,000,000
                                                                                          --------------
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
  Principal                                                                     Moody's
   Amount                                                                       or S&P*       Value
<C>            <S>                                                             <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
               MASSACHUSETTS--3.4%
$   1,600,000  Massachusetts State, Daily VRDNs GO UT Bonds
               (Series D)/(ABN-AMRO LOC)                                       VMIG1      $    1,600,000
    3,000,000  Massachusetts Municipal Wholesale Electric Co., Weekly VRDNs
               Supply System Revenue Refunding Bonds (Series C)/(Canadian
               Imperial Bank LOC)                                              A-1+            3,000,000
                                                                                          --------------
               Total                                                                           4,600,000
                                                                                          --------------
               MINNESOTA--1.5%
    2,020,000  Minnesota State, 6.60% GO UT Refunding Bonds, 8/1/95            Aa1             2,053,251
                                                                                          --------------
               NEW YORK--0.7%
    1,000,000  New York, NY, Daily VRDNs GO UT Refunding Bonds (Morgan
               Guaranty LOC)                                                   VMIG1           1,000,000
                                                                                          --------------
               NORTH CAROLINA--1.8%
    2,500,000  North Carolina Eastern Municipal Power, 3.55% Revenue Bonds
               (Series B), 1/9/95, (UBS & Morgan Guaranty LOC)                 A-1+            2,500,000
                                                                                          --------------
               OHIO--0.7%
    1,000,000  Centerville, OH, Healthcare Revenue, Weekly VRDNs (Bethany
               Lutheran Village Project)/(PNC Bank LOC)                        VMIG1           1,000,000
                                                                                          --------------
               PENNSYLVANIA--6.3%
    3,600,000  Allegheny County, PA, Port Authority, 4.10% GANs, 7/3/95 (PNC
               Bank LOC)                                                       MIG1            3,600,111
    2,000,000  Pennsylvania State University, 3.00%, 12/5/94                   SP-1+           2,000,057
    2,000,000  Philadelphia, PA, 4.75% GO UT Bonds (Series A) RANs and TANs,
               6/15/95, (Canadian Imperial Bank LOC)                           MIG1            2,008,800
    1,000,000  Sewickley Valley Hospital Authority, PA, 3.00% Revenue
               Refunding Bonds (Series B), 12/15/94 (PNC Bank LOC)             VMIG1           1,000,139
                                                                                          --------------
               Total                                                                           8,609,107
                                                                                          --------------
               TENNESSEE--7.4%
    3,000,000  Metro Government Nashville & Davidson County, TN, IDB, Weekly
               VRDNs Revenue Bonds (Arbor Crest)/(Series B)/ (Chemical Bank,
               NY LOC)                                                         VMIG1           3,000,000
    2,000,000  Metro Government Nashville & Davidson County, TN, Health and
               Education Facilities, Weekly VRDNs Revenue Refunding Bonds
               (West Meade Place Project)/(NationsBank, GA LOC)                A-1             2,000,000
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
  Principal                                                                     Moody's
   Amount                                                                       or S&P*       Value
<C>            <S>                                                             <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
               TENNESSEE--CONTINUED
$   5,100,000  Tennessee State, Weekly VRDNs GO UT Bonds (Series B) BANs       VMIG1      $    5,100,000
                                                                                          --------------
               Total                                                                          10,100,000
                                                                                          --------------
               TEXAS--7.3%
    1,000,000  Fort Worth, TX, 8.70% GO LT Refunding Bonds, 3/1/95             AAA             1,013,366
    3,000,000  Lower Neches Valley Authority, TX, 3.50% Revenue Refunding
               Bonds (Chevron USA, Inc. Project), 2/15/95                      A-1+            3,000,000
    1,000,000  San Antonio, TX, 8.30% GO LT Refunding Bonds, 8/1/95            AAA             1,027,885
    1,860,000  **San Antonio, TX, Electric & Gas Revenue, 9.60%, 2/1/95        AAA             1,907,317
    3,000,000  Texas State, Weekly VRDNs                                       MIG1            3,000,000
                                                                                          --------------
               Total                                                                           9,948,568
                                                                                          --------------
               VIRGINIA--4.0%
    1,500,000  **Harrisonburg, VA, HFA, 2.75% Revenue Bonds (Rolling Brook
               Village Apartments)/(Series A)/(Guardian S&L LOC),
               2/1/95                                                          VMIG1           1,500,000
    3,000,000  Peninsula Ports Authority, VA, Daily VRDNs Revenue Refunding
               Bonds (Port Facility-Shell Oil Co.)                             AAA             3,000,000
    1,000,000  Virginia State, HSG Dev. Auth., 4.25% Revenue Bonds (Series
               D), 7/12/95                                                     VMIG1           1,000,000
                                                                                          --------------
               Total                                                                           5,500,000
                                                                                          --------------
               WASHINGTON--2.2%
    3,000,000  Port Anacortes, WA, IDA, 3.95% Revenue Refunding Bonds (Texaco
               Project), 2/15/95                                               P-1             3,000,000
                                                                                          --------------
               WISCONSIN--0.7%
    1,000,000  West Allis Milwaukee, WI, 5.00% GO UT Bonds, RANs & TANs,
               8/22/95                                                         MIG1            1,006,631
                                                                                          --------------
               WYOMING--0.7%
    1,000,000  **Unita County, WY, Pollution Control Revenue, 3.75% (Chevron
               USA, Inc. Project), 6/15/95                                     P-1             1,000,000
                                                                                          --------------
               Total Short-Term Municipal Securities                                         131,667,748
                                                                                          --------------
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
   Shares                                                                                     Value
<C>            <S>                                                             <C>        <C>
- --------------------------------------------------------------------------------------------------------
Regulated Investment Companies--4.4%
    5,932,526  Fidelity Tax-Exempt Money Market Fund Instruments
               Portfolio (at net asset value)                                             $    5,932,526
                                                                                          --------------
               Total Investments, at amortized cost and value                             $  137,600,274+
                                                                                          --------------
</TABLE>


  On December 6, 1994, Orange County, California filed for protection under
  Chapter 9 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in Santa
  Ana, California. On December 7, 1994, Wachovia Corp. purchased the indicated
  security from the Fund's portfolio of investments at its amortized cost,
  resulting in no loss to the Fund or its shareholders.


+ Also represents cost for federal tax purposes.


         * Please refer to the Appendix of the Combined Statement of Additional
           Information for an explanation of the credit ratings. Current credit
           ratings are unaudited.


        ** Denotes variable rate securities which show current rate and next
           demand date.

Note: The categories of investments are shown as a percentage of net assets
($136,687,018) at
     November 30, 1994.

The following abbreviations are used throughout this portfolio:

BANs--Bond Anticipation Notes
GANs--Grant Anticipation Notes
GO--General Obligation
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Board
IDR--Industrial Development Revenue
LOC--Letter(s) of Credit
LT--Limited Tax
RANs--Revenue Anticipation Notes
SPA--Standby Purchase Agreement
TANs--Tax Anticipation Notes
UT--Unlimited Tax
VRDNs--Variable Rate Demand Notes

(See Notes which are an integral part of the Financial Statements)

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND
                      STATEMENT OF ASSETS AND LIABILITIES

                               NOVEMBER 30, 1994

<TABLE>
<S>                                                                         <C>           <C>
Assets:
Investments, at amortized cost and value                                                  $  137,600,274
Cash                                                                                              17,117
Interest receivable                                                                              972,051
Deferred expenses                                                                                 11,321
                                                                                          --------------
     Total assets                                                                            138,600,763
Liabilities:
Payable for investments purchased                                           $  1,533,878
Dividends payable                                                                342,201
Accrued expenses                                                                  37,666
                                                                            ------------
     Total liabilities                                                                         1,913,745
                                                                                          --------------
Net Assets for 136,687,018 shares of beneficial interest outstanding                      $  136,687,018
                                                                                          --------------
Net Asset Value, Offering Price, and Redemption Proceeds Per Share:
Institutional Shares ($93,866,997 / 93,866,997 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
Investment Shares ($42,820,021 / 42,820,021 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
          BILTMORE TAX-FREE MONEY MARKET FUND STATEMENT OF OPERATIONS

                          YEAR ENDED NOVEMBER 30, 1994

<TABLE>
<S>                                                                <C>         <C>           <C>
Investment Income:
Interest income                                                                              $  3,466,650
Expenses:
Investment advisory fee                                                        $    620,752
Trustees' fees                                                                        5,447
Administrative personnel and services fees                                          124,799
Custodian fees                                                                       24,830
Transfer and dividend disbursing agent fees and expenses                             52,855
Fund share registration costs                                                        35,102
Auditing fees                                                                        15,373
Legal fees                                                                           18,482
Printing and postage                                                                 39,391
Portfolio accounting fees                                                            51,896
Insurance premiums                                                                   13,213
Distribution services fee                                                           139,886
Miscellaneous                                                                        16,448
                                                                               ------------
     Total expenses                                                               1,158,474
Deduct--
  Waiver of investment advisory fee                                $  463,428
  Waiver of administrative personnel and services fees                 31,039
  Waiver of distribution services fee                                  34,972
  Reimbursement of other operating expenses by administrator           57,028       586,467
                                                                   ----------  ------------
     Net expenses                                                                                 572,007
                                                                                             ------------
          Net investment income                                                              $  2,894,643
                                                                                             ------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND
                       STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                Year Ended November 30,       1994             1993
<S>                                                                      <C>              <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income                                                    $     2,894,643  $     1,687,496
                                                                         ---------------  ---------------
Distributions to Shareholders--
Dividends to shareholders from net investment income:
     Institutional Shares                                                     (2,150,380)      (1,400,375)
     Investment Shares                                                          (744,263)        (287,121)
                                                                         ---------------  ---------------
          Change in net assets from distributions to shareholders             (2,894,643)      (1,687,496)
                                                                         ---------------  ---------------
Fund Share (Principal) Transactions--
Proceeds from sale of shares                                                 263,497,759      202,842,602
Cost of shares redeemed                                                     (210,055,320)    (186,567,848)
                                                                         ---------------  ---------------
     Change in net assets from Fund share transactions                        53,442,439       16,274,754
                                                                         ---------------  ---------------
          Change in net assets                                                53,442,439       16,274,754
Net Assets:
Beginning of period                                                           83,244,579       66,969,825
                                                                         ---------------  ---------------
End of period                                                            $   136,687,018  $    83,244,579
                                                                         ---------------  ---------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                            PORTFOLIO OF INVESTMENTS

                               NOVEMBER 30, 1994

<TABLE>
<CAPTION>
  Principal
   Amount                                                                                     Value
<C>            <S>                                                                        <C>
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations--48.9%
               U.S. TREASURY BILLS--48.9%
$  66,000,000  1/5/95-3/9/95                                                              $   65,453,242
                                                                                          --------------
*Repurchase Agreements--51.5%
   31,980,653  Goldman Sachs & Co., 5.65%, dated 11/30/94, due 12/1/94                        31,980,653
   31,000,000  Daiwa Securities America, Inc., 5.72%, dated 11/30/94, due 12/1/94             31,000,000
    6,000,000  Morgan Stanley & Co., 5.65%, dated 11/30/94, due 12/1/94                        6,000,000
                                                                                          --------------
               Total Repurchase Agreements                                                    68,980,653
                                                                                          --------------
               Total Investments, at amortized cost and value                             $  134,433,895+
                                                                                          --------------
</TABLE>

+ Also represents cost for federal tax purposes.

* Repurchase agreements are fully collateralized by U.S. Treasury obligations
  based on market prices at the date of the portfolio.

Note: The categories of investments are shown as a percentage of net assets
      ($133,927,588) at November 30, 1994.

(See Notes which are an integral part of the Financial Statements)

================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                      STATEMENT OF ASSETS AND LIABILITIES

                               NOVEMBER 30, 1994

<TABLE>
<S>                                                                        <C>            <C>
Assets:
Investments in repurchase agreements                                       $  68,980,653
Investments in securities                                                     65,453,242
                                                                           -------------
     Total investments, at amortized cost and value                                       $  134,433,895
Interest receivable                                                                               10,886
Deferred expenses                                                                                  9,104
                                                                                          --------------
     Total assets                                                                            134,453,885
Liabilities:
Dividends payable                                                                462,413
Accrued expenses                                                                  63,884
                                                                           -------------
     Total liabilities                                                                           526,297
                                                                                          --------------
Net Assets for 133,927,588 shares of beneficial interest outstanding                      $  133,927,588
                                                                                          --------------
Net Asset Value, Offering Price, and Redemption Proceeds Per Share:
Institutional Shares ($87,531,434 / 87,531,434 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
Investment Shares ($46,396,154 / 46,396,154 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                            STATEMENT OF OPERATIONS

                          YEAR ENDED NOVEMBER 30, 1994

<TABLE>
<S>                                                                 <C>         <C>         <C>
Investment Income:
Interest income                                                                             $  4,087,226
Expenses:
Investment advisory fee                                                         $  501,363
Trustees' fees                                                                       3,381
Administrative personnel and services fees                                          98,959
Custodian fees                                                                      20,054
Transfer and dividend disbursing agent fees and expenses                            57,810
Fund share registration costs                                                       42,008
Auditing fees                                                                       15,400
Legal fees                                                                          13,525
Printing and postage                                                                38,030
Portfolio accounting fees                                                           51,353
Insurance premiums                                                                  12,948
Distribution services fees                                                         104,760
Miscellaneous                                                                       15,534
                                                                                ----------
     Total expenses                                                                975,125
Deduct--
  Waiver of investment advisory fee                                 $  432,458
  Waiver of administrative personnel and services fees                  25,319
  Waiver of distribution services fees                                  26,139
  Reimbursement of other operating expenses by Administrator            57,893     541,809
                                                                    ----------  ----------
     Net expenses                                                                                433,316
                                                                                            ------------
          Net investment income                                                             $  3,653,910
                                                                                            ------------
</TABLE>


(See Notes which are an integral part of the Financial Statements)



================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                       STATEMENT OF CHANGES IN NET ASSETS


<TABLE>
<CAPTION>
                                                Year Ended November 30,       1994             1993
<S>                                                                      <C>              <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income                                                    $     3,653,910  $     1,900,006
                                                                         ---------------  ---------------
Distributions to Shareholders--
Dividends to shareholders from net investment income:
     Institutional Shares                                                     (2,707,306)      (1,826,489)
     Investment Shares                                                          (946,604)         (73,517)
                                                                         ---------------  ---------------
          Change in net assets from distributions to shareholders             (3,653,910)      (1,900,006)
                                                                         ---------------  ---------------
Fund Share (Principal) Transactions--
Proceeds from sale of shares                                                 448,524,970      288,944,990
Cost of shares redeemed                                                     (396,891,742)    (262,058,559)
                                                                         ---------------  ---------------
     Change in net assets from Fund share transactions                        51,633,228       26,886,431
                                                                         ---------------  ---------------
          Change in net assets                                                51,633,228       26,886,431
Net Assets:
Beginning of period                                                           82,294,360       55,407,929
                                                                         ---------------  ---------------
End of period                                                            $   133,927,588  $    82,294,360
                                                                         ---------------  ---------------
</TABLE>


(See Notes which are an integral part of the Financial Statements)


================================================================================

                          BILTMORE MONEY MARKET FUNDS
                     COMBINED NOTES TO FINANCIAL STATEMENTS


                               NOVEMBER 30, 1994


(1) ORGANIZATION


The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present those of the Biltmore Money Market Fund (Money Market
Fund), Biltmore Tax-Free Money Market Fund (Tax-Free Fund), and Biltmore U.S.
Treasury Money Market Fund (U.S. Treasury Fund), (each referred to as "Fund,"
and collectively as the "Funds"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are
segregated, and a shareholder's interest is limited to the portfolio in which
shares are held.



The Funds offer two classes of shares: Institutional Shares and Investment
Shares. Investment Shares are identical in all respects to Institutional Shares,
except that Investment Shares are sold pursuant to a Distribution Plan (the
"Plan") adopted in accordance with the Act's Rule 12b-1.


(2) SIGNIFICANT ACCOUNTING POLICIES


The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.



A.   INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
     their portfolio securities is in accordance with Rule 2a-7 under the Act.



B.   REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
     custodian bank to take possession, to have legally segregated in the
     Federal Reserve Book Entry System, or to have segregated within the
     custodian bank's vault, all securities held as collateral in support of
     repurchase agreement investments. Additionally, procedures have been
     established by the Funds to monitor, on a daily basis, the market value of
     each repurchase agreement's collateral to ensure the value of collateral at
     least equals the principal amount of the repurchase transaction including
     accrued interest.


     The Funds will only enter into repurchase agreements with banks and other
     recognized financial institutions, such as broker/dealers, which are deemed
     by the Funds' adviser to be creditworthy pursuant to guidelines established
     by the Board of Trustees (the "Trustees").

C.   INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
     are accrued daily. Bond premium and discount, if applicable, are amortized
     as required by the Internal Revenue Code, as amended (the "Code").
     Distributions to shareholders are recorded on the ex-dividend date.


D.   FEDERAL TAXES--It is each Fund's policy to comply with the provisions of
     the Code applicable to regulated investment companies and to distribute to
     shareholders each year substantially all of their income. Accordingly, no
     provisions for federal tax are necessary.


E.   WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
     when-issued or delayed delivery transactions. The Funds record when-issued
     securities on the trade date and maintain security positions such that
     sufficient liquid assets will be available to make payment for the
     securities purchased. Securities purchased on a when-issued or delayed
     delivery basis are marked to market daily and begin earning interest on the
     settlement date.

F.   DEFERRED EXPENSES--The costs incurred by each Fund with respect to
     registration of its shares in its first fiscal year, excluding the initial
     expense of registering the shares, have been deferred and are being
     amortized using the straight-line method not to exceed a period of five
     years from each Fund's commencement date.

G.   OTHER--Investment transactions are accounted for on the trade date.

================================================================================
                          BILTMORE MONEY MARKET FUNDS

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At November 30, 1994, capital paid-in for the Money Market
Fund, Tax-Free Fund and U.S. Treasury Fund aggregated $185,337,876,
$136,687,018, and $133,927,588, respectively. Transactions in Fund shares were
as follows:

<TABLE>
<CAPTION>
Money Market Fund
<S>                                                                             <C>          <C>
   Institutional Shares                                         Year Ended
                                 November 30,                                      1994         1993
- --------------------------------------------------------------------------------------------------------
Shares sold                                                                     385,548,512  508,765,112
Shares redeemed                                                                 (433,405,663) (416,373,470)
                                                                                -----------  -----------
  Net change resulting from Institutional Share transactions                    (47,857,151)  92,391,642
                                                                                -----------  -----------

<CAPTION>

Tax-Free Fund
   Institutional Shares                                         Year Ended
                                 November 30,                                      1994         1993
<S>                                                                             <C>          <C>
- --------------------------------------------------------------------------------------------------------
Shares sold                                                                     175,432,174  157,797,806
Shares redeemed                                                                 (140,833,740) (160,161,423)
                                                                                -----------  -----------
  Net change resulting from Institutional Share transactions                     34,598,434   (2,363,617)
                                                                                -----------  -----------
<CAPTION>

U.S. Treasury Fund
   Institutional Shares                                         Year Ended
                                 November 30,                                      1994         1993
<S>                                                                             <C>          <C>
- --------------------------------------------------------------------------------------------------------
Shares sold                                                                     337,402,499  268,967,543
Shares redeemed                                                                 (315,224,009) (259,022,528)
                                                                                -----------  -----------
  Net change resulting from Institutional Share transactions                     22,178,490    9,945,015
                                                                                -----------  -----------
<CAPTION>

Money Market Fund
Investment Shares                                          Year Ended November
                                     30,                                           1994         1993
<S>                                                                             <C>          <C>
- --------------------------------------------------------------------------------------------------------
Shares sold                                                                      94,114,744   14,573,466
Shares redeemed                                                                 (47,851,876)  (7,837,523)
                                                                                -----------  -----------
  Net change resulting from Investment Share transactions                        46,262,868    6,735,943
                                                                                -----------  -----------
    Total net change resulting from Fund share transactions                      (1,594,283)  99,127,585
                                                                                -----------  -----------
<CAPTION>

Tax Free Fund
Investment Shares                                          Year Ended November
                                     30,                                           1994         1993
<S>                                                                             <C>          <C>
- --------------------------------------------------------------------------------------------------------
Shares sold                                                                      88,065,585   45,044,796
Shares redeemed                                                                 (69,221,580) (26,406,425)
                                                                                -----------  -----------
  Net change resulting from Investment Share transactions                        18,844,005   18,638,371
                                                                                -----------  -----------
    Total net change resulting from Fund share transactions                      53,442,439   16,274,754
                                                                                -----------  -----------
<CAPTION>

U.S. Treasury Fund
Investment Shares                                          Year Ended November
                                     30,                                           1994         1993*
<S>                                                                             <C>          <C>
- --------------------------------------------------------------------------------------------------------
Shares sold                                                                     111,122,471   19,977,447
Shares redeemed                                                                 (81,667,733)  (3,036,031)
                                                                                -----------  -----------
  Net change resulting from Investment Share transactions                        29,454,738   16,941,416
                                                                                -----------  -----------
    Total net change resulting from Fund share transactions                      51,633,228   26,886,431
                                                                                -----------  -----------
</TABLE>


*_ For the period from May 12, 1993 (date of initial public investment) to
   November 30, 1993.


(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES


INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.50 of 1% of each Fund's


================================================================================
                          BILTMORE MONEY MARKET FUNDS

average daily net assets. The Adviser may voluntarily choose to waive a portion
of its fee. The Adviser can modify or terminate this voluntary waiver at any
time at its sole discretion.



ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse a portion of each Fund's other operating expenses. FAS can modify
or terminate the voluntary waiver and reimbursement at any time at its sole
discretion.



DISTRIBUTION PLAN--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, each Fund
will compensate Federated Securities Corp. ("FSC"), the principal distributor,
from its net assets to finance activities intended to result in the sale of each
Fund's Investment Shares. The Plan provides that each Fund may incur
distribution expenses up to 0.40 of 1% of the average daily net assets of its
Investment Shares, annually, to compensate FSC. The distributor may voluntarily
choose to waive a portion of its fee. The distributor can modify or terminate
this voluntary waiver at any time at its sole discretion.

TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Funds for which it is paid a fee. The FServ fee is based on the size, type,
and number of accounts and transactions made by shareholders.

FServ also maintains the Funds' accounting records for which it is paid a fee.
The fee is based on the level of the Funds' average net assets for the period,
plus out-of-pocket expenses.


Wachovia Bank of North Carolina, N.A. is the Funds' custodian for which it is
paid a fee. The fee is based on the level of each Fund's average net assets for
the period, plus out-of-pocket expenses.

ORGANIZATIONAL EXPENSES--Organizational expenses for the Money Market Fund,
Tax-Free Fund and U.S. Treasury Fund of $65,357, $59,661, and $33,032,
respectively, were borne initially by FAS. The Funds have agreed to reimburse
FAS for the organizational expenses during the five year period following the
date that each Fund's registration statement became effective. For the fiscal
year ended November 30, 1994, the Money Market Fund, Tax-Free Fund and U.S.
Treasury Fund paid $13,270, $12,360 and $9,718, respectively, pursuant to this
agreement.

Certain of the Officers of the Trust are Officers and Directors or Trustees of
the above companies.

================================================================================
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Trustees and Shareholders of
THE BILTMORE FUNDS:


We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Biltmore Money Market Fund, Biltmore Tax-Free
Money Market Fund and Biltmore U.S. Treasury Money Market Fund (portfolios of
The Biltmore Funds) as of November 30, 1994, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial highlights (see
pages 4, 5, 6, 25, 26, & 27 of this prospectus) for the periods presented. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.


We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements 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 included confirmation of securities owned as of
November 30, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.


In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Money Market Fund, Biltmore Tax-Free Money Market Fund and Biltmore
U.S. Treasury Money Market Fund of The Biltmore Funds at November 30, 1994, and
the results of their operations for the year then ended, changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for the periods presented, in conformity with generally accepted
accounting principles.


                                                               ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 12, 1995



================================================================================
                                  ADDRESSES
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
  INVESTMENT SHARES
BILTMORE TAX-FREE MONEY MARKET FUND        Federated Investors Tower
  INVESTMENT SHARES                        Pittsburgh, Pennsylvania 15222-3779
BILTMORE U.S. TREASURY MONEY MARKET FUND
  INVESTMENT SHARES

- --------------------------------------------------------------------------------
DISTRIBUTOR                                Federated Securities Corp.
                                           Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779

- --------------------------------------------------------------------------------
INVESTMENT ADVISER                         Wachovia Investment Management Group
                                           301 North Main Street
                                           Winston-Salem, N.C. 27150

- --------------------------------------------------------------------------------
CUSTODIAN                                  Wachovia Bank of North Carolina, N.A.
                                           Wachovia Trust Operations
                                           301 North Main Street
                                           Winston-Salem, N.C. 27150

- --------------------------------------------------------------------------------
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, Federated Services Company
AND PORTFOLIO ACCOUNTING SERVICES          Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779

- --------------------------------------------------------------------------------
COUNSEL TO THE BILTMORE FUNDS              Kirkpatrick & Lockhart
                                           1800 M Street, N.W.
                                           Washington, D.C. 20036-5891

- --------------------------------------------------------------------------------
COUNSEL TO THE INDEPENDENT TRUSTEES        Piper & Marbury
                                           1200 Nineteenth Street, N.W.
                                           Washington, D.C. 20036-2430

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

INDEPENDENT AUDITORS                       Ernst & Young LLP
                                           One Oxford Centre
                                           Pittsburgh, Pennsylvania 15219


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

THE BILTMORE SERVICE CENTER                101 Greystone Boulevard,
                                           SC-9215
                                           Columbia, South Carolina 29226


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

                          BILTMORE MONEY MARKET FUND
                     BILTMORE TAX-FREE MONEY MARKET FUND
                   BILTMORE U.S. TREASURY MONEY MARKET FUND


                 DIVERSIFIED PORTFOLIOS OF THE BILTMORE FUNDS
                  An Open-End Management Investment Company

                                                                       090297201
                                                                       090297409
                                                                       090297888
January 31, 1995                                                 3042106A (1/95)



                                  PROSPECTUS
                               JANUARY 31, 1995


The Institutional Shares of Biltmore U.S. Treasury Money Market Fund (the
``Fund'') offered by this prospectus represent interests in a diversified
portfolio of securities which is one of a series of investment portfolios in The
Biltmore Funds (the ``Trust''), an open-end, management investment company (a
mutual fund).


AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.


The investment objective of the Fund is to provide current income consistent
with stability of principal and liquidity. The Fund seeks to achieve its
objective by investing in a portfolio of short-term U.S. Treasury obligations
with an average maturity of 90 days or less.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY, WACHOVIA BANK OF NORTH CAROLINA, N.A. OR ITS
AFFILIATES OR SUBSIDIARIES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (``FDIC''), THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT
AGENCY.

This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.

                                   BILTMORE
                       U.S. TREASURY MONEY MARKET FUND
                     (A PORTFOLIO OF THE BILTMORE FUNDS)
                             INSTITUTIONAL SHARES


The Fund has also filed a Combined Statement of Additional Information for
Institutional Shares and Investment Shares, dated January 31, 1995, with the
Securities and Exchange Commission. The information contained in the Combined
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, purchase Institutional Shares, or obtain other
information about the Fund by writing to the Fund or calling your Wachovia Bank
(as defined herein) account officer.


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.


================================================================================

                                TABLE OF CONTENTS

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

SUMMARY OF FUND EXPENSES                                                       1

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

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES                                     2

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

GENERAL INFORMATION                                                            3

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

INVESTMENT INFORMATION                                                         3

Investment Objective                                                           3

Investment Policies                                                            3

  Acceptable Investments                                                       3

  Repurchase Agreements                                                        3

  Investing in Securities of

     Other Investment Companies                                                4

  When-Issued and Delayed Delivery

     Transactions                                                              4

  Lending of Portfolio Securities                                              4

Investment Limitation                                                          4

Regulatory Compliance                                                          4

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

THE BILTMORE FUNDS INFORMATION                                                 5

Management of the Trust                                                        5

  Board of Trustees                                                            5

  Investment Adviser                                                           5

     Advisory Fees                                                             5

     Adviser's Background                                                      5

Distribution of Institutional Shares                                           5

Administration of the Fund                                                     5

  Administrative Services                                                      5

  Custodian                                                                    6

  Transfer Agent, Dividend Disbursing

     Agent, and Portfolio Accounting

     Services                                                                  6

  Legal Services                                                               6

  Independent Auditors                                                         6

Expenses of the Fund

  and Institutional Shares                                                     6

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

NET ASSET VALUE                                                                6

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

INVESTING IN INSTITUTIONAL SHARES                                              7

Share Purchases                                                                7
  Through the Wachovia Banks                                                   7
  Via a Sweep Account                                                          7
Minimum Investment Required                                                    7
What Shares Cost                                                               7
Certificates and Confirmations                                                 7
Dividends                                                                      8
Capital Gains                                                                  8
- ---------------------------------------------------
EXCHANGES                                                                      8
- ---------------------------------------------------
REDEEMING INSTITUTIONAL SHARES                                                 8
  By Telephone                                                                 8
- ---------------------------------------------------
SHAREHOLDER INFORMATION                                                        9
Voting Rights                                                                  9
Massachusetts Business Trusts                                                  9
- ---------------------------------------------------
EFFECT OF BANKING LAWS                                                         9
- ---------------------------------------------------
TAX INFORMATION                                                               10
- ---------------------------------------------------
PERFORMANCE INFORMATION                                                       10
- ---------------------------------------------------
OTHER CLASSES OF SHARES                                                       11
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES                                       12
- ---------------------------------------------------
FINANCIAL STATEMENTS                                                          13
- ---------------------------------------------------

REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS                                                          20

- ---------------------------------------------------
ADDRESSES                                                             BACK COVER

================================================================================
                            SUMMARY OF FUND EXPENSES

                              INSTITUTIONAL SHARES
                        SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S>                                                                                               <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)                            None
Maximum Sales Load Imposed on Reinvested Dividends
  (as a percentage of offering price)                                                                  None
Contingent Deferred Sales Charge (as a percentage of original
  purchase price or redemption proceeds, as applicable)                                                None
Redemption Fees (as a percentage of amount redeemed, if applicable)                                    None
Exchange Fee                                                                                           None
</TABLE>

                 ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
                    (As a percentage of average net assets)

<TABLE>
<S>                                                                                               <C>
Management Fee (after waiver) (1)                                                                     0.05%
12b-1 Fees                                                                                             None
Other Expenses                                                                                        0.27%
          Total Institutional Shares Operating Expenses (after waiver) (2)                        0.32%
</TABLE>


(1)  The management fee has been reduced to reflect the voluntary waiver by the
     investment adviser. The adviser can terminate this voluntary waiver at any
     time at its sole discretion. The maximum management fee is 0.50%.



(2)  The Annual Institutional Shares Operating Expenses were 0.36% for the
     fiscal year ended
     November 30, 1994. The Annual Institutional Shares Operating Expenses in
     the table above reflect an anticipated reduction in the voluntary waiver
     of the administrative fee for the fiscal year ending November 30, 1995.
     The Annual Institutional Shares Operating Expenses are expected to be
     0.77%, absent the voluntary waiver described above in note 1.


The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Institutional Shares of the Fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "The Biltmore Funds Information" and "Investing
in Institutional Shares."

<TABLE>
<S>                                                                <C>        <C>        <C>        <C>
Example                                                             1 year     3 years    5 years   10 years
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period. As noted in the table above, the Fund charges
no redemption fees for Institutional Shares.                          $3         $10        $18        $41
</TABLE>

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

The information set forth in the foregoing table and example relates only to
Institutional Shares of the Fund. The Fund also offers another class of Shares
called Investment Shares. Investment Shares are subject to certain of the same
expenses with the addition of a maximum 12b-1 fee of 0.40% of the Investment
Shares' average net assets. See "Other Classes of Shares."

================================================================================
  BILTMORE U.S. TREASURY MONEY MARKET FUND FINANCIAL HIGHLIGHTS INSTITUTIONAL
                                     SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)


Reference is made to the Report of Ernst & Young, LLP, Independent Auditors on
page 20.


<TABLE>
<CAPTION>
                                               Year Ended November 30,    1994       1993       1992*
<S>                                                                     <C>        <C>        <C>
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                    $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                      0.04       0.03       0.02
Less distributions
  Dividends to shareholders from net investment income                      (0.04)     (0.03)     (0.02)
                                                                        ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                          $    1.00  $    1.00  $    1.00
                                                                        ---------  ---------  ---------
Total return**                                                               3.70%      2.91%      1.90%
Ratios to Average Net Assets
  Expenses                                                                   0.36%      0.28%      0.17%(a)
  Net investment income                                                      3.72%      2.87%      3.24%(a)
  Expense waiver/reimbursement (b)                                           0.51%      0.63%      0.71%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                 $87,531     $65,353     $55,408
</TABLE>

 * Reflects operations for the period from May 7, 1992 (date of initial public
   investment) to November 30, 1993.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)


================================================================================

                              GENERAL INFORMATION


The Biltmore Funds was established as a Massachusetts business trust under a
Declaration of Trust dated November 19, 1991. The Declaration of Trust permits
the Trust to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. As of the date of this prospectus, the Board
of Trustees (the "Trustees") has established two classes of shares of Biltmore
U.S. Treasury Money Market Fund (the "Fund"), Institutional Shares and
Investment Shares. This prospectus relates only to Institutional Shares of the
Fund.



Institutional Shares are offered only for purchase through the bank subsidiaries
of Wachovia Corporation: Wachovia Bank of North Carolina, N.A., Wachovia Bank of
Georgia, N.A., Wachovia Bank of South Carolina, N.A. and their affiliates
(collectively, the "Wachovia Banks"). Institutional Shares are offered only to
accounts held by the Wachovia Banks in a fiduciary, advisory, agency, custodial,
or similar capacity. The Fund offers a convenient means of participating in a
professionally-managed, diversified portfolio limited to short-term U.S.
Treasury obligations. Investors should consult their account agreement with the
Wachovia Banks for any applicable minimum investment.


The Fund attempts to stabilize the value of a share at $1.00. Institutional
Shares are currently sold and redeemed at that price.


The other portfolios in the Trust are Biltmore Balanced Fund, Biltmore Emerging
Markets Fund, Biltmore Equity Fund, Biltmore Equity Index Fund, Biltmore Fixed
Income Fund, Biltmore Money Market Fund (Institutional and Investment Shares),
Biltmore Prime Cash Management Fund (Institutional Shares), Biltmore
Quantitative Equity Fund, Biltmore Short-Term Fixed Income Fund, Biltmore
Special Values Fund, and Biltmore Tax-Free Money Market Fund (Institutional and
Investment Shares).


================================================================================

                             INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide current income consistent
with stability of principal and liquidity. This investment objective cannot be
changed without approval of shareholders. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing in a portfolio of
short-term U.S. Treasury obligations which are issued by the U.S. government,
and are fully guaranteed as to payment of principal and interest by the United
States. Unless indicated otherwise, the investment policies may be changed by
the Trustees without approval of shareholders. Shareholders will be notified
before any material changes in these policies become effective.

ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. Treasury obligations
maturing in 397 days or less. The average maturity of the U.S. Treasury
obligations in the Fund's portfolio, computed on a dollar-weighted basis, will
be 90 days or less.

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. The Fund or its
custodian will take possession of the securities subject to repurchase
agreements, and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as


broker/dealers, which are deemed by the Fund's investment adviser to be
creditworthy pursuant to guidelines established by the Trustees.


As a matter of investment practice, which can be changed without shareholder
approval, repurchase agreements providing for settlement in more than seven days
after notice, along with illiquid obligations, will be limited to not more than
10% of the Fund's net assets.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3%
of the total outstanding voting stock of any investment company, invest more
than 5% of its total assets in any one investment company, or invest more than
10% of its total assets in investment companies in general. The Fund will only
invest in other investment companies that are money market funds having
investment objectives and policies similar to its own and primarily for the
purpose of investing short-term cash which has not yet been invested in other
portfolio instruments. The adviser to the Fund will waive its investment
advisory fee on assets invested in securities of open-end investment companies.


WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.



The Fund may dispose of a commitment prior to settlement if the Fund's
investment adviser deems it appropriate to do so. In addition, the Fund may
enter into transactions to sell purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or losses
upon the sale of such commitments.



LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term basis to broker/dealers,
banks, or other institutional borrowers of securities. The Fund will only enter
into loan arrangements with broker/dealers, banks, or other institutions which
the Fund's investment adviser has determined are creditworthy under guidelines
established by the Trustees, and will receive collateral in the form of cash or
U.S. Treasury securities equal to at least 100% of the value of the securities
loaned at all times.



There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.


INVESTMENT LIMITATION

The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) except, under
certain circumstances, the Fund may borrow in amounts up to one-third of the
value of its total assets. This investment limitation cannot be changed without
shareholder approval.

REGULATORY COMPLIANCE

The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and the Combined Statement of Additional of Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. The Fund will
invest more than 5% of its assets in any one issuer only under the circumstances
permitted by Rule 2a-7. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of its
shareholders.

================================================================================

                         THE BILTMORE FUNDS INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Board of Trustees is responsible for managing the Trust's
business affairs and for exercising all the Trust's powers except those reserved
for the shareholders.

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Wachovia Investment Management
Group (the "Adviser"), a business unit of Wachovia Bank of North Carolina, N.A.,
subject to direction by the Board of Trustees. The Adviser continually conducts
investment research and supervision of investments for the Fund and is
responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the assets of the Fund.


Advisory Fees. The Adviser receives an annual investment advisory fee equal to
.50 of 1% of the Fund's average daily net assets. The investment advisory
contract provides that such fee shall be accrued and paid daily. The Adviser has
undertaken to reimburse the Fund for operating expenses in excess of limitations
established by certain states. The Adviser may voluntarily choose to waive a
portion of its fee or reimburse the Fund for certain other expenses of the Fund
but reserves the right to terminate such waiver or reimbursement at any time at
its sole discretion.


Adviser's Background. Wachovia Bank of North Carolina, N.A. is a direct,
wholly-owned subsidiary of Wachovia Corporation, a registered bank holding
company headquartered in Winston-Salem, North Carolina and Atlanta, Georgia.
Through offices in eight states, Wachovia Corporation and its subsidiaries
provide a broad range of financial services to individuals and businesses.

Wachovia Bank of North Carolina, N.A. is a national banking association, which
offers a broad range of financial services, including commercial and consumer
loans, corporate, institutional and personal trust services, demand and time
deposit accounts, letters of credit and international financial services.


Wachovia Investment Management Group employs an experienced staff of
professional investment analysts, portfolio managers and traders. The Adviser
uses fundamental analysis and other investment management disciplines to
identify investment opportunities. Wachovia Bank of North Carolina, N.A.,
together with its affiliates, Wachovia Bank of Georgia, N.A. and Wachovia Bank
of South Carolina, N.A., have been managing trust assets for over 100 years,
with approximately $17.3 billion in managed assets as of September 30, 1994.
Wachovia Investment Management Group has served as investment adviser to The
Biltmore Funds since March 9, 1992. Wachovia Bank of North Carolina, N.A. also
serves as investment adviser to the Biltmore North Carolina Municipal Bond Fund,
a portfolio of The Biltmore Municipal Funds, another investment company. As part
of their regular banking operations, the Wachovia Banks may make loans to public
companies. Thus, it may be possible, from time to time, for the Fund to hold or
acquire the securities of issuers which are also lending clients of the Wachovia
Banks. The lending relationship will not be a factor in the selection of
securities.


DISTRIBUTION OF INSTITUTIONAL SHARES

Federated Securities Corp. is the distributor for shares of the Fund. It is a
Pennsylvania corporation organized on November 14, 1969, and is the distributor
for a number of investment companies. Federated Securities Corp. is a subsidiary
of Federated Investors.

ADMINISTRATION OF THE FUND


ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with the
administrative personnel and services necessary to operate the Fund. Such
services include the preparation of filings with the Securities and Exchange
Commission and other regulatory authorities, assistance with respect to meetings
of the Trustees, shareholder servicing and accounting services, and other
administrative services. Federated Administrative Services provides these at an
annual rate, computed and payable daily, as specified below:



<TABLE>
<CAPTION>
                         Average Aggregate Daily Net
      Maximum            Assets of The Biltmore Funds
Administrative Fee     and The Biltmore Municipal Funds
<S>                  <C>
    0.150 of 1%           on the first $250 million
    0.125 of 1%            on the next $250 million
    0.100 of 1%            on the next $250 million
    0.075 of 1%      on assets in excess of $750 million
</TABLE>


The administrative fee received during any fiscal year for the Fund and for each
of the other portfolios of The Biltmore Funds shall aggregate at least $75,000.
Federated Administrative Services may choose voluntarily to waive or reimburse a
portion of its fee at any time.



CUSTODIAN. Wachovia Bank of North Carolina, N.A., Winston-Salem, North Carolina,
is custodian (the "Custodian") for the securities and cash of the Fund. Under
the Custodian Agreement, Wachovia Bank of North Carolina, N.A. holds the Fund's
portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties. For the services to be provided to the Trust
pursuant to the Custodian Agreement, the Trust pays Wachovia Bank of North
Carolina, N.A. an annual fee based upon the average daily net assets of the Fund
and which is payable monthly. The Custodian will also charge transaction fees
and out-of-pocket expenses.



TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent for the shares of the Fund, and dividend disbursing
agent for the Fund. Federated Services Company also provides certain accounting
and recordkeeping services with respect to the portfolio investments of the
Fund.



LEGAL SERVICES. Legal services for the Fund are provided by Kirkpatrick &
Lockhart, Washington, D.C. Piper & Marbury, Washington, D.C., serves as counsel
to the independent Trustees.


INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young
LLP, Pittsburgh, Pennsylvania.


EXPENSES OF THE FUND AND INSTITUTIONAL SHARES

Holders of Institutional Shares pay their allocable portion of Fund and Trust
expenses. The Trust expenses for which holders of Institutional Shares pay their
allocable portion include, but are not limited to: the cost of organizing the
Trust and continuing its existence; registering the Trust; Trustees' fees;
auditors' fees; the cost of meetings of Trustees; legal fees of the Trust;
association membership dues; and such non-recurring and extraordinary items as
may arise.

Each Fund's expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund
under state and federal law; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise.

At present, no expenses are allocated to Institutional Shares as a class.
However, the Trustees reserve the right to allocate certain other expenses to
the shareholders of a particular class as they deem appropriate ("Class
Expenses"). In any case, Class Expenses would be limited to: transfer agent fees
as identified by the transfer agent as attributable to holders of Institutional
Shares; printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange Commission
and registration fees paid to states; expenses related to administrative
personnel and services as required to support holders of Institutional Shares;
legal fees relating solely to Institutional Shares; and Trustees' fees incurred
as a result of issues relating solely to Institutional Shares.

================================================================================
                                NET ASSET VALUE

The Fund attempts to stabilize the net asset value of Institutional Shares at
$1.00 by valuing the portfolio securities using the amortized cost method. The
net asset value per share is determined by adding the interest of the shares in
the value of all securities and other assets of the Fund, subtracting the
interest of the Institutional Shares in liabilities of the Fund and those
attributable to Institutional Shares, and dividing

the remainder by the total number of Institutional Shares outstanding. The Fund,
of course, cannot guarantee that its net asset value will always remain at $1.00
per share.

================================================================================

                       INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES

Institutional Shares are sold on days on which the New York Stock Exchange and
the Federal Reserve Wire System are open for business. Institutional Shares may
be purchased by or through the Wachovia Banks. Texas residents must purchase,
exchange, and redeem shares through Federated Securities Corp. at
1-800-618-8573. The Fund and the distributor reserve the right to reject any
purchase request.

THROUGH THE WACHOVIA BANKS. To place an order to purchase Institutional Shares
of the Fund, customers of the Wachovia Banks may telephone, send written
instructions, or place the order in person with their account officer in
accordance with the procedures established by the Wachovia Banks and as set
forth in the relevant account agreement.


Payment may be made to the Wachovia Banks by check, federal funds, or by
debiting a customer's account with the Wachovia Banks. Orders are considered
received after payment by check is converted into federal funds and received by
the Wachovia Banks, normally the next business day. When payment is made with
federal funds, the order is considered received when federal funds are received
by the Wachovia Banks or available in the customer's account. Purchase orders
must be communicated to the Wachovia Banks by 11:00 a.m. (Eastern time) and
payment by federal funds must be received by the Wachovia Banks before 4:00 p.m.
(Eastern time) on the same day as the purchase order in order to earn dividends
for that day. Institutional Shares cannot be purchased on days on which the
Wachovia Banks, the New York Stock Exchange and the Federal Reserve Wire System
are not open for business.


VIA A SWEEP ACCOUNT. If you are investing in the Fund as part of a Wachovia Bank
sweep account program, automatic purchases and redemptions will be made by the
Wachovia Bank on your behalf pursuant to the sweep agreement you signed as part
of your trust account with the Wachovia Banks.

MINIMUM INVESTMENT REQUIRED

Investors should consult their account agreement with the Wachovia Banks for any
applicable minimum investment. Minimum investment requirements may vary under
different sweep agreements.

WHAT SHARES COST

Institutional Shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.


The net asset value is determined at 12:00 noon and 4:00 p.m. (Eastern time),
Monday through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net asset value
might be materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) the following
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day, and Christmas Day.


CERTIFICATES AND CONFIRMATIONS


As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued unless
required in writing to the Fund.



Federated Services Company provides the Wachovia Banks, as shareholders of
record, with detailed statements on a monthly basis that include account
balances, information on each purchase or redemption, and a report of dividends
paid during the month. These statements will serve as confirmations of all
transactions in the shareholders' accounts for the statement period.


Investors purchasing through the Wachovia Banks will receive account statements
from those institutions periodically as required by the relevant account
agreement.

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends will be reinvested on
payment dates in additional Institutional Shares of the Fund unless cash
payments are requested by writing to the Wachovia Banks.

CAPITAL GAINS

Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If for some extraordinary reason the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.

================================================================================
                                   EXCHANGES

A shareholder may exchange Institutional Shares of one fund for Institutional
Shares of any other fund that does not assess a sales charge on the basis of
their respective net asset values by calling or writing to his account officer
at the Wachovia Banks. Telephone exchange instructions may be recorded. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions. Institutional Shares
purchased by check are eligible for exchange after the purchase check has
cleared, which could take up to ten calendar days. The exchange feature applies
to Institutional Shares of each fund that does not assess a sales charge as of
the effective offering date of each fund's Institutional Shares.

Orders to exchange Institutional Shares of one fund for Institutional Shares of
any of the other Biltmore Funds that do not assess a sales charge will be
executed by redeeming the Institutional Shares owned at net asset value next
determined after receipt of the order and purchasing Institutional Shares of any
such other Biltmore Funds at the net asset value determined after the proceeds
from such redemption become available. Orders for exchanges received by the Fund
after 12:00 noon but prior to 4:00 p.m. (Eastern time) on any day the Trust is
open for business will be executed at the price determined at 4:00 p.m. (Eastern
time) that day. Orders for exchanges received after 4:00 p.m. (Eastern time) on
any business day will be executed at the price determined at 12:00 noon (Eastern
time) on the next business day.

An excessive number of exchanges may be disadvantageous to the Trust. Therefore
the Trust, in addition to its right to reject any exchange, reserves the right
to modify or terminate the exchange privilege of any shareholder, provided the
shareholder is given 60 days' written notice.

An exchange order must comply with the requirements for a redemption and
purchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial investment requirement
imposed by the relevant account agreement. An exchange constitutes a sale for
federal income tax purposes.

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Before the exchange, a shareholder
should review a prospectus of the fund for which the exchange is being made.

================================================================================
                         REDEEMING INSTITUTIONAL SHARES

The Fund redeems Institutional Shares at their net asset value next determined
after the Wachovia Banks receive the redemption request. Redemptions will be
made on days on which the Fund computes its net asset value. Requests for
redemption can be made in person, by telephone, or by writing to your account
officer. If at any time the Fund shall determine it necessary to terminate or
modify any of these methods of redemption, shareholders would be promptly
notified.


BY TELEPHONE. A shareholder who is a customer of the Wachovia Banks may redeem
Institutional Shares by telephoning his account officer. For calls received by
the Wachovia Banks before 11:00 a.m. (Eastern time) proceeds will normally be
wired the same day to the shareholder's account at the Wachovia Banks or a check
will be sent to the address of record. Those shares will not be entitled to the
dividend declared that day. For calls received by the Wachovia Banks after 11:00
a.m. (Eastern time) proceeds will normally be wired or a check mailed the
following business day. Those shares will be entitled to the dividend declared
on the day the redemption request was received. In no event will proceeds be
paid or credited more than



seven days after a proper request for redemption has been received. In the event
of drastic economic or market changes, a shareholder may experience difficulty
in redeeming by telephone. If such a case should occur, another method of
redemption should be considered. Telephone redemption instructions may be
recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.


================================================================================
                            SHAREHOLDER INFORMATION

VOTING RIGHTS


Each Institutional Share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
all classes of each fund in the Trust have equal voting rights, except that, in
matters affecting only a particular fund or class, only shares of that fund or
class are entitled to vote. As of January 6, 1995, the Wachovia Banks and their
various affiliates and subsidiaries, acting in various capacities for numerous
accounts, were the owner of record of in excess of 25% of the outstanding Shares
of the Fund, and therefore may, for certain purposes, be deemed to control the
Fund and be able to affect the outcome of certain matters presented for a vote
of shareholders.


As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or the Fund's operation and for the election of Trustees
under certain circumstances.

Trustees may be removed by the Trustees or shareholders at a special meeting. A
special meeting of shareholders shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the Trust's outstanding shares.

MASSACHUSETTS BUSINESS TRUSTS

Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect shareholders,
the Trust has filed legal documents with Massachusetts that expressly disclaim
the liability of shareholders for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or the Trustees enter into or sign on behalf
of the Fund.

In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of the Fund, the Trust is required by the Declaration of
Trust to use the property of the Fund to protect or compensate the shareholder.
On request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Fund for any act or obligation of the Trust on behalf of the
Fund. Therefore, financial loss resulting from liability as a shareholder of the
Fund will occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.

================================================================================
                             EFFECT OF BANKING LAWS


The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling,
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibits banks
generally from issuing, underwriting, or distributing most securities. However
such banking laws and regulations do not prohibit such a holding company or its
bank and non-bank affiliates generally from acting as investment adviser,
transfer agent or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of their customer. The
Fund's investment adviser, Wachovia Investment Management Group, and its
affiliate banks, are subject to such banking laws and regulations.

The Adviser believes, based on the advice of its counsel, that it may perform
the services for the Fund contemplated by its investment advisory and custody
agreements with the Trust without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present or future statutes and regulations,
could prevent the Adviser from continuing to perform all or a part of the above
services for its

customers and/or the Fund. If it were prohibited from engaging in these
customer-related activities, the Trustees would consider alternative service
providers and means of continuing available investment services. In such event,
changes in the operation of the Fund may occur, including the possible
termination of any automatic or other Fund share investment and redemption
services then being provided by the Adviser. It is not expected that existing
Fund shareholders would suffer any adverse financial consequences (if another
adviser with equivalent abilities to the Adviser is found) as a result of any of
these occurrences.


The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above, or should Congress relax current restrictions on depository institutions,
the Trustees will consider appropriate changes in the services.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

================================================================================
                                TAX INFORMATION

The Fund expects to pay no federal income tax because it will meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.


Dividends of the Fund representing net interest income on some temporary
investments and any realized net short-term gains are taxed as ordinary income.


These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.

Unless otherwise exempt, shareholders will be subject to federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local tax laws.

================================================================================
                            PERFORMANCE INFORMATION

From time to time, the Fund advertises its yield and effective yield for
Institutional Shares.

The yield of Institutional Shares represents the annualized rate of income
earned on an investment in Institutional Shares over a seven-day period. It is
the annualized dividends earned during the period on the investment shown as a
percentage of the investment. The effective yield is calculated similarly to the
yield but, when annualized, the income earned by an investment in Institutional
Shares is assumed to be reinvested daily. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.

Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in Institutional Shares after reinvesting all distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.

================================================================================
                            OTHER CLASSES OF SHARES


Investment Shares are sold to customers of the Wachovia Banks who are not
eligible to purchase Institutional Shares and customers of Wachovia Investments,
Inc. Investment Shares are subject to a minimum initial investment of $1,000.
Investment Shares are sold at net asset value and are distributed pursuant to a
Rule 12b-1 Plan adopted by the Trust, whereby the distributor is paid a maximum
fee of 0.40 of 1% of the Investment Shares' average daily net assets.
Institutional Shares are distributed without a Rule 12b-1 Plan.


Financial institutions and brokers providing sales and/or administrative
services may receive different compensation from one class of shares than from
another class of shares.

The amount of dividends payable to Institutional Shares will be greater than
those payable to Investment Shares by the difference between class expenses and
distribution expenses borne by shares of each respective class. The stated
advisory fee is the same for both classes of shares of the Fund.

================================================================================
BILTMORE U.S. TREASURY MONEY MARKET FUND FINANCIAL HIGHLIGHTS INVESTMENT SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)


Reference is made to the Report of Ernst & Young, LLP, Independent Auditors on
page 20.


<TABLE>
<CAPTION>
                                      Year Ended November 30,        1994       1993*

<S>                                                               <C>        <C>
- --------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                              $    1.00  $    1.00
Income from investment operations
  Net investment income                                                0.03       0.01
Less distributions
  Dividends to shareholders from net investment income                (0.03)     (0.01)
                                                                  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                    $    1.00  $    1.00
                                                                  ---------  ---------
Total return**                                                         3.39%      1.42%
Ratios to Average Net Assets
  Expenses                                                             0.66%      0.65%(a)
  Net investment income                                                3.42%      2.50%(a)
  Expense waiver/reimbursement (b)                                     0.61%      0.73%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                           $46,396     $16,941
</TABLE>

 * Reflects operations for the period from May 12, 1993 (date of initial public
   investment) to November 30, 1993.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)



================================================================================

                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                            PORTFOLIO OF INVESTMENTS

                               NOVEMBER 30, 1994

<TABLE>
<CAPTION>
  Principal
   Amount                                                                                     Value
<C>            <S>                                                                        <C>
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations--48.9%
               U.S. TREASURY BILLS--48.9%
$  66,000,000  1/5/95-3/9/95                                                              $   65,453,242
                                                                                          --------------
*Repurchase Agreements--51.5%
   31,980,653  Goldman Sachs & Co., 5.65%, dated 11/30/94, due 12/1/94                        31,980,653
   31,000,000  Daiwa Securities America, Inc., 5.72%, dated 11/30/94, due 12/1/94             31,000,000
    6,000,000  Morgan Stanley & Co., 5.65%, dated 11/30/94, due 12/1/94                        6,000,000
                                                                                          --------------
               Total Repurchase Agreements                                                    68,980,653
                                                                                          --------------
               Total Investments, at amortized cost and value                             $  134,433,895+
                                                                                          --------------
</TABLE>

+ Also represents cost for federal tax purposes.

* Repurchase agreements are fully collateralized by U.S. Treasury obligations
  based on market prices at the date of the portfolio.

Note: The categories of investments are shown as a percentage of net assets
($133,927,588) at November 30, 1994.

(See Notes which are an integral part of the Financial Statements)



================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                      STATEMENT OF ASSETS AND LIABILITIES


                               NOVEMBER 30, 1994


<TABLE>
<S>                                                                        <C>            <C>
Assets:
Investments in repurchase agreements                                       $  68,980,653
Investments in securities                                                     65,453,242
                                                                           -------------
     Total investments, at amortized cost and value                                       $  134,433,895
Interest receivable                                                                               10,886
Deferred expenses                                                                                  9,104
                                                                                          --------------
     Total assets                                                                            134,453,885
                                                                                          --------------
Liabilities:
Dividends payable                                                                462,413
Accrued expenses                                                                  63,884
                                                                           -------------
     Total liabilities                                                                           526,297
                                                                                          --------------
Net Assets for 133,927,588 shares of beneficial interest outstanding                      $  133,927,588
                                                                                          --------------
Net Asset Value, Offering Price, and Redemption Proceeds Per Share:
Institutional Shares ($87,531,434 / 87,531,434 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
Investment Shares ($46,396,154 / 46,396,154 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
</TABLE>


(See Notes which are an integral part of the Financial Statements)


================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                            STATEMENT OF OPERATIONS


                          YEAR ENDED NOVEMBER 30, 1994


<TABLE>
<S>                                                                 <C>         <C>         <C>
Investment Income:
Interest income                                                                             $  4,087,226
Expenses:
Investment advisory fee                                                         $  501,363
Trustees' fees                                                                       3,381
Administrative personnel and services fees                                          98,959
Custodian fees                                                                      20,054
Transfer and dividend disbursing agent fees and expenses                            57,810
Fund share registration costs                                                       42,008
Auditing fees                                                                       15,400
Legal fees                                                                          13,525
Printing and postage                                                                38,030
Portfolio accounting fees                                                           51,353
Insurance premiums                                                                  12,948
Distribution services fees                                                         104,760
Miscellaneous                                                                       15,534
                                                                                ----------
     Total expenses                                                                975,125
Deduct--
  Waiver of investment advisory fee                                 $  432,458
  Waiver of administrative personnel and services fees                  25,319
  Waiver of distribution services fees                                  26,139
  Reimbursement of other operating expenses
     by Administrator                                                   57,893     541,809
                                                                    ----------  ----------
          Net expenses                                                                           433,316
                                                                                            ------------
          Net investment income                                                             $  3,653,910
                                                                                            ------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                       STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>

                                                  Year Ended November 30,        1994           1993
<S>                                                                      <C>              <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income                                                    $     3,653,910  $     1,900,006
                                                                         ---------------  ---------------
Distributions to Shareholders--
Dividends to shareholders from net investment income:
  Institutional Shares                                                        (2,707,306)      (1,826,489)
  Investment Shares                                                             (946,604)         (73,517)
                                                                         ---------------  ---------------
     Change in net assets resulting from distribution
       to shareholders                                                        (3,653,910)      (1,900,006)
                                                                         ---------------  ---------------
Fund Share (Principal) Transactions--
Proceeds from sale of shares                                                 448,524,970      288,944,990
Cost of shares redeemed                                                     (396,891,742)    (262,058,559)
                                                                         ---------------  ---------------
     Change in net assets from Fund share transactions                        51,633,228       26,886,431
                                                                         ---------------  ---------------
          Change in net assets                                                51,633,228       26,886,431
Net Assets:
Beginning of period                                                           82,294,360       55,407,929
                                                                         ---------------  ---------------
End of period                                                            $   133,927,588  $    82,294,360
                                                                         ---------------  ---------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================

                    BILTMORE U.S. TREASURY MONEY MARKET FUND
                         NOTES TO FINANCIAL STATEMENTS


                               NOVEMBER 30, 1994



(1) ORGANIZATION

The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore U.S. Treasury Money Market
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.

The Fund offers two classes of shares: Institutional Shares and Investment
Shares. Investment Shares are identical in all respects to Institutional Shares,
except that Investment Shares are sold pursuant to a Distribution Plan (the
"Plan") adopted in accordance with the Act's Rule 12b-1.

(2) SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.

A.   INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
     its portfolio securities is in accordance with Rule 2a-7 under the Act.

B.   REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
     custodian bank to take possession, to have legally segregated in the
     Federal Reserve Book Entry System, or to have segregated within the
     custodian bank's vault, all securities held as collateral in support of
     repurchase agreement investments. Additionally, procedures have been
     established by the Fund to monitor, on a daily basis, the market value of
     each repurchase agreement's collateral to ensure the value of collateral at
     least equals the repurchase price to be paid under the repurchase agreement
     transaction.

     The Fund will only enter into repurchase agreements with banks and other
     recognized financial institutions, such as broker/dealers, which are deemed
     by the Fund's adviser to be creditworthy pursuant to guidelines established
     by the Board of Trustees (the "Trustees").

C.   INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
     are accrued daily. Bond premium and discount, if applicable, are amortized
     as required by the Internal Revenue Code, as amended (the "Code").
     Distribution to shareholders are recorded on the ex-dividend date.

D.   FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
     Code applicable to regulated investment companies and to distribute to
     shareholders each year substantially all of its taxable income.
     Accordingly, no provisions for federal tax are necessary.

E.   WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
     when-issued or delayed delivery transactions. The Fund records when-issued
     securities on the trade date and maintains security positions such that
     sufficient liquid assets will be available to make payment for the
     securities purchased. Securities purchased on a when-issued or delayed
     delivery basis are marked to market daily and begin earning interest on the
     settlement date.

F.   DEFERRED EXPENSES--Costs incurred by the Fund with respect to registration
     of its shares in its first year, excluding the initial expense of
     registering the shares, have been deferred and are being amortized using
     the straight-line method not to exceed a period of five years from the
     Fund's commencement date.

G.   OTHER--Investment transactions are accounted for on the trade date.

================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND


(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At November 30, 1994, capital paid-in aggregated $133,927,588.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
                                                  Year Ended November 30,       1994            1993
<S>                                                                        <C>             <C>
- ---------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold                                                                   337,402,499     268,967,543
Shares redeemed                                                              (315,224,009)   (259,022,528)
                                                                           --------------  --------------
     Net change resulting from Institutional Share transactions                22,178,490       9,945,015
                                                                           --------------  --------------

<CAPTION>

                                                  Year Ended November 30,       1994           1993*
<S>                                                                        <C>             <C>
- ---------------------------------------------------------------------------------------------------------
Investment Shares
Shares sold                                                                   111,122,471      19,977,447
Shares redeemed                                                               (81,667,733)     (3,036,031)
                                                                           --------------  --------------
     Net change resulting from Investment Share transactions                   29,454,738      16,941,416
                                                                           --------------  --------------
          Total net change resulting from Fund share transactions              51,633,228      26,886,431
                                                                           --------------  --------------
</TABLE>

*For the period from May 12, 1993 (date of initial public investment) to
 November 30, 1993.

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.50 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee. The
Adviser can modify or terminate the voluntary waiver at any time at its sole
discretion.


ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.


DISTRIBUTION PLAN--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Investment Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.40 of 1% of the average daily net assets of the
Investment Shares, annually, to compensate FSC. FSC may voluntarily choose to
waive a portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.


TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Funds for which it is paid a fee. The fee is based on the size, type, and
number of accounts and transactions made by shareholders.


FServ also maintains the Fund's accounting records for which it is paid a fee.
The FServ fee is based on the level of the Fund's average net assets for the
period, plus out-of-pocket expenses.



Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The FServ fee is
based on the level of the Fund's average net assets for the period, plus
out-of-pocket expenses.


ORGANIZATIONAL EXPENSES--Organizational expenses ($33,032) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following May 4, 1992

================================================================================
                    BILTMORE U.S. TREASURY MONEY MARKET FUND
(the date the Fund became effective). For the fiscal year ended November 30,
1994, the Fund paid $9,718 pursuant to this agreement.

Certain of the Officers of the Trust are Officers and Directors or Trustees of
the above companies.

================================================================================
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Trustees and Shareholders of
THE BILTMORE FUNDS:


We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore U.S. Treasury Money Market Fund (one
of the portfolios comprising The Biltmore Funds) as of November 30, 1994, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights (see pages 2 and 12 of this prospectus) for the periods
presented. 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.


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 included confirmation of securities owned as of
November 30, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.


In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore U.S. Treasury Money Market Fund of The Biltmore Funds at November 30,
1994, and the results of its operations for the year then ended, changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.


                                                             ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 12, 1995



================================================================================
                                  ADDRESSES

- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND   Federated Investors Tower
  INSTITUTIONAL SHARES                     Pittsburgh, Pennsylvania 15222-3779

- --------------------------------------------------------------------------------
DISTRIBUTOR                                Federated Securities Corp.
                                           Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779

- --------------------------------------------------------------------------------
INVESTMENT ADVISER                         Wachovia Investment Management Group
                                           301 North Main Street
                                           Winston-Salem, N.C. 27150

- --------------------------------------------------------------------------------
CUSTODIAN                                  Wachovia Bank of North Carolina, N.A.
                                           Wachovia Trust Operations
                                           301 North Main Street
                                           Winston-Salem, N.C. 27150

- --------------------------------------------------------------------------------
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, Federated Services Company
AND PORTFOLIO ACCOUNTING SERVICES          Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779

- --------------------------------------------------------------------------------
COUNSEL TO THE BILTMORE FUNDS              Kirkpatrick & Lockhart
                                           1800 M Street, N.W.
                                           Washington, D.C. 20036-5891

- --------------------------------------------------------------------------------
COUNSEL TO THE INDEPENDENT TRUSTEES        Piper & Marbury
                                           1200 Nineteenth Street, N.W.
                                           Washington, D.C. 20036-2430

- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS                       Ernst & Young LLP
                                           One Oxford Centre
                                           Pittsburgh, Pennsylvania 15219

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

                   BILTMORE U.S. TREASURY MONEY MARKET FUND
                             INSTITUTIONAL SHARES


                A DIVERSIFIED PORTFOLIO OF THE BILTMORE FUNDS
                  An Open-End, Management Investment Company

                                                                       090297706
January 31, 1995                                              2020205A-IS (1/95)





BILTMORE U.S. TREASURY MONEY MARKET FUND

(A PORTFOLIO OF THE BILTMORE FUNDS)
INSTITUTIONAL SHARES
INVESTMENT SHARES
Combined Statement of Additional Information










    This Combined Statement of Additional Information should be read
    with the respective prospectus for the Institutional Shares and
    Investment Shares of Biltmore U.S. Treasury Money Market Fund (the
    "Fund"),  a portfolio in The Biltmore Funds (the "Trust"), dated
    January 31, 1995. This Combined Statement is not a prospectus
    itself. To receive a copy of either prospectus, write to the Fund,
    call The Biltmore Service Center toll-free at 1-800-994-4414,  or
    contact your Wachovia Bank account officer.
    Federated Investors Tower
    Pittsburgh, Pennsylvania 15222-3779
    Statement dated January 31, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED
INVESTORS
GENERAL INFORMATION ABOUT THE
FUND                                    1
INVESTMENT OBJECTIVE AND POLICIES       1
 Types of Investments                  1
 Investment Limitations                1
THE BILTMORE FUNDS MANAGEMENT           3
 Officers and Trustees                 3
 Fund Ownership                        4
 Trustees Compensation                 5
 Trustee Liability                     5
INVESTMENT ADVISORY SERVICES            5
 Adviser to the Fund                   5
 Advisory Fees                         6
ADMINISTRATIVE SERVICES                 6
BROKERAGE TRANSACTIONS                  6
PURCHASING SHARES                       7
 Distribution Plan (Investment
   Shares Only)                         7
 Conversion to Federal Funds           7
DETERMINING NET ASSET VALUE             8
 Use of the Amortized Cost
   Method                               8
REDEEMING SHARES                        9
 Redemption in Kind                    9
TAX STATUS                              9
 The Fund's Tax Status                 9
 Shareholders' Tax Status              9
YIELD                                   9
EFFECTIVE YIELD                        10
PERFORMANCE COMPARISONS                10
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in the Trust.  The Trust was established as a
Massachusetts business trust under a Declaration of Trust dated November
19, 1991.
Shares of the Fund are offered in two classes, Institutional Shares and
Investment Shares (individually and collectively referred to as
"Shares," as the context may require). This Combined Statement of
Additional Information relates to both classes of the above-mentioned
Shares. Capitalized terms not otherwise defined in this Statement have
the same meaning assigned in the prospectus.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide current income consistent
with stability of principal and liquidity. The investment objective
cannot be changed without approval of shareholders.
TYPES OF INVESTMENTS
The Fund invests only in short-term U.S. Treasury obligations which
mature in 397 days or less.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund.  No fees or other expenses,
other than normal transaction costs, are incurred.  However, liquid
assets of the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date.  These
assets are marked to market daily and are maintained until the
transaction has been settled.  The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the securities
subject to repurchase agreements, and these securities are marked to
market daily. To the extent that the original seller does not repurchase
the securities from the Fund, the Fund could receive less than the
repurchase price on any sale of such securities. In the event that such
a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending
court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction
would rule in favor of the Fund and allow retention or disposition of
such securities. The Fund will only enter into repurchase agreements
with banks and other recognized financial institutions, such as
broker/dealers, which are deemed by the Fund's investment adviser to be
creditworthy pursuant to guidelines established by the Trust's Board of
Trustees (the "Trustees").
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in
return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Fund will repurchase
the portfolio instrument by remitting the original consideration plus
interest at an agreed upon rate. The use of reverse repurchase
agreements may enable the Fund to avoid selling portfolio instruments at
a time when a sale may be deemed to be disadvantageous, but the ability
to enter into reverse repurchase agreements does not ensure that the
Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund,
in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These assets are marked to
market daily and are maintained until the transaction has been settled.
INVESTMENT LIMITATIONS
   Issuing Senior Securities and Borrowing Money
      The Fund will not issue senior securities, except that the Fund
      may borrow money directly or through reverse repurchase agreements
      in amounts up to one-third of the value of its total assets,
      including the amount borrowed. The Fund will not borrow money or
      engage in reverse repurchase agreements for investment leverage,
      but rather as a temporary, extraordinary, or emergency measure or
      to facilitate management of the portfolio by enabling the Fund to
      meet redemption requests when the liquidation of portfolio
      securities is deemed to be inconvenient or disadvantageous.
   Investing in Commodities
      The Fund will not buy or sell commodities, commodity contracts, or
      commodities futures contracts.
   Investing in Real Estate
      The Fund will not purchase or sell real estate, including limited
      partnership interests.
   Underwriting
      The Fund will not underwrite any issue of securities, except as it
      may be deemed to be an underwriter under the Securities Act of
      1933 in connection with the sale of securities in accordance with
      its investment objective, policies, and limitations.
   Lending Cash or Securities
      The Fund will not lend any of its assets, except portfolio
      securities up to one-third of the value of its total assets. This
      shall not prevent the Fund from purchasing or holding U.S.
      government securities, including repurchase agreements, permitted
      by its investment objective and policies.
   Diversification of Investments
      With respect to securities comprising 75% of the value of its
      total assets, the Fund will not purchase securities of any one
      issuer (other than cash, cash items or securities issued or
      guaranteed by the government of the United States or its agencies
      or instrumentalities and repurchase agreements collateralized by
      U.S. Treasury securities) if as a result more than 5% of the value
      of its total assets would be invested in the securities of that
      issuer.
Except as noted, the above limitations cannot be changed without
shareholder approval. The Fund does not consider the issuance of
separate classes of shares to involve the issuance of "senior
securities" within the meaning of the investment limitation set forth
above. The following limitations may be changed without shareholder
approval. Shareholders will be notified before any material change in
those limitations becomes effective.
   Selling Short and Buying on Margin
      The Fund will not sell any securities short or purchase any
      securities on margin but may obtain such short-term credits as may
      be necessary for clearance of transactions.
   Investing in Securities of Other Investment Companies
      The Fund will limit its investment in other investment companies
      to no more than 3% of the total outstanding voting stock of any
      investment company, invest no more than 5% of its total assets in
      any one investment company, or invest more than 10% of its total
      assets in investment companies in general. The Fund will limit its
      investments in the securities of other investment companies to
      those of money market funds having investment objectives and
      policies similar to its own. The Fund will purchase securities of
      closed-end investment companies only in open market transactions
      involving only customary broker's commissions. However, these
      limitations are not applicable if the securities are acquired in a
      merger, consolidation, reorganization or acquisition of assets.
      While it is the Fund's investment adviser's policy to waive its
      investment advisory fee on assets invested in securities of open-
      end investment companies, it should be noted that investment
      companies incur certain expenses, such as custodian and transfer
      agent fees, and therefore any investment by the Fund in shares of
      another investment company would be subject to such duplicate
      expenses.
   Investing in Illiquid Securities
      The Fund will not invest more than 10% of the value of its net
      assets in illiquid securities, including repurchase agreements
      providing for settlement in more than seven days after notice.
   Investing in Minerals
      The Fund will not purchase oil, gas, or other mineral exploration
      or development programs or leases.
   Investing in Issuers Whose Securities are Owned by Officers and
   Trustees of the Fund
      The Fund will not purchase or retain the securities of any issuer
      if the officers and Trustees of the Trust or the Fund's investment
      adviser, owning individually more than 1/2 of 1% of the issuer's
      securities, together own more than 5% of the issuer's securities.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.
The Fund will not purchase any securities while borrowings in excess of
5% of the value of its total assets are outstanding.
The Fund does not expect to borrow money, pledge securities, or invest
in reverse repurchase agreements in excess of 5% of the value of its net
assets, or invest in securities of closed-end investment companies,
during the coming fiscal year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits  issued by a U.S.
branch of a domestic bank or savings and loan, having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of
investment, to be "cash items."
THE BILTMORE FUNDS MANAGEMENT
OFFICERS AND TRUSTEES
Officers and Trustees of the Trust are listed with their addresses,
principal occupations, and present positions. Each of the Trustees and
officers listed below holds an identical position with The Biltmore
Municipal Funds, another investment company. Except as listed below,
none of the Trustees or officers are affiliated with Wachovia Bank of
North Carolina, N.A., Federated Investors, Federated Securities Corp.,
Federated Services Company, or Federated Administrative Services.

James A. Hanley
Trustee
Retired; Vice President and Treasurer, Abbott Laboratories (health care
products) (until 1992).

Malcolm T. Hopkins
Trustee
Private investor and consultant; Director, the Columbia Gas System, Inc.
(integrated natural gas production, transmission and distribution);
Director MAPCO, Inc. (diversified energy); Director, Metropolitan Series
Funds, Inc. and MetLife Portfolios, Inc. (investment companies);
Director, Kinder-Care Learning Centers, Inc. (child care); Director,
U.S. Home Corporation (residential builder and land development); and
Director, EMCOR Group, Inc. (engineering and construction).

Samuel E. Hudgins
Trustee
President, Percival Hudgins &  Company, Inc. (investment
bankers/financial consultants); Director, Atlantic American Corporation
(insurance holding company); Director, Bankers Fidelity Life Insurance
Company; Director and Vice Chairman, Leath Furniture, Inc. (retail
furniture); President, Atlantic American Corporation (until 1988);
Director, Vice Chairman and Chief Executive Officer, Rhodes, Inc.
(retail furniture) (until 1988); Chairman and Director, Atlantic
American Life Insurance Co., Georgia Casualty & Surety Company, and
Bankers Fidelity Life Insurance (until 1988).


J. Berkley Ingram, Jr.
Trustee
Real estate investor and partner; Director, VF Corporation (apparel
company); formerly, Vice Chairman, Massachusetts Mutual Life Insurance
Company.

D. Dean Kaylor
Trustee
Retired; Executive Vice President and Chief Financial Officer, NBD Bank,
N.A. and NBD Bancorp, Inc. (bank and bank holding company) (until 1990).

John W. McGonigle
President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research;  Trustee, Federated
Services Company; Executive Vice President, Secretary and Trustee,
Federated Administrative Services; Executive Vice President and
Director, Federated Securities Corp.

Ronald M. Petnuch
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; formerly Associate
Corporate Counsel, Federated Investors; Vice President and Assistant
Treasurer for certain investment companies for which Federated
Securities Corp. is the principal distributor.

Joseph M. Huber
Secretary
Corporate Counsel, Federated Investors.

FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of January 6, 1995, the following shareholder of record owned 5% or
more of the outstanding Institutional Shares of the Fund:  Wachovia Bank
of North Carolina, Winston-Salem, North Carolina, on behalf of certain
underlying accounts, owned approximately 91,976,638 Shares (100%).
As of January 6, 1995, the following shareholders of record owned 5% or
more of the outstanding Investment Shares of the Fund:  Wachovia Bank of
North Carolina, Winston-Salem, North Carolina, on behalf of certain
underlying accounts, owned approximately 21,463,089 Shares (43.31%);
Wachovia Brokerage Services, Winston-Salem, North Carolina, on behalf of
certain underlying accounts, owned approximately 20,756,208 Shares
(41.88%); and Wachovia Bank of Georgia, Atlanta, Georgia, on behalf of
certain underlying accounts, owned approximately 6,211,640 Shares
(12.53%).

TRUSTEES COMPENSATION

NAME AND                   AGGREGATE               TOTAL COMPENSATION
PAID
POSITION WITH THE          COMPENSATION FROM       TO THE TRUSTEES  FROM
THE TRUST
TRUST                      THE TRUST+              AND FUND COMPLEX #

James A. Hanley,
Trustee                       $22,086               $23,400 for the
Trust and
                                                    one other investment
company

Malcolm T. Hopkins,
Trustee                       $16,920               $18,000 for the
Trust and
                                                    one other investment
company

Samuel E. Hudgins,
Trustee                       $22,086               $23,400 for the
Trust and
                                                    one other investment
company

J. Berkley Ingram, Jr.
Trustee                       $16,920               $18,000 for the
Trust and
                                                    one other investment
company

D. Dean Kaylor,
Trustee                       $15,851               $16,875 for the
Trust and
                                                    one other investment
company

+The aggregate compensation is paid by the Trust, which is comprised of
twelve portfolios.
# The Fund Complex is comprised of 15 portfolios.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not
liable for errors of judgment or mistakes of fact or law. However, they
are not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is Wachovia Investment Management Group
(the "Adviser"). The Adviser is a business unit of Wachovia Bank of
North Carolina, N.A., which is a wholly-owned subsidiary of Wachovia
Corporation of North Carolina, a wholly-owned subsidiary of Wachovia
Corporation.
The Adviser shall not be liable to the Trust, the Fund or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties imposed
upon it by its contract with the Trust.
Because of the internal controls maintained by the Wachovia Banks' to
restrict the flow of non-public information, Fund investments are
typically made without any knowledge of the Wachovia Banks or their
affiliates' lending relationships with an issuer
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment
advisory fee as described in the prospectuses.
For the fiscal years ended November 30, 1994 and 1993, and for the
period from February 19, 1992 (start of business) to November 30, 1992,
the Adviser earned $501,363, $333,904 and $142,878, respectively, of
which $432,458, $276,657 and $142,878, respectively, were voluntarily
waived. In addition, the Fund's adviser reimbursed $9,693 of other Fund
operating expenses for the period from February 19, 1992 (start of
business) to November 30, 1992.
   State Expense Limitation
      The Adviser has undertaken to comply with the expense limitation
      established by certain states for investment companies whose
      shares are registered for sale in those states. If the Fund's
      normal operating expenses (including the investment advisory fee,
      but not including brokerage commissions, interest, taxes, and
      extraordinary expenses) exceed 2-1/2% per year of the first $30
      million of average net assets, 2% per year of the next $70 million
      of average net assets, and 1-1/2% per year of the remaining
      average net assets, the Adviser will waive its fee or reimburse
      the Fund for its expenses over the limitation.
      If the Fund's monthly projected operating expenses exceed this
      limitation, the investment advisory fee paid will be reduced by
      the amount of the excess, subject to an annual adjustment. If the
      expense limitation is exceeded, the amount to be reimbursed by the
      Adviser will be limited, in any single fiscal year, by the amount
      of the investment advisory fee.
ADMINISTRATIVE SERVICES
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectuses.
For the fiscal years ended November 30, 1994 and 1993, and for the
period from February 19, 1992 (start of business) to November 30, 1992,
Federated Administrative Services earned $98,959, $88,313 and $25,104,
respectively, of which $25,319, $71,133 and $25,104, respectively, were
voluntarily waived. In addition, for the fiscal years ended November 30,
1994 and 1993, and for the period from February 19, 1992 (start of
business) to November 30, 1992, Federated Administrative Services
reimbursed $57,893, $55,602 and $16,331, respectively, of other Fund
operating expenses.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the
Trustees.
The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the Fund
or to the Adviser, and may include:
o  advice as to the advisability of investing in securities;
o  security analysis and reports;
o  economic studies;
o  industry studies;
o  receipt of quotations for portfolio evaluations; and
o  similar services.
The Adviser exercises reasonable business judgment in selecting brokers
who offer brokerage and research services to execute securities
transactions. The Adviser determines in good faith that commissions
charged by such persons are reasonable in relation to the value of the
brokerage and research services provided.
Research services provided by brokers and dealers may be used by the
Adviser in advising the Fund and other accounts. To the extent that
receipt of these services may supplant services for which the Adviser
might otherwise have paid, it would tend to reduce expenses. The Fund
has no obligation to deal with any broker or group of brokers in the
execution of portfolio transactions.
Some of the Adviser's other clients have investment objectives and
programs similar to that of the Fund. Occasionally, the Adviser may make
recommendations to other clients which result in their purchasing or
selling securities simultaneously with the Fund. Consequently, the
demand for securities being purchased or the supply of securities being
sold may increase, and this could have an adverse effect on the price of
those securities. It is the Adviser's policy not to favor one client
over another in making recommendations or in placing orders. If two or
more of the Adviser's clients are purchasing a given security on the
same day from the same broker or dealer, the Adviser may average the
price of the transactions and allocate the average among the clients
participating in the transaction.
PURCHASING SHARES
Shares are sold at their net asset value without a sales charge on days
the Wachovia Banks, the New York Stock Exchange and the Federal Reserve
Wire System are open for business. The procedure for purchasing Shares
is explained in the respective prospectus under "Investing in
Institutional Shares" and "Investing in Investment Shares."
DISTRIBUTION PLAN (INVESTMENT SHARES ONLY)
With respect to the Investment Shares class of the Fund, the Trust has
adopted a plan (the "Plan") pursuant to Rule 12b-1 which was promulgated
by the Securities and Exchange Commission pursuant to the Investment
Company Act of 1940, as amended (the "1940 Act"). The Plan provides for
payment of fees to Federated Securities Corp. to finance any activity
which is principally intended to result in the sale of the Fund's
Investment Shares subject to the Plan. Such activities may include:  the
advertising and marketing of Investment Shares; preparing, printing, and
distributing prospectuses and sales literature to prospective
shareholders, brokers, or administrators; and implementing and operating
the Plan. Pursuant to the Plan, Federated Securities Corp. may pay fees
to brokers for distribution and administrative services and to
administrators for administrative services as to Investment Shares. The
administrative services are provided by a representative who has
knowledge of the shareholder's particular circumstances and goals, and
include, but are not limited to: communicating account openings;
communicating account closings; entering purchase transactions; entering
redemption transactions; providing or arranging to provide accounting
support for all transactions; wiring funds and receiving funds for
Investment Share purchases and redemptions; confirming and reconciling
all transactions; reviewing the activity in Fund accounts and providing
training and supervision of broker personnel; posting and reinvesting
dividends to Fund accounts or arranging for this service to be performed
by the Fund's transfer agent; and maintaining and distributing current
copies of prospectuses and shareholder reports to the beneficial owners
of Investment Shares and prospective shareholders.
The Trustees expect that the adoption of the Plan will result in the
sale of sufficient number of Investment Shares so as to allow the Fund
to achieve economic viability. It is also anticipated that an increase
in the size of the Fund will facilitate more efficient portfolio
management and assist the Fund in seeking to achieve its investment
objective.
For the fiscal years ended November 30, 1994 and 1993, brokers and
administrators (financial institutions) received fees in the amount of
$104,760 and $11,831, respectively, of which $26,139 and $2,966,
respectively, were voluntarily waived pursuant to the Plan.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal
funds. The Wachovia Banks act as the shareholder's agent in depositing
checks and converting them to federal funds.
EXCHANGING SECURITIES FOR FUND SHARES
The Fund has no present intention of accepting securities in exchange
for Shares. However, if the Fund should allow such exchanges, it will do
so only upon the prior approval of the Fund and only upon a
determination by the Fund and the Adviser that the securities to be
exchanged are acceptable.
Any securities exchanged must meet the investment objective and policies
of the Fund, must have a readily ascertainable market value, must be
liquid and must not be subject to restrictions on resale. The market
value of any securities exchanged in an initial investment, plus any
cash, must be at least equal to the minimum investment requirement of
the Fund.
Securities accepted by the Fund will be valued in the same manner as the
Fund values its assets. The basis of the exchange will depend upon the
net asset value of Shares on the day the securities are valued. One
Share will be issued for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the
property of the Fund, along with the securities.
   Tax Consequences
      If an exchange is permitted, it will be treated as a sale for
      federal income tax purposes. Depending upon the cost basis of the
      securities exchanged for Fund shares, a gain or loss may be
      realized by the investor.
DETERMINING NET ASSET VALUE
The Fund attempts to stabilize the value of a share at $1.00. The days
on which net asset value is calculated by the Fund are described in the
respective prospectuses.
USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value
of portfolio instruments is amortized cost. Under the amortized cost
method, portfolio instruments are valued at the acquisition cost as
adjusted for amortization of premium or accumulation of discount rather
than at current market value. The Fund's use of the amortized cost
method of valuing portfolio instruments depends on its compliance with
the provisions of Rule 2a-7 (the "Rule") promulgated by the Securities
and Exchange Commission under the 1940 Act. Under the Rule, the Trustees
must establish procedures reasonably designed to stabilize the net asset
value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market
conditions and the Fund's investment objective.
Under the Rule, the Fund is permitted to purchase instruments which are
subject to demand features or standby commitments. As defined by the
Rule, a demand feature entitles the Fund to receive the principal amount
of the instrument from the issuer or a third party on (1) no more than
30 days' notice or (2) at specified intervals not exceeding 397 days on
no more than 30 days' notice. A standby commitment entitles the Fund to
achieve same day settlement and to receive an exercise price equal to
the amortized cost of the underlying instrument plus accrued interest at
the time of exercise.
The Fund acquires instruments subject to demand features and standby
commitments to enhance the instrument's liquidity. The Fund treats
demand features and standby commitments as a part of the underlying
instruments, because the Fund does not acquire them for speculative
purposes and cannot transfer them separately from the underlying
instruments. Therefore, although the Rule defines demand features and
standby commitments as "puts," the Fund does not consider them to be
separate investments for the purposes of its investment policies.
   Monitoring Procedures
      The Trustees' procedures include monitoring the relationship
      between the amortized cost value per share and the net asset value
      per share based upon available indications of market value. The
      Trustees will decide what, if any, steps should be taken if there
      is a difference of more than 0.5 of 1% between the two values. The
      Trustees will take any steps they consider appropriate (such as
      redemption in kind or shortening the average portfolio maturity)
      to minimize any material dilution or other unfair results arising
      from differences between the two methods of determining net asset
      value.
   Investment Restrictions
      The Rule requires that the Fund limit its investments to
      instruments that, in the opinion of the Trustees, present minimal
      credit risks. The Rule also requires the Fund to maintain a dollar-
      weighted average portfolio maturity (not more than 90 days)
      appropriate to the objective of maintaining a stable net asset
      value of $1.00 per share. In addition, no instruments with a
      remaining maturity of more than 397 days can be purchased by the
      Fund. Should the disposition of a portfolio security result in a
      dollar-weighted average portfolio maturity of more than 90 days,
      the Fund will invest its available cash to reduce the average
      maturity to 90 days or less as soon as possible. Shares of
      investment companies purchased by the Fund will meet these same
      criteria and will have investment policies consistent with the
      Rule.
      The Trust  may attempt to increase yield by trading portfolio
      securities to take advantage of short-term market variations. This
      policy may, from time to time, result in high portfolio turnover.
      Under the amortized cost method of valuation, neither the amount
      of daily income nor the net asset value is affected by any
      unrealized appreciation or depreciation of the portfolio. In
      periods of declining interest rates, the indicated daily yield on
      shares of the Fund computed by dividing the annualized daily
      income on the Fund's portfolio by the net asset value computed as
      above, may tend to be higher than a similar computation made by
      using a method of valuation based upon market prices and
      estimates. In periods of rising interest rates, the indicated
      daily yield on shares of the Fund computed the same way may tend
      to be lower than a similar computation made by using a method of
      calculation based upon market prices and estimates.
REDEEMING SHARES
The Fund redeems Shares at the next computed net asset value after the
Fund receives the redemption request. Redemption procedures are
explained in the respective prospectus under "Redeeming Institutional
Shares" and "Redeeming Investment Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem Shares in cash, it reserves the
right under certain circumstances to pay the redemption price in whole
or in part by a distribution of securities from the Fund's portfolio. To
the extent available, such securities will be readily marketable.
Redemption in kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the same value
employed in determining net asset value and selecting the securities in
a manner the Trustees determine to be fair and equitable.
Redemption in kind is not as liquid as cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of
their securities and could incur transaction costs.
The Trust has elected to be governed by Rule 18f-1 under the 1940 Act,
which obligates the Fund to redeem Shares for any one shareholder in
cash only up to the lesser of $250,000 or 1% of the class's net asset
value during any 90-day period. Any redemption beyond this amount will
also be in cash unless the Trustees determine that payments should be in
kind.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund
must, among other requirements:
o  derive at least 90% of its gross income from dividends, interest, and
   gains from the sale of securities;
o  derive less than 30% of its gross income from the sale of securities
   held less than three months;
o  invest in securities within certain statutory limits; and
o  distribute to its shareholders at least 90% of its net income earned
   during the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and any
short-term capital gains received as cash or additional Shares. No
portion of any income dividend paid by the Fund is eligible for the
dividends received deduction available to corporations. These dividends
and any short-term capital gains are taxable as ordinary income.
   Capital Gains
      Capital gains experienced by the Fund could result in an increase
      in dividends. Capital losses could result in a decrease in
      dividends. If, for some extraordinary reason, the Fund realizes
      net long-term capital gains, it will distribute them at least once
      every 12 months.
YIELD
The Fund's yield for the seven-day period ended November 30, 1994, was
5.08% for Institutional Shares. The yield for Investment Shares was
4.78% for the same period.
The Fund calculates its yield for both classes of Shares daily, based
upon the seven days ending on the day of the calculation, called the
"base period." This yield is computed by:
o  determining the net change in the value of a hypothetical account
   with a balance of one Share at the beginning of the base period, with
   the net change excluding capital changes but including the value of
   any additional Shares purchased with dividends earned from the
   original one Share and all dividends declared on the original and any
   purchased Shares;
o  dividing the net change in the account's value by the value of the
   account at the beginning of the base period to determine the base
   period return; and
o  multiplying the base period return by (365/7).
To the extent that financial institutions and broker/dealers charge fees
in connection with services provided in conjunction with an investment
in either class of Shares, the performance will be reduced for those
shareholders paying those fees.
EFFECTIVE YIELD
The Fund's effective yield for the seven-day period ended November 30,
1994, was 5.21% for Institutional Shares. The effective yield for
Investment Shares was 4.89% for the same period.
The Fund's effective yield for both classes of Shares is computed by
compounding the unannualized base period return by:
o  adding 1 to the base period return;
o  raising the sum to the 365/7th power; and
o  subtracting 1 from the result.
PERFORMANCE COMPARISONS
The performance of both classes of Shares depends upon such variables
as:
o  portfolio quality;
o  average portfolio maturity;
o  type of instruments in which the portfolio is invested;
o  changes in interest rates on money market instruments;
o  changes in the expenses of the Fund or of either class of Shares; and
o  the relative amount of Fund cash flow.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors, such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price.  The financial publications and/or indices which
the Fund uses in advertising may include:
o  SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
   representative yields for selected securities, issued by the U.S.
   Treasury, maturing in 30 days.
o  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 the offering price over a specific period of time. From time to
   time, the Fund will quote its Lipper ranking in the "institutional
   short-term U.S. Treasury funds" and "short-term U.S. Treasury funds"
   categories in advertising and sales literature.
o  Money,  a monthly magazine, regularly ranks money market funds in
   various categories based on the latest available seven-day compound
   (effective) yield. From time to time, the Fund will quote its MONEY
   ranking in advertising and sales literature.
o  BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a
   financial reporting service which publishes weekly average rates of
   50 leading bank and thrift institution money market deposit accounts.
   The rates published in the index are averages of the personal account
   rates offered on the Wednesday prior to the date of publication by
   ten of the largest banks and thrifts in each of the five largest
   Standard Metropolitan Statistical Areas. Account minimums range
   upward from $2,500 in each institution and compounding methods vary.
   If more than one rate is offered, the lowest rate is used. Rates are
   subject to change at any time specified by the institution.
o  IBC/DONOGHUE'S MONEY FUND REPORT publishes annualized yields of
   hundreds of money market funds on a weekly basis and, through its
   MONEY MARKET INSIGHT  publication, reports monthly and 12-month-to-
   date investment results for the same money funds.
Advertisements and other sales literature for either class of Shares may
quote total returns, which are calculated on standardized base periods.
Those total returns also represent the historic change in the value of
an investment in either class of Shares based on the monthly
reinvestment of dividends over a specified period of time.
090297-70-6
090297-40-9
2020205B (1/95)


                                  PROSPECTUS
                               JANUARY 31, 1995

The Institutional Shares of Biltmore Money Market Fund (the ``Fund'') offered
by this prospectus represent interests in a diversified portfolio of
securities, which is one of a series of investment portfolios in The Biltmore
Funds (the ``Trust''), an open-end management investment company (a mutual
fund).

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

The Fund is a money market fund which invests in money market instruments to
provide current income consistent with stability of principal and liquidity.
The Fund pursues this investment objective by investing exclusively in money
market instruments maturing in 397 days or less.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY, WACHOVIA BANK OF NORTH CAROLINA, N.A. OR ITS
AFFILIATES OR SUBSIDIARIES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE ``FDIC''), THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.

This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.

                                   BILTMORE
                              MONEY MARKET FUND
                     (A PORTFOLIO OF THE BILTMORE FUNDS)
                             INSTITUTIONAL SHARES


The Fund has also filed a Combined Statement of Additional Information for
Institutional Shares and Investment Shares, dated January 31, 1995 with the
Securities and Exchange Commission. The information contained in the Combined
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, purchase Institutional Shares or obtain other
information about the Fund by writing to the Fund or by calling your Wachovia
Bank (as defined herein) account officer.


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.


================================================================================
            TABLE OF CONTENTS

- ---------------------------------------------------
SUMMARY OF FUND EXPENSES                                                       1
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES                                     2
- ---------------------------------------------------
GENERAL INFORMATION                                                            3
- ---------------------------------------------------
INVESTMENT INFORMATION                                                         3
Investment Objective                                                           3
Investment Policies                                                            3
  Acceptable Investments                                                       3
     U.S. Government Obligations                                               4
     Variable Rate Demand Notes                                                4
     Bank Instruments                                                          4
     Short-Term Credit Facilities                                              4
  Ratings                                                                      4
  Repurchase Agreements                                                        4
  Credit Enhancement                                                           5
  Demand Features                                                              5
  Restricted and Illiquid Securities                                           5
  When-Issued and Delayed Delivery
     Transactions                                                              5
  Investing in Securities of Other
     Investment Companies                                                      6
  Concentration of Investments                                                 6
  Lending of Portfolio Securities                                              6
Investment Risks                                                               6
Investment Limitations                                                         6
Regulatory Compliance                                                          6
- ---------------------------------------------------
THE BILTMORE FUNDS INFORMATION                                                 7
Management of the Trust                                                        7
  Board of Trustees                                                            7
  Investment Adviser                                                           7
     Advisory Fees                                                             7
     Adviser's Background                                                      7
Distribution of Institutional Shares                                           7
Administration of the Fund                                                     7
  Administrative Services                                                      7
  Custodian                                                                    8
  Transfer Agent, Dividend Disbursing
     Agent, and Portfolio Accounting
     Services                                                                  8
  Legal Services                                                               8
  Independent Auditors                                                         8
Expenses of the Fund and
  Institutional Shares                                                         8
- ---------------------------------------------------
NET ASSET VALUE                                                                8
- ---------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES                                              9
Share Purchases                                                                9
  Through the Wachovia Banks                                                   9
  Via a Sweep Account                                                          9
Minimum Investment Required                                                    9
What Shares Cost                                                               9
Certificates and Confirmations                                                 9
Dividends                                                                     10
Capital Gains                                                                 10
- ---------------------------------------------------
EXCHANGES                                                                     10
- ---------------------------------------------------
REDEEMING INSTITUTIONAL SHARES                                                10
By Telephone                                                                  10
- ---------------------------------------------------
SHAREHOLDER INFORMATION                                                       11
Voting Rights                                                                 11
Massachusetts Business Trusts                                                 11
- ---------------------------------------------------
EFFECT OF BANKING LAWS                                                        11
- ---------------------------------------------------
TAX INFORMATION                                                               12
- ---------------------------------------------------
PERFORMANCE INFORMATION                                                       12
- ---------------------------------------------------
OTHER CLASSES OF SHARES                                                       13
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES                                       14
- ---------------------------------------------------
FINANCIAL STATEMENTS                                                          15
- ---------------------------------------------------

REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS                                                          23

- ---------------------------------------------------
ADDRESSES                                                             BACK COVER

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

                            SUMMARY OF FUND EXPENSES

                              INSTITUTIONAL SHARES
                        SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S>                                                                                               <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)                            None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)                 None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)                                                                               None
Redemption Fees (as a percentage of amount redeemed, if applicable)                                    None
Exchange Fee                                                                                           None
</TABLE>

                 ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
                    (As a percentage of average net assets)

<TABLE>
<S>                                                                                               <C>
Management Fee (after waiver) (1)                                                                     0.16%
12b-1 Fees                                                                                             None
Other Expenses (after waiver & assumption) (2)                                                        0.22%
     Total Institutional Shares Operating Expenses (after waivers & assumption) (3)                   0.38%
</TABLE>


(1)  The management fee was reduced to reflect the voluntary waiver by the
     investment adviser. The adviser can terminate this voluntary waiver at any
     time at its sole discretion. The maximum management fee is 0.50%.

(2)  Other Expenses would have been 0.28% absent the voluntary waiver and the
     voluntary assumption by the administrator. The administrator may terminate
     the voluntary waiver and voluntary assumption at any time at its sole
     discretion.

(3)  The Annual Institutional Shares Operating Expenses would have been 0.78%
     absent the voluntary waivers and assumption described above in notes 1 and
     2.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Institutional Shares of the Money
Market Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "The Biltmore Funds
Information" and "Investing in Institutional Shares."


<TABLE>
<CAPTION>
Example                                                        1 Year     3 Years    5 Years   10 Years
<S>                                                           <C>        <C>        <C>        <C>
You would pay the following expenses on a $1,000 invest-
ment, assuming (1) 5% annual return and (2) redemption at
the end of each time period. The Fund charges no redemption
fees for Institutional Shares.                                   $4         $12        $21        $48
</TABLE>

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

The information set forth in the foregoing table and example relates only to
Institutional Shares of the Fund. The Fund also offers another class of shares
called Investment Shares. Investment Shares are subject to certain of the same
expenses with the addition of a maximum 12b-1 fee of 0.40% of the Investment
Shares' average net assets. See "Other Classes of Shares."

================================================================================
                BILTMORE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                              INSTITUTIONAL SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 23.


<TABLE>
<CAPTION>
                                           Year Ended November 30,    1994       1993       1992*
<S>                                                                 <C>        <C>        <C>
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                  0.04       0.03       0.02
Less distributions
  Dividends to shareholders from net investment income                  (0.04)     (0.03)     (0.02)
                                                                    ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                      $    1.00  $    1.00  $    1.00
                                                                    ---------  ---------  ---------
Total Return**                                                           3.77%      3.05%      1.71%
Ratios to Average Net Assets
  Expenses                                                               0.38%      0.25%      0.14%(a)
  Net investment income                                                  3.74%      3.00%      3.38%(a)
  Expense waiver/reimbursement (b)                                       0.40%      0.56%      0.65%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                            $129,233     $177,090      $84,698
</TABLE>


 * Reflects operations for the period from June 2, 1992 (date of initial public
   investment) to November 30, 1992.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)


================================================================================
                              GENERAL INFORMATION


The Biltmore Funds was established as a Massachusetts business trust under a
Declaration of Trust dated November 19, 1991. The Declaration of Trust permits
the Trust to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. As of the date of this prospectus, the Board
of Trustees (the "Trustees") has established two classes of shares of Biltmore
Money Market Fund (the "Fund"), Institutional Shares and Investment Shares. This
prospectus relates only to the Institutional Shares of the Fund.



Institutional Shares are offered only for purchase through the bank subsidiaries
of Wachovia Corporation: Wachovia Bank of North Carolina, N.A., Wachovia Bank of
Georgia, N.A., Wachovia Bank of South Carolina, N.A. (formerly known as The
South Carolina National Bank), and their affiliates (collectively, the "Wachovia
Banks"). Institutional Shares are offered only to accounts held by the Wachovia
Banks in a fiduciary, advisory agency, custodial, or similar capacity. The Fund
offers a convenient means of accumulating an interest in a
professionally-managed, diversified portfolio limited to money market
instruments maturing in 397 days or less. Investors should consult their account
agreement with the Wachovia Banks for any applicable minimum investment.


The Fund attempts to stabilize the value of a share at $1.00. Institutional
Shares are currently sold and redeemed at that price.


The other portfolios in the Trust are Biltmore Balanced Fund, Biltmore Emerging
Markets Fund, Biltmore Equity Fund, Biltmore Equity Index Fund, Biltmore Fixed
Income Fund, Biltmore Prime Cash Management Fund (Institutional Shares),
Biltmore Quantitative Equity Fund, Biltmore Short-Term Fixed Income Fund,
Biltmore Special Values Fund, Biltmore Tax-Free Money Market Fund (Institutional
and Investment Shares), and Biltmore U.S. Treasury Money Market Fund
(Institutional Shares and Investment Shares).


================================================================================
                             INVESTMENT INFORMATION

INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal and liquidity. The investment objective cannot be
changed without approval of shareholders. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.

INVESTMENT POLICIES
The Fund pursues its investment objective by investing exclusively in a
portfolio of money market instruments maturing in 397 days or less. The average
maturity of money market instruments in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less.

Unless indicated otherwise, the investment policies may be changed by the
Trustees without the approval of shareholders. Shareholders will be notified
before any material changes in these policies become effective.

ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are rated in the highest short-term rating categories by one or
more nationally recognized statistical rating organizations ("NRSROs") or are of
comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:

. commercial paper (including Canadian Commercial Paper and Europaper);
. certificates of deposit, demand and time deposits, saving shares, bankers'
  acceptances, and other instruments of domestic and foreign banks and other
  deposit institutions;
. corporate debt obligations, including variable rate demand notes;
. obligations of the U.S. government, its agencies and instrumentalities; and
. repurchase agreements.

The Fund invests only in instruments denominated and payable in U.S. dollars.

For further discussion of the instruments described above and rating categories,
consult the Fund's Combined Statement of Additional Information.

U.S. Government Obligations. The types of U.S. government obligations in which
the Money Market Fund may invest generally include direct obligations of the
U.S. Treasury (such as U.S. Treasury bills, notes and bonds) and obligations
issued or guaranteed by U.S. government agencies or instrumentalities. These
securities are backed by:

. the full faith and credit of the U.S. Treasury;

. the issuer's right to borrow from the U.S. Treasury;

. the discretionary authority of the U.S. government to purchase certain
  obligations of agencies or instrumentalities; or

. the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:


 Farm Credit System, including the National Bank for Cooperatives, Farm Credit
 Banks, and Banks for Cooperatives; Farmers Home Administration; Federal Home
 Loan Banks; Federal Home Loan Mortgage Corporation; Federal National Mortgage
 Association; Government National Mortgage Association; and Student Loan
 Marketing Association.


Variable Rate Demand Notes. Variable rate demand notes are long-term corporate
debt instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear interest
at a rate that is intended to cause the securities to trade at par. The interest
rate may float or be adjusted at regular intervals (ranging from daily to
annually), and is normally based on an interest rate index or a published
interest rate. Most variable rate demand notes allow the Fund to demand the
repurchase of the security on not more than seven days prior notice. Other notes
only permit the Fund to tender the security at the time of each interest rate
adjustment or at other fixed intervals. See "Demand Features." The Fund treats
variable rate demand notes as maturing on the later of the date of the next
interest rate adjustment or the date on which the Fund may next tender the
security for repurchase.

Bank Instruments. The Fund only invests in U.S. and foreign bank instruments
either issued by an institution having capital, surplus and undivided profits
over $100 million or insured by the Bank Insurance Fund ("BIF"), which is
administered by the FDIC. Bank instruments may include Eurodollar Certificates
of Deposit ("ECDs"), Yankee Certificates of Deposit ("Yankee CDs") and
Eurodollar Time Deposits ("ETDs"). The Fund will treat securities credit
enhanced with a bank's irrevocable letter of credit or unconditional guaranty as
bank instruments.

Short-Term Credit Facilities. Demand notes are short-term borrowing arrangements
between a corporation and an institutional lender (such as the Fund) payable
upon demand by either party. The notice period for demand typically ranges from
one to seven days, and the party may demand full or partial payment. The Fund
may also enter into, or acquire participations in, short-term revolving credit
facilities with corporate borrowers. Demand notes and other short-term credit
arrangements usually provide for floating or variable rates of interest.


RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1+ or A-1 by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch") are
all considered rated in the highest short-term rating category. The Fund will
follow applicable regulations in determining whether a security rated by more
than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. The Fund or its
custodian will take possession of the securities subject to repurchase
agreements, and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition
of such securities. The Fund will only enter into repurchase agreements with
banks and other recognized financial institutions, such as broker/dealers, which
are deemed by the Fund's investment adviser to be creditworthy pursuant to
guidelines established by the Trustees.


CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may have been
credit enhanced by a guaranty, letter of credit or insurance. The Fund typically
evaluates the credit quality and ratings of credit enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, the Fund
will not treat credit enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain circumstances,
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership or default of the credit enhancer will adversely affect the quality
and marketability of the underlying security.

DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 10% of its net assets.

The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law, and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Fund intends,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Fund's investment adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Fund intends to not subject such
paper to the limitation applicable to restricted securities.


WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.

The Fund may dispose of a commitment prior to settlement if the Fund's
investment adviser deems it appropriate to do so. In addition, the Fund may
enter into transactions to sell purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or losses
upon the sale of such commitments.


INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3%
of the total outstanding voting stock of any investment company, invest more
than 5% of its total assets in any one investment company, or invest more than
10% of its total assets in investment companies in general. The Fund will only
invest in other investment companies that are money market funds having
investment objectives and policies similar to its own and primarily for the
purpose of investing short-term cash which has not yet been invested in other
portfolio instruments. The adviser to the Fund will waive its advisory fee on
assets invested in securities of open-end investment companies.

CONCENTRATION OF INVESTMENTS. The Fund may invest more than 25% of the value of
its total assets in cash or certain money market instruments (including
instruments issued by a U.S. branch of a domestic bank having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment),
securities issued or guaranteed by the U.S. government, its agencies, or
instrumentalities, or instruments secured by these money market instruments,
such as repurchase agreements.


LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term basis to broker/dealers,
banks, or other institutional borrowers of securities. The Fund will only enter
into loan arrangements with broker/dealers, banks, or other institutions which
the Fund's investment adviser has determined are creditworthy under guidelines
established by the Trustees, where loaned securities are marked to market daily
and where the Fund receives collateral equal to at least 100% of the value of
the securities loaned. The Fund will limit the amount of portfolio securities it
may lend to not more than one-third of its total assets. There is the risk that
when lending portfolio securities, the securities may not be available to the
Fund on a timely basis and the Fund may, therefore, lose the opportunity to sell
the securities at a desirable price. In addition, in the event that a borrower
of securities would file for bankruptcy or become insolvent, disposition of the
securities may be delayed pending court action.


INVESTMENT RISKS


ECDs, ETDs, Yankee CDs, and Europaper are subject to somewhat different risks
than domestic obligations of domestic issuers. Examples of these risks include
international economic and political developments, foreign governmental
restrictions that may adversely affect the payment of principal or interest,
foreign withholdings or other taxes on interest income, difficulties in
obtaining or enforcing a judgment against the issuing bank, and the possible
impact of interruptions in the flow of international currency transactions.
Different risks may also exist for ECDs, ETDs, and Yankee CDs because the banks
issuing these instruments, or their domestic or foreign branches, are not
necessarily subject to the same regulatory requirements that apply to domestic
banks, such as reserve requirements, loan limitations, examinations, accounting,
auditing, and recordkeeping, and the public availability of information. These
factors will be carefully considered by the Fund's investment adviser in
selecting investments for the Fund.


INVESTMENT LIMITATIONS
The Fund will not:

. borrow money directly or through reverse repurchase agreements (arrangements
  in which the Fund sells a money market instrument for a percentage of its cash
  value with an agreement to buy it back on a set date) except, under certain
  circumstances, the Fund may borrow up to one-third of the value of its total
  assets; nor

. with respect to 75% of the value of its total assets, invest more than 5% of
  the value of its total assets in securities of any one issuer (other than
  cash, cash items or securities issued or guaranteed by the government of the
  United States or its agencies or instrumentalities and repurchase agreements
  collateralized by U.S. government securities).

The above investment limitations cannot be changed without shareholder approval.
For additional information regarding the Fund's investment limitations, please
refer to Combined Statement of Additional Information.

REGULATORY COMPLIANCE

The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and the Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. The Fund will
invest more than 5% of its assets in any one issuer only under the
circumstances permitted by Rule 2a-7. The Fund will also determine the
effective maturity of its investments, as well as its ability to consider a
security as having received the requisite short-term ratings by NRSROs,
according to Rule 2a-7. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of its
shareholders.

================================================================================

                         THE BILTMORE FUNDS INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Board of Trustees is responsible for managing the Trust's
business affairs and for exercising all the Trust's powers except those reserved
for the shareholders.

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Wachovia Investment Management
Group (the "Adviser"), a business unit of Wachovia Bank of North Carolina, N.A.,
subject to direction by the Trustees. The Adviser continually conducts
investment research and supervision of investments for the Fund and is
responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the assets of the Fund.


Advisory Fees. The Adviser receives an annual investment advisory fee equal to
0.50 of 1% of the Fund's average aggregate daily net assets. The investment
advisory contract provides that such fee shall be accrued and paid daily. The
Adviser has undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states. The Adviser may voluntarily choose to
waive a portion of its fee or reimburse the Fund for certain other expenses of
the Fund but reserves the right to terminate such waiver or reimbursement at any
time at its sole discretion.


Adviser's Background. Wachovia Bank of North Carolina, N.A., is a direct,
wholly-owned subsidiary of Wachovia Corporation, a registered bank holding
company headquartered in Winston-Salem, North Carolina and Atlanta, Georgia.
Through offices in eight states, Wachovia Corporation and its subsidiaries
provide a broad range of financial services to individuals and businesses.

Wachovia Bank of North Carolina, N.A. is a national banking association, which
offers a broad range of financial services, including commercial and consumer
loans, corporate, institutional, and personal trust services, demand and time
deposit accounts, letters of credit and international financial services.


Wachovia Investment Management Group employs an experienced staff of
professional investment analysts, portfolio managers and traders. The Adviser
uses fundamental analysis and other investment management disciplines to
identify investment opportunities. Wachovia Bank of North Carolina, N.A.,
together with its affiliates, Wachovia Bank of Georgia, N.A. and Wachovia Bank
of South Carolina, N.A., have been managing trust assets for over 100 years,
with approximately $17.3 billion in managed assets as of September 30, 1994.
Wachovia Investment Management Group has served as investment adviser for The
Biltmore Funds since March 9, 1992. Wachovia Bank of North Carolina, N.A. also
serves as investment adviser to the Biltmore North Carolina Municipal Bond Fund,
a portfolio of The Biltmore Municipal Funds, another investment company. As part
of their regular banking operations, the Wachovia Banks may make loans to public
companies. Thus, it may be possible, from time to time, for the Fund to hold or
acquire the securities of issuers which are also lending clients of the Wachovia
Banks. The lending relationship will not be a factor in the selection of
securities.

DISTRIBUTION OF INSTITUTIONAL SHARES

Federated Securities Corp. is the distributor for shares of the Fund. It is a
Pennsylvania corporation organized on November 14, 1969, and is the distributor
for a number of investment companies. Federated Securities Corp. is a subsidiary
of Federated Investors.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with the
administrative personnel and services necessary to operate the Fund. Such
services include the preparation of filings with the Securities and Exchange
Commission and other regulatory authorities, assistance with respect to
meetings of the Trustees, shareholder servicing and accounting services, and
other administrative services. Federated Administrative Services provides these
at an annual rate, computed and payable daily, as specified below:


<TABLE>
<CAPTION>
                         Average Aggregate Daily Net
      Maximum            Assets of The Biltmore Funds
Administrative Fee     and The Biltmore Municipal Funds

<S>                  <C>
    0.150 of 1%           on the first $250 million
    0.125 of 1%            on the next $250 million
    0.100 of 1%            on the next $250 million
    0.075 of 1%      on assets in excess of $750 million
</TABLE>


The administrative fee received during any fiscal year for the Fund and for each
of the other portfolios of The Biltmore Funds shall aggregate at least $75,000.
Federated Administrative Services may choose voluntarily to waive or reimburse a
portion of its fee at any time.



CUSTODIAN. Wachovia Bank of North Carolina, N.A., Winston-Salem, North Carolina,
is custodian (the "Custodian") for the securities and cash of the Fund. Under
the Custodian Agreement, Wachovia Bank of North Carolina, N.A. holds the Fund's
portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties. For the services to be provided to the Trust
pursuant to the Custodian Agreement, the Trust pays Wachovia Bank of North
Carolina, N.A. an annual fee based upon the average daily net assets of the Fund
and which is payable monthly. The Custodian will also charge transaction fees
and out-of-pocket expenses.



TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent for the shares of the Fund and dividend disbursing
agent for the Fund. Federated Services Company also provides certain accounting
and recordkeeping services with respect to the Fund's portfolio investments.



LEGAL SERVICES. Legal services for the Fund are provided by Kirkpatrick &
Lockhart, Washington, D.C. Piper & Marbury, Washington, D.C. serves as counsel
to the independent Trustees.



INDEPENDENT AUDITORS. The independent auditors are Ernst & Young LLP,
Pittsburgh, Pennsylvania.


EXPENSES OF THE FUND AND INSTITUTIONAL SHARES

Holders of Institutional Shares pay their allocable share of Fund and Trust
expenses. The Trust expenses for which holders of Institutional Shares pay their
allocable share include, but are not limited to: the cost of organizing the
Trust and continuing its existence; registering the Trust; Trustees' fees;
auditors' fees; the cost of meetings of Trustees; legal fees of the Trust;
association membership dues and such non-recurring and extraordinary items as
may arise.

Each Fund's expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund
under state and federal law; investment advisory services, taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise.

At present, no expenses are allocated to Institutional Shares as a class.
However, the Trustees reserve the right to allocate certain other expenses to
the shareholders of a particular class as they deem appropriate ("Class
Expenses"). In any case, Class Expenses would be limited to: transfer agent fees
as identified by the transfer agent as attributable to holders of Institutional
Shares; printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange Commission
and registration fees paid to states; expenses related to administrative
personnel and services as required to support holders of Institutional Shares;
legal fees relating solely to Institutional Shares; and Trustees' fees incurred
as a result of issues relating solely to Institutional Shares.

================================================================================
                                NET ASSET VALUE

The Fund attempts to stabilize the net asset value of Institutional Shares at
$1.00 by valuing the portfolio securities using the amortized cost method. The
net asset value per share is determined by adding the interest of the
Institutional Shares in the value of all securities and other assets of the
Fund, subtracting the interest of the Institutional Shares in the liabilities
of the Fund and those attributable to Institutional Shares, and dividing the
remainder by the total number of Institutional Shares outstanding. The Fund, of
course, cannot guarantee that its net asset value will always remain at $1.00
per share.

================================================================================
                       INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES

Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Institutional Shares may be
purchased by or through the Wachovia Banks. Texas residents must purchase,
exchange, and redeem shares through Federated Securities Corp. at 1-800-
618-8573. In connection with the sale of Fund shares, the distributor may, from
time to time, offer certain items of nominal value to any shareholder or
investor. The Fund and the distributor reserve the right to reject any purchase
request.

THROUGH THE WACHOVIA BANKS. To place an order to purchase Institutional Shares
of the Fund, customers of the Wachovia Banks may telephone, send written
instructions, or place the order in person with their account officer in
accordance with the procedures established by the Wachovia Banks and as set
forth in the relevant account agreement.


Payment may be made to the Wachovia Banks by check, federal funds, or by
debiting a customer's account with the Wachovia Banks. Orders are considered
received after payment by check is converted into federal funds and received by
the Wachovia Banks, normally the next business day. When payment is made with
federal funds, the order is considered received when federal funds are received
by the Wachovia Banks or available in the customer's account. Purchase orders
must be communicated to the Wachovia Banks by 11:00 a.m. (Eastern time) and
payment by federal funds must be received by the Wachovia Banks before 4:00 p.m.
(Eastern time) on the same day as the order to earn dividends for that day.
Shares cannot be purchased on days on which the Wachovia Banks, the New York
Stock Exchange, and the Federal Reserve Wire System are not open for business.


VIA A SWEEP ACCOUNT. If you are investing in the Fund as part of a Wachovia Bank
sweep account program, automatic purchases and redemptions will be made by the
Wachovia Banks on your behalf pursuant to the sweep agreement you signed as part
of your trust account with the Wachovia Banks.

MINIMUM INVESTMENT REQUIRED

Investors should consult their account agreement with the Wachovia Banks in
order to determine any applicable minimum investment. Minimum investment
requirements may vary under different sweep agreements.

WHAT SHARES COST

Institutional Shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.

The net asset value is determined at 12:00 noon and 4:00 p.m. (Eastern time),
Monday through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net asset value
might be materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) the following
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day and Christmas Day.

CERTIFICATES AND CONFIRMATIONS


As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued unless
requested in writing to the Fund.

Federated Services Company provides the Wachovia Banks, as shareholders of
record, with detailed statements on a monthly basis that include account
balances, information on each purchase or redemption, and a report of dividends
paid during the month. These statements will serve as confirmations of all
transactions in the shareholders' accounts for the statement period.


Investors purchasing through the Wachovia Banks will receive account statements
from those institutions periodically as required by the relevant account
agreement.

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends will be reinvested on
payment dates in additional Institutional Shares of the Fund unless cash
payments are requested by writing to the Wachovia Banks.

CAPITAL GAINS

Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If for some extraordinary reason the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.

================================================================================
                                   EXCHANGES

A shareholder may exchange Institutional Shares of one fund for Institutional
Shares of any other fund that does not assess a sales charge on the basis of
their respective net asset values by calling or writing to his account officer
at the Wachovia Banks. Telephone exchange instructions may be recorded. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions. Institutional Shares
purchased by check are eligible for exchange after the purchase check has
cleared, which could take up to ten calendar days. The exchange feature applies
to Institutional Shares of each fund that does not assess a sales charge as of
the effective offering date of each fund's Institutional Shares.

Orders to exchange Institutional Shares of one fund for Institutional Shares of
any of the other Biltmore Funds that do not assess a sales charge will be
executed by redeeming the Institutional Shares owned at net asset value next
determined after receipt of the order and purchasing Institutional Shares of any
such other Biltmore Funds at the net asset value determined after the proceeds
from such redemption become available. Orders for exchanges received by the Fund
after 12:00 noon but prior to 4:00 p.m. (Eastern time) on any day the Trust is
open for business will be executed at the price determined at 4:00 p.m. (Eastern
time) that day. Orders for exchanges received after 4:00 p.m. (Eastern time) on
any business day will be executed at the price determined at 12:00 noon (Eastern
time) on the next business day.

An excessive number of exchanges may be disadvantageous to the Trust. Therefore
the Trust, in addition to its right to reject any exchange, reserves the right
to modify or terminate the exchange privilege of any shareholder, provided the
shareholder is given 60 days' written notice.

An exchange order must comply with the requirements for a redemption and
purchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial investment requirement
imposed by the relevant account agreement. An exchange constitutes a sale for
federal income tax purposes.

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Before the exchange, a shareholder
should review a prospectus of the fund for which the exchange is being made.

================================================================================
                         REDEEMING INSTITUTIONAL SHARES

The Fund redeems shares at their net asset value next determined after the
Wachovia Banks receive the redemption request. Redemptions will be made on days
on which the Fund computes its net asset value. Requests for redemption can be
made in person, by telephone, or by writing to your account officer. If at any
time the Fund shall determine it necessary to terminate or modify any of these
methods of redemption, shareholders would be promptly notified.

BY TELEPHONE


A shareholder who is a customer of the Wachovia Banks may redeem Institutional
Shares of the Fund by telephoning his account officer. For calls received by the
Wachovia Banks before 11:00 a.m. (Eastern time) proceeds will normally be wired
the same day to the shareholder's account at the Wachovia Banks or a check will
be sent to the address of record. Those shares will not be entitled to the
dividend declared that day. For calls received by the Wachovia Banks after 11:00
a.m. (Eastern time) proceeds will normally be wired or a check mailed the
following business day. Those shares will be entitled to the dividend declared



on the day the redemption request was received. In no event will proceeds be
wired or a check mailed more than seven days after a proper request for
redemption has been received. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone. If
such a case should occur, another method of redemption should be considered.
Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.


================================================================================
                            SHAREHOLDER INFORMATION

VOTING RIGHTS


Each Institutional Share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
all classes of each fund in the Trust have equal voting rights, except that in
matters affecting only a particular fund or class, only shares of that fund or
class are entitled to vote. As of January 6, 1995, the Wachovia Banks and their
various affiliates and subsidiaries, acting in various capacities for numerous
accounts, were the owner of record of in excess of 25% of the outstanding shares
of the Fund, and therefore may, for certain purposes, be deemed to control the
Fund and be able to affect the outcome of certain matters presented for a vote
of shareholders.


As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or the Fund's operation and for the election of Trustees
under certain circumstances.

Trustees may be removed by the Trustees or shareholders at a special meeting. A
special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

MASSACHUSETTS BUSINESS TRUSTS

Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect shareholders,
the Trust has filed legal documents with Massachusetts that expressly disclaim
the liability of shareholders for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or the Trustees enter into or sign on behalf
of the Fund.

In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of the Fund, the Trust is required by the Declaration of
Trust to use the property of the Fund to protect or compensate the shareholder.
On request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Fund for any act or obligation of the Trust on behalf of the
Fund. Therefore, financial loss resulting from liability as a shareholder of the
Fund will occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.

================================================================================
                             EFFECT OF BANKING LAWS

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting or distributing most securities. However, such
banking laws and regulations do not prohibit such a holding company or its bank
and non-bank affiliates generally from acting as investment adviser, transfer
agent or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of their customer. The Fund's
investment adviser, Wachovia Investment Management Group, and its affiliate
banks, are subject to such banking laws and regulations.

The Adviser believes, based on the advice of its counsel, that it may perform
the services for the Fund contemplated by its advisory and custody agreements
with the Trust without violation of the Glass-Steagall Act or other applicable
banking laws or regulations. Changes in either federal or state statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present or future statutes and regulations,
could prevent the Adviser from continuing to perform all or a part of the above
services for its customers and/or the Fund. If it were prohibited from engaging
in these customer-related activities, the Trustees would consider alternative
service providers and means of continuing available investment services. In
such event, changes in the operation of the Fund may occur, including the
possible termination of any automatic or other Fund share investment and
redemption services then being provided by the Adviser. It is not expected that
existing Fund shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities to the Adviser is found) as a result
of any of these occurrences.


The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above, or should Congress relax current restrictions on depository institutions,
the Trustees will consider appropriate changes in the services.


State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

================================================================================

                                TAX INFORMATION

The Fund expects to pay no federal income tax because it will meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.


Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.

Unless otherwise exempt, shareholders will be subject to federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local tax laws.

================================================================================

                            PERFORMANCE INFORMATION

From time to time, the Fund advertises its yield and effective yield for
Institutional Shares.

The yield of Institutional Shares represents the annualized rate of income
earned on an investment in Institutional Shares over a seven-day period. It is
the annualized dividends earned during the period on the investment shown as a
percentage of the investment. The effective yield is calculated similarly to the
yield but, when annualized, the income earned by an investment in Institutional
Shares is assumed to be reinvested daily. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.

Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in Institutional Shares after reinvesting all distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

Yield and effective yield will be calculated separately for Institutional Shares
and Investment Shares. Because Investment Shares are subject to Rule 12b-1 fees,
the yield and effective yield of Institutional Shares for the same period will
exceed that of Investment Shares.

From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.

================================================================================
                            OTHER CLASSES OF SHARES


Investment Shares are sold to customers of the Wachovia Banks who are not
eligible to purchase Institutional Shares and customers of Wachovia Investments,
Inc. Investment Shares are subject to a minimum initial investment of $1,000.
Investment Shares are sold at net asset value and are distributed pursuant to a
Rule 12b-1 Plan adopted by the Trust, whereby the distributor is paid a maximum
fee of 0.40 of 1% of the Investment Shares' average daily net assets.
Institutional Shares are distributed without a Rule 12b-1 Plan.


Financial institutions and brokers providing sales and/or administrative
services may receive different compensation from one class of shares than from
another class of shares.

The amount of dividends payable to Investment Shares will be less than those
payable to Institutional Shares by the difference between class expenses and
distribution expenses borne by shares of each respective class. The stated
advisory fee is the same for both classes of shares.

================================================================================

                BILTMORE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                               INVESTMENT SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 23.


<TABLE>
<CAPTION>
                                           Year Ended November 30,    1994       1993       1992*
<S>                                                                 <C>        <C>        <C>
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                  0.03       0.03       0.01
Less distributions
  Dividends to shareholders from net investment income                  (0.03)     (0.03)     (0.01)
                                                                    ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                      $    1.00  $    1.00  $    1.00
                                                                    ---------  ---------  ---------
Total Return**                                                           3.46%      2.74%      1.48%
Ratios to Average Net Assets
  Expenses                                                               0.68%      0.55%      0.48%(a)
  Net investment income                                                  3.44%      2.70%      3.44%(a)
  Expense waiver/reimbursement (b)                                       0.50%      0.66%      0.75%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                             $56,105     $9,842       $3,106
</TABLE>


  * Reflects operations for the period from June 9, 1992 (date of initial public
    investment) to November 30, 1992.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expenses and net
    investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)

================================================================================
              BILTMORE MONEY MARKET FUND PORTFOLIO OF INVESTMENTS

                               NOVEMBER 30, 1994


<TABLE>
<CAPTION>
  Principal
   Amount                                                                                     Value
<C>            <S>                                                                        <C>
- --------------------------------------------------------------------------------------------------------
Bankers' Acceptance--1.1%
$   2,000,000  Mellon Bank, 4.88%, 12/22/94                                               $    1,994,307
                                                                                          --------------
Certificates of Deposit--36.7%
    5,000,000  ABN-AMRO Bank, 5.78%, 3/16/95                                                   5,001,799
    4,000,000  Bank of New York, 5.25%, 5/4/95                                                 3,985,480
    4,000,000  CIBC New York, 5.05%, 12/5/94                                                   4,000,000
    5,000,000  Commonwealth Bank of Australia, 4.98%, 12/30/94                                 5,000,344
    5,000,000  Deutsche Bank, Yankee, 5.76%, 4/6/95                                            4,999,375
    5,000,000  Credit Suisse, Yankee, 5.21%, 3/3/95                                            4,998,029
    9,000,000  National Westminster Bank, 5.14%, 12/19/94                                      9,000,178
    8,000,000  Rabobank, Yankee, 5.09%-5.97%, 2/1/95-2/28/95                                   7,998,537
    9,000,000  Socie 1/3te Generale Bank, 5.20%-5.55%, 1/31/95-2/28/95                         8,997,515
    9,000,000  Swiss Bank of New York, 5.50%, 1/13/95                                          9,000,000
    5,000,000  Union Bank of Switzerland, Yankee, 6.02%, 5/15/95                               5,000,445
                                                                                          --------------
               Total Certificates of Deposit                                                  67,981,702
                                                                                          --------------
*Commercial Paper--36.5%
               FINANCE-AUTOMOTIVE--4.8%
    9,000,000  Ford Motor Credit Corp., 5.57%, 1/9/95                                          8,945,693
                                                                                          --------------
               FINANCE-MISCELLANEOUS--3.2%
    6,000,000  TransAmerica Finance Corp., 5.97%, 2/17/95                                      5,922,390
                                                                                          --------------
               FINANCE-OIL--7.5%
    8,000,000  Chevron Oil Finance Co., 5.18%, 12/12/94                                        7,987,338
    6,000,000  Texaco, Inc., 5.62%, 1/13/95                                                    5,959,723
                                                                                          --------------
               Total                                                                          13,947,061
                                                                                          --------------
               FINANCE-RETAIL--12.9%
    9,000,000  American General Finance Corp., 5.75%, 1/27/95                                  8,918,063
    8,000,000  Associates Corp. of North America, 5.35%, 12/15/94                              7,983,356
    7,000,000  MCA Funding Corp., 5.07%-5.17%, 1/12/95-2/6/95                                  6,951,181
                                                                                          --------------
               Total                                                                          23,852,600
                                                                                          --------------
               FINANCE-TELECOMMUNICATIONS--4.3%
    8,000,000  BellSouth Capital Funding Corp., 5.00%-5.49%, 12/5/94-2/6/95                    7,956,908
                                                                                          --------------
               FOOD & BEVERAGE--3.8%
$   7,000,000  Sara Lee Corp., 4.70%, 12/2/94                                             $    6,999,086
                                                                                          --------------
               Total Commercial Paper                                                         67,623,738
                                                                                          --------------
Time Deposits--12.9%
               FINANCE-BANKING--12.9%
    8,000,000  First Union Nassau Bank, 5.81%, 12/1/94                                         8,000,000
    8,000,000  NBD Bank, Canada, 5.75%, 12/1/94                                                8,000,000
    8,000,000  Toronto-Dominion Bank, 5.75%, 12/1/94                                           8,000,000
                                                                                          --------------
               Total Time Deposits                                                            24,000,000
                                                                                          --------------
**Variable Rate Notes--9.7%
               FINANCE-BANKING--7.0%
    5,000,000  Boatmens National Bank, St. Louis, 5.72%, 8/16/95                               5,000,000
    3,000,000  Northern Trust Co., 5.75%, 7/20/95                                              2,990,917
    5,000,000  PNC Bank, Kentucky, 5.69%, 5/12/95                                              4,999,421
                                                                                          --------------
               Total                                                                          12,990,338
                                                                                          --------------
               FOOD & BEVERAGE--2.7%
    5,000,000  Coca-Cola Co., 6.10%, 8/29/95                                                   5,000,000
                                                                                          --------------
               Total Variable Rate Notes                                                      17,990,338
                                                                                          --------------
***Repurchase Agreement--7.9%
   14,715,632  Goldman Sachs, 5.65%, dated 11/30/94, due 12/1/94                              14,715,632
                                                                                          --------------
               Total Investments, at amortized cost and value                             $  194,305,717+
                                                                                          --------------
</TABLE>


  * Each issue shows the rate of discount at the time of purchase for discount
    issues, or the coupon for interest bearing issues.

 ** Denotes variable rate securities which show current rate and next demand
    date.

*** Repurchase agreement is fully collateralized by U.S. Treasury obligations
    based on market prices at the date of the portfolio.

  + Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of net assets
($185,337,876) at November 30, 1994.

(See Notes which are an integral part of the Financial Statements)

================================================================================
         BILTMORE MONEY MARKET FUND STATEMENT OF ASSETS AND LIABILITIES

                               NOVEMBER 30, 1994


<TABLE>
<S>                                                                         <C>           <C>
Assets:
Investments, at amortized cost and value                                                  $  194,305,717
Interest receivable                                                                              837,025
Deferred expenses                                                                                 14,467
                                                                                          --------------
     Total assets                                                                            195,157,209
Liabilities:
Payable for investments purchased                                           $  9,016,713
Dividends payable                                                                743,199
Accrued expenses                                                                  59,421
                                                                            ------------
     Total liabilities                                                                         9,819,333
                                                                                          --------------
Net Assets for 185,337,876 shares of beneficial interest outstanding                      $  185,337,876
                                                                                          --------------
Net Asset Value, Offering Price, and Redemption Proceeds Per Share:
Institutional Shares ($129,232,911 / 129,232,911 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
Investment Shares ($56,104,965 / 56,104,965 shares of beneficial interest outstanding)             $1.00
                                                                                          --------------
</TABLE>


(See Notes which are an integral part of the Financial Statements)

================================================================================
               BILTMORE MONEY MARKET FUND STATEMENT OF OPERATIONS

                          YEAR ENDED NOVEMBER 30, 1994


<TABLE>
<S>                                                                <C>         <C>           <C>
Investment Income:
Interest income                                                                              $  7,076,136
Expenses:
Investment advisory fee                                                        $    859,936
Trustees' fees                                                                        4,481
Administrative personnel and services fees                                          170,963
Custodian fees                                                                       34,397
Transfer and dividend disbursing agent fees and expenses                             55,002
Fund share registration costs                                                        52,444
Auditing fees                                                                        15,514
Legal fees                                                                           27,234
Printing and postage                                                                 23,938
Portfolio accounting fees                                                            56,919
Insurance premiums                                                                   14,500
Distribution services fees                                                          127,921
Miscellaneous                                                                        19,875
                                                                               ------------
     Total expenses                                                               1,463,124
Deduct--
  Waiver of investment advisory fee                                $  587,479
  Waiver of administrative personnel and services fees                 46,534
  Waiver of distribution services fees                                 31,980
  Reimbursement of other operating expenses by Administrator           52,852       718,845
                                                                   ----------  ------------
     Net expenses                                                                                 744,279
                                                                                             ------------
          Net investment income                                                              $  6,331,857
                                                                                             ------------
</TABLE>


(See Notes which are an integral part of the Financial Statements)

================================================================================
         BILTMORE MONEY MARKET FUND STATEMENT OF CHANGES IN NET ASSETS


<TABLE>
<CAPTION>
                                              Year Ended November 30,       1994             1993
<S>                                                                    <C>              <C>
- -------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income                                                  $     6,331,857  $     4,207,488
                                                                       ---------------  ---------------
Distributions to Shareholders--
Dividends to shareholders from net investment income:
  Institutional Shares                                                      (5,146,447)      (4,068,438)
  Investment Shares                                                         (1,185,410)        (139,050)
                                                                       ---------------  ---------------
     Change in net assets resulting from distributions to
     shareholders                                                           (6,331,857)      (4,207,488)
                                                                       ---------------  ---------------
Fund Share (Principal) Transactions--
Net proceeds from sale of shares                                           479,663,256      523,338,578
Cost of shares redeemed                                                   (481,257,539)    (424,210,993)
                                                                       ---------------  ---------------
     Change in net assets from Fund share transactions                      (1,594,283)      99,127,585
                                                                       ---------------  ---------------
          Change in net assets                                              (1,594,283)      99,127,585
Net Assets:
Beginning of period                                                        186,932,159       87,804,574
                                                                       ---------------  ---------------
End of period                                                          $   185,337,876  $   186,932,159
                                                                       ---------------  ---------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================

            BILTMORE MONEY MARKET FUND NOTES TO FINANCIAL STATEMENTS


                               NOVEMBER 30, 1994


(1) ORGANIZATION

The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Money Market Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.

The Fund offers two classes of shares: Institutional Shares and Investment
Shares. Investment Shares are identical in all respects to Institutional Shares,
except that Investment Shares are sold pursuant to a Distribution Plan (the
"Plan") adopted in accordance with the Act's Rule 12b-1.

(2) SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.

A.   INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
     its portfolio securities is in accordance with Rule 2a-7 under the Act.


B.   REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
     custodian bank to take possession, to have legally segregated in the
     Federal Reserve Book Entry System, or to have segregated within the
     custodian bank's vault, all securities held as collateral in support of
     repurchase agreement investments. Additionally, procedures have been
     established by the Fund to monitor, on a daily basis, the market value of
     each repurchase agreement's collateral to ensure the value of collateral at
     least equals the principal amount of the repurchase transaction, including
     accrued interest.


     The Fund will only enter into repurchase agreements with banks and other
     recognized financial institutions, such as broker/dealers, which are deemed
     by the Fund's adviser to be creditworthy pursuant to guidelines established
     by the Board of Trustees (the "Trustees").

C.   INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
     are accrued daily. Bond premium and discount, if applicable, are amortized
     as required by the Internal Revenue Code, as amended (the "Code").
     Distributions to shareholders are recorded on the ex-dividend date.

D.   FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
     Code applicable to regulated investment companies and to distribute to
     shareholders each year substantially all of its taxable income.
     Accordingly, no provisions for federal tax are necessary.

E.   WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
     when-issued or delayed delivery transactions. The Fund records when-issued
     securities on the trade date and maintains security positions such that
     sufficient liquid assets will be available to make payment for the
     securities purchased. Securities purchased on a when-issued or delayed
     delivery basis are marked to market daily and begin earning interest on the
     settlement date.

F.   DEFERRED EXPENSES--The costs incurred by the Fund with respect to
     registration of its shares in its first fiscal year, excluding the initial
     expense of registering the shares, have been deferred and are being
     amortized using the straight-line method not to exceed a period of five
     years from the Fund's commencement date.

G.   OTHER--Investment transactions are accounted for on the trade date.

================================================================================
                           BILTMORE MONEY MARKET FUND

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At November 30, 1994, capital paid-in aggregated $185,337,876.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
                                                 Year Ended November 30,       1994            1993
- --------------------------------------------------------------------------------------------------------
Institutional Shares
<S>                                                                       <C>             <C>
Shares sold                                                                  385,548,512     508,765,112
Shares redeemed                                                             (433,405,663)   (416,373,470)
                                                                          --------------  --------------
     Net change resulting from Institutional Share transactions              (47,857,151)     92,391,642
                                                                          --------------  --------------
<CAPTION>
                                                 Year Ended November 30,       1994            1993
- --------------------------------------------------------------------------------------------------------
Investment Shares
<S>                                                                       <C>             <C>
Shares sold                                                                   94,114,744      14,573,466
Shares redeemed                                                              (47,851,876)     (7,837,523)
                                                                          --------------  --------------
     Net change resulting from Investment Share transactions                  46,262,868       6,735,943
                                                                          --------------  --------------
          Total net change resulting from Fund Share transactions             (1,594,283)     99,127,585
                                                                          --------------  --------------
</TABLE>

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.50 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its sole
discretion.

ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse a portion of the Fund's other operating expenses. FAS can modify
or terminate the voluntary waiver and reimbursement at any time at its sole
discretion.


DISTRIBUTION PLAN--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Investment Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.40 of 1% of the average daily net assets of the
Investment Shares, annually, to compensate FSC. The distributor may voluntarily
choose to waive a portion of its fee. The distributor can modify or terminate
this voluntary waiver at any time at its sole discretion.


TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund for which it is paid a fee. The FServ fee is based on the size, type
and number of accounts and transactions made by shareholders.

FServ also maintains the Fund's accounting records for which it is paid a fee.
The FServ fee is based on the level of the Fund's average net assets for the
period, plus out-of-pocket expenses.


Wachovia Bank of North Carolina, N.A. is the Fund's custodian for which it is
paid a fee. The fee is based on the level of the Fund's average net assets for
the period, plus out-of-pocket expenses.


================================================================================
                           BILTMORE MONEY MARKET FUND

ORGANIZATIONAL EXPENSES--Organizational expenses ($65,357) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following May 4, 1992 (date the Fund became
effective). For the fiscal year ended November 30, 1994, the Fund paid $13,270
pursuant to this agreement.

Certain of the Officers of the Trust are Officers and Directors or Trustees of
the above companies.

================================================================================
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Trustees and Shareholders of
THE BILTMORE FUNDS:


We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Money Market Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1994, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights (see pages 2 and 14 of this prospectus) for the periods
presented. 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.


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 included confirmation of securities owned as of
November 30, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Money Market Fund of The Biltmore Funds at November 30, 1994, and the
results of its operations for the year then ended, changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented, in conformity with generally accepted accounting
principles.

                                                               ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 12, 1995


================================================================================
                                  ADDRESSES

BILTMORE MONEY MARKET FUND                 Federated Investors Tower
INSTITUTIONAL SHARES                       Pittsburgh, Pennsylvania 15222-3779
- --------------------------------------------------------------------------------

DISTRIBUTOR                                Federated Securities Corp.
                                           Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779
- --------------------------------------------------------------------------------

INVESTMENT ADVISER                         Wachovia Investment Management Group
                                           301 North Main Street
                                           Winston-Salem, North Carolina 27150
- --------------------------------------------------------------------------------

CUSTODIAN                                  Wachovia Bank of North Carolina, N.A.
                                           Wachovia Trust Operations
                                           301 North Main Street
                                           Winston-Salem, North Carolina 27150
- --------------------------------------------------------------------------------

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, Federated Services Company
AND PORTFOLIO RECORDKEEPER                 Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779
- --------------------------------------------------------------------------------

COUNSEL TO THE BILTMORE FUNDS              Kirkpatrick & Lockhart
                                           1800 M Street, N.W.
                                           Washington, D.C. 20036-5891
- --------------------------------------------------------------------------------

COUNSEL TO THE INDEPENDENT TRUSTEES        Piper & Marbury
                                           1200 Nineteenth Street, N.W.
                                           Washington, D.C. 20036-2430
- --------------------------------------------------------------------------------

INDEPENDENT AUDITORS                       Ernst & Young LLP
                                           One Oxford Centre
                                           Pittsburgh, Pennsylvania 15219
- --------------------------------------------------------------------------------

                    BILTMORE MONEY MARKET FUND PROSPECTUS

                A DIVERSIFIED PORTFOLIO OF THE BILTMORE FUNDS
                  An Open-End, Management Investment Company


                                                                       090297102

January 31, 1995                                              2020203A-IS (1/95)





BILTMORE MONEY MARKET FUND

(A PORTFOLIO OF THE BILTMORE FUNDS)
INSTITUTIONAL SHARES
INVESTMENT SHARES
Combined Statement of Additional Information










    This Combined Statement of Additional Information should be read
    with the respective prospectus for Institutional Shares and
    Investment Shares of Biltmore Money Market Fund (the "Fund"), a
    portfolio in The Biltmore Funds (the "Trust"), dated January 31,
    1995. This Combined Statement is not a prospectus itself. To
    receive a copy of either prospectus, write to the Fund, call The
    Biltmore Service Center toll-free at 1-800-994-4414, or contact
    your Wachovia Bank account officer.
    Federated Investors Tower
    Pittsburgh, Pennsylvania 15222-3779
    
    Statement dated January 31, 1995
    
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED
INVESTORS
GENERAL INFORMATION ABOUT THE
FUND                                    1
INVESTMENT OBJECTIVE AND POLICIES       1
 Types of Investments                  1
 Investment Limitations                2
THE BILTMORE FUNDS MANAGEMENT           4
 Officers and Trustees                 4
 Fund Ownership                        5
 Trustees Compensation                 6
 Trustee Liability                     6
INVESTMENT ADVISORY SERVICES            6
 Adviser to the Fund                   6
 Advisory Fees                         7
ADMINISTRATIVE SERVICES                 7
BROKERAGE TRANSACTIONS                  7
PURCHASING SHARES                       8
 Distribution Plan (Investment
   Shares Only)                         8
 Conversion to Federal Funds           8
DETERMINING NET ASSET VALUE             9
 Use of the Amortized Cost
   Method                               9
REDEEMING SHARES                       10
 Redemption in Kind                   10
TAX STATUS                             10
 The Fund's Tax Status                10
 Shareholders' Tax Status             10
YIELD                                  10
EFFECTIVE YIELD                        11
PERFORMANCE COMPARISONS                11
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in the Trust.  The Trust was established as a
Massachusetts business trust under a Declaration of Trust dated November
19, 1991.
Shares of the Fund are offered in two classes, Institutional Shares and
Investment Shares (individually and collectively referred to as
"Shares," as the context may require). This Combined Statement of
Additional Information relates to both classes of the above-mentioned
Shares. Capitalized terms not otherwise defined in this Statement shall
have the same meaning assigned in the prospectuses.

INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide current income consistent
with stability of principal and liquidity. The investment objective
cannot be changed without approval of shareholders.
TYPES OF INVESTMENTS
The Fund invests exclusively in money market instruments which mature in
397 days or less and which include, but are not limited to, high quality
commercial paper and variable amount master demand notes, bank
instruments, and U.S. government obligations.
The instruments of banks whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation, such as certificates of deposit, demand and time
deposits, and bankers' acceptances, are not necessarily guaranteed by
that organization.
   U.S. Government Obligations
      The types of U.S. government obligations in which the Fund may
      invest generally include direct obligations of the U.S. Treasury
      (such as U.S. Treasury bills, notes, and bonds) and obligations
      issued or guaranteed by U.S. government agencies or
      instrumentalities. These securities are backed by:
      o the full faith and credit of the U.S. Treasury;
      o the issuer's right to borrow from the U.S. Treasury;
      o the discretionary authority of the U.S. government to purchase
        certain obligations of agencies or instrumentalities; or
      o the credit of the agency or instrumentality issuing the
        obligations.
      Examples of agencies and instrumentalities which may not always
      receive financial support from the U.S. government are:
      o  Farm Credit System, including the National Bank for
        Cooperatives, Farm Credit Banks, and Banks for Cooperatives;
      o Farmers Home Administration;
      o Federal  Home Loan Banks;
      o Federal Home Loan Mortgage Corporation;
      o Federal National Mortgage  Association;
      o Government  National Mortgage  Association; and
      o Student Loan Marketing Association.
   Bank Instruments
      In addition to domestic bank obligations, such as certificates of
      deposit, demand and time deposits, and bankers' acceptances, the
      Fund may invest in:
      o Eurodollar Certificates of Deposit issued by foreign branches
        of U.S. or foreign banks;
      o Eurodollar Time Deposits, which are U.S. dollar-denominated
        deposits in foreign branches of U.S. or foreign banks; and
      o Yankee Certificates of Deposit, which are U.S. dollar-
        denominated certificates of deposit issued by U.S. branches of
        foreign banks and held in the United States.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund.  No fees or other expenses,
other than normal transaction costs, are incurred.  However, liquid
assets of the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date.  These
assets are marked to market daily and are maintained until the
transaction has been settled.  The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in
return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Fund will repurchase
the portfolio instrument by remitting the original consideration plus
interest at an agreed upon rate. The use of reverse repurchase
agreements may enable the Fund to avoid selling portfolio instruments at
a time when a sale may be deemed to be disadvantageous, but the ability
to enter into reverse repurchase agreements does not ensure that the
Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund,
in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These assets are marked to
market daily and are maintained until the transaction has been settled.
INVESTMENT LIMITATIONS
   Issuing Senior Securities and Borrowing Money
      The Fund will not issue senior securities, except that the Fund
      may borrow money directly or through reverse repurchase agreements
      in amounts up to one-third of the value of its total assets,
      including the amount borrowed. The Fund will not borrow money or
      engage in reverse repurchase agreements for investment leverage,
      but rather as a temporary, extraordinary, or emergency measure or
      to facilitate management of the portfolio by enabling the Fund to
      meet redemption requests when the liquidation of portfolio
      securities is deemed to be inconvenient or disadvantageous.
   Lending Cash or Securities
      The Fund will not lend any of its assets, except portfolio
      securities up to one-third of the value of its total assets. This
      shall not prevent the Fund from purchasing or holding money market
      instruments, including repurchase agreements and variable amount
      demand master notes, permitted by its investment objective,
      policies, and limitations or by the Trust's Declaration of Trust.
   Investing in Real Estate
      The Fund will not purchase or sell real estate, including limited
      partnership interests, although it may invest in securities of
      issuers whose business involves the purchase or sale of real
      estate or in securities which are secured by real estate or
      interests in real estate.
   Investing in Commodities
      The Fund will not purchase or sell commodities, commodity
      contracts, or commodity futures contracts.
   Diversification of Investments
      With respect to securities comprising 75% of the value of its
      total assets, the Fund will not purchase securities of any one
      issuer (other than cash, cash items or securities issued or
      guaranteed by the government of the United States or its agencies
      or instrumentalities and repurchase agreements collateralized by
      U.S. government securities) if as a result more than 5% of the
      value of its total assets would be invested in the securities of
      that issuer.
   Concentration of Investments
      The Fund will not invest 25% or more of the value of its total
      assets in any one industry. The Fund may invest 25% or more of the
      value of its total assets in cash or certain money market
      instruments, including  securities issued or guaranteed by the
      U.S. government, its agencies, or instrumentalities, or
      instruments secured by these money market instruments, such as
      repurchase agreements.
   Underwriting
      The Fund will not underwrite any issue of securities, except as it
      may be deemed to be an underwriter under the Securities Act of
      1933 in connection with the sale of securities in accordance with
      its investment objective, policies, and limitations.
Except as noted, the above limitations cannot be changed without
shareholder approval. The Fund does not consider the issuance of
separate classes of shares to involve the issuance of "senior
securities" within the meaning of the investment limitation set forth
above. The following investment limitations, however, may be changed by
the Board of Trustees (the "Trustees") without shareholder approval.
Shareholders will be notified before any material change in these
policies becomes effective.
   Selling Short and Buying on Margin
      The Fund will not sell any securities short or purchase any
      securities on margin but may obtain such short-term credits as are
      necessary for clearance of transactions.
   Investing in Restricted Securities
      The Fund will not invest more than 10% of its net assets in
      securities subject to restrictions on resale under federal
      securities law, except for Section 4(2) commercial paper and other
      restricted securities determined to be liquid under criteria
      established by the Trustees.
   Investing in Illiquid Securities
      The Fund will not invest more than 10% of the value of its net
      assets in illiquid securities, including repurchase agreements
      providing for settlement in more than seven days after notice, non-
      negotiable fixed income time deposits with maturities over seven
      days, and restricted securities which have not been determined to
      be liquid under criteria established by the Trustees.
   Investing in New Issuers
      The Fund will not invest more than 5% of the value of its total
      assets in securities of issuers which have records of less than
      three years of continuous operations, including the operation of
      any predecessor.
   Investing in Issuers Whose Securities are Owned by Officers of the
   Trust
      The Fund will not purchase or retain the securities of any issuer
      if the officers and Trustees of the Trust or the Fund's investment
      adviser, owning individually more than 1/2 of 1% of the issuer's
      securities, together own more than 5% of the issuer's securities.
   Investing in Minerals
      The Fund will not purchase interests in oil, gas, or other mineral
      exploration or development programs or leases, although it may
      invest in the securities of issuers which invest in or sponsor
      such programs.
   Investing in Securities of Other Investment Companies
      The Fund will limit its investment in other investment companies
      to no more than 3% of the total outstanding voting stock of any
      investment company, invest no more than 5% of its total assets in
      any one investment company, or invest more than 10% of its total
      assets in investment companies in general. The Fund will limit its
      investments in the securities of other investment companies to
      those of money market funds having investment objectives and
      policies similar to its own. The Fund will purchase securities of
      closed-end investment companies only in open market transactions
      involving only customary broker's commissions. However, these
      limitations are not applicable if the securities are acquired in a
      merger, consolidation, reorganization or acquisition of assets.
      While it is the Fund's investment adviser's policy to waive its
      investment advisory fee on assets invested in securities of open-
      end investment companies, it should be noted that investment
      companies incur certain expenses, such as custodian and transfer
      agent fees, and therefore any investment by the Fund in shares of
      another investment company would be subject to such duplicate
      expenses.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.
The Fund will not purchase any securities while borrowings in excess of
5% of the value of its total assets are outstanding.
The Fund does not expect to borrow money in excess of 5% of the value of
its net assets or invest in securities of closed-end investment
companies during the coming fiscal year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits  issued by a U.S.
branch of a domestic bank or savings and loan, having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of
investment , to be "cash items."
THE BILTMORE FUNDS MANAGEMENT
OFFICERS AND TRUSTEES
Officers and Trustees of the Trust are listed with their principal
occupations and present positions. Each of the Trustees and officers
listed below holds an identical position with The Biltmore Municipal
Funds, another investment company. Except as listed below, none of the
Trustees or officers are affiliated with Wachovia Bank of North
Carolina, N.A., Federated Investors, Federated Securities Corp.,
Federated Services Company, or Federated Administrative Services.

James A. Hanley
Trustee
Retired; Vice President and Treasurer, Abbott Laboratories (health care
products) (until 1992).

Malcolm T. Hopkins
Trustee
Private investor and consultant; Director, the Columbia Gas System, Inc.
(integrated natural gas production, transmission and distribution);
Director MAPCO, Inc. (diversified energy); Director,  Metropolitan
Series Funds, Inc. and MetLife Portfolios, Inc. (investment companies);
Director, Kinder-Care Learning Centers, Inc. (child care); Director,
U.S. Home Corporation (residential builder and land development); and
Director, EMCOR Group, Inc. (engineering and construction).

Samuel E. Hudgins
Trustee
President, Percival Hudgins &  Company, Inc. (investment
bankers/financial consultants);  Director, Atlantic American Corporation
(insurance holding company); Director, Bankers Fidelity Life Insurance
Company; Director and Vice Chairman, Leath Furniture, Inc. (retail
furniture); President, Atlantic American Corporation (until 1988);
Director, Vice Chairman and Chief Executive Officer, Rhodes, Inc.
(retail furniture) (until 1988); Chairman and Director,
Atlantic American Life Insurance Co., Georgia Casualty & Surety Company,
and Bankers Fidelity Life Insurance (until 1988).

J. Berkley Ingram, Jr.
Trustee
Real estate investor and partner; Director, VF Corporation (apparel
company); formerly, Vice Chairman, Massachusetts Mutual Life Insurance
Company.


D. Dean Kaylor
Trustee
Retired; Executive Vice President and Chief Financial Officer, NBD Bank,
N.A. and NBD Bancorp, Inc. (bank and bank holding company) (until 1990).

John W. McGonigle
President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research;  Trustee, Federated
Services Company; Executive Vice President, Secretary and Trustee,
Federated Administrative Services; Executive Vice President and
Director, Federated Securities Corp.

Ronald M. Petnuch
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; formerly, Associate
Corporate Counsel, Federated Investors; Vice President and Assistant
Treasurer for certain investment companies for which Federated
Securities Corp. is the principal distributor.

Joseph M. Huber
Secretary
Corporate Counsel, Federated Investors.

FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of January 6, 1995, the following shareholder of record owned 5% or
more of the outstanding Institutional Shares of the Fund:  Wachovia Bank
of North Carolina, Winston-Salem, North Carolina, on behalf of certain
underlying accounts, owned approximately 132,826,605 Shares (100%).
As of January 6, 1995, the following shareholders of record owned 5% or
more of the outstanding Investment Shares of the Fund:  Wachovia Bank of
North Carolina, Winston-Salem, North Carolina, on behalf of certain
underlying accounts, owned approximately 37,867,419 Shares (52.80%);
Wachovia Brokerage Services, Winston-Salem, North Carolina, owned
approximately 28,846,980 Shares (40.22%); and Wachovia Bank of Georgia,
Atlanta, Georgia, on behalf of certain underlying accounts, owned
approximately 4,426,379 Shares (6.17%).
TRUSTEES COMPENSATION

NAME AND                   AGGREGATE               TOTAL COMPENSATION
PAID
POSITION WITH THE          COMPENSATION FROM       TO THE TRUSTEES  FROM
THE TRUST
TRUST                      THE TRUST+              AND FUND COMPLEX #

James A. Hanley,
Trustee                       $22,086               $23,400 for the
Trust and
                                                    one other investment
company

Malcolm T. Hopkins,
Trustee                       $16,920               $18,000 for the
Trust and
                                                    one other investment
company

Samuel E. Hudgins,
Trustee                       $22,086               $23,400 for the
Trust and
                                                    one other investment
company

J. Berkley Ingram, Jr.
Trustee                       $16,920               $18,000 for the
Trust and
                                                    one other investment
company

D. Dean Kaylor,
Trustee                       $15,851               $16,875 for the
Trust and
                                                    one other investment
company

+The aggregate compensation is paid by the Trust, which is comprised of
twelve portfolios.
# The Fund Complex is comprised of 15 portfolios.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not
liable for errors of judgment or mistakes of fact or law. However, they
are not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is Wachovia Investment Management Group
(the "Adviser"). The Adviser is a business unit of Wachovia Bank of
North Carolina, N.A., which is a wholly-owned subsidiary of Wachovia
Corporation of North Carolina, a wholly-owned subsidiary of Wachovia
Corporation.
The Adviser shall not be liable to the Trust, the Fund or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties imposed
upon it by its contract with the Trust.
Because of the internal controls maintained by the Wachovia Banks to
restrict the flow of non-public information, Fund investments are
typically made without any knowledge of the Wachovia Banks' or their
affiliates' lending relationships with an issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment
advisory fee as described in the prospectuses.
For the fiscal years ended November 30, 1994 and 1993, and for the
period from June 2, 1992 (date of initial public investment) to November
30, 1992, the Adviser earned $859,936, $703,812 and $211,845,
respectively, of which $587,479, $549,233 and $200,203, respectively,
were voluntarily waived.
   State Expense Limitations
      The Adviser has undertaken to comply with the expense limitations
      established by certain states for investment companies whose
      shares are registered for sale in those states. If the Fund's
      normal operating expenses (including the investment advisory fee,
      but not including brokerage commissions, interest, taxes, and
      extraordinary expenses) exceed 2-1/2% per year of the first $30
      million of average net assets, 2% per year of the next $70 million
      of average net assets, and 1-1/2% per year of the remaining
      average net assets, the Adviser will waive its fee or reimburse
      the Fund for its expenses over the limitation.
      If the Fund's monthly projected operating expenses exceed this
      limitation, the investment advisory fee paid will be reduced by
      the amount of the excess, subject to an annual adjustment. If the
      expense limitation is exceeded, the amount to be reimbursed by the
      Adviser will be limited, in any single fiscal year, by the amount
      of the investment advisory fee.
ADMINISTRATIVE SERVICES
Federated Administrative Services, which is a subsidiary of Federated
Investors, provides administrative personnel and services to the Fund
for a fee as described in the prospectuses.
For the fiscal years ended November 30, 1994 and 1993, and for the
period from June 2, 1992 (date of initial public investment) to November
30, 1992, the Fund incurred costs for administrative services of
$170,963, $183,805 and $43,901, of which $46,534, $142,842 and $43,901,
respectively, were voluntarily waived. In addition, Federated
Administrative Services reimbursed $52,852, $67,462 and $17,500,
respectively, in other Fund operating expenses.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the
Trustees.
The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the Fund
or to the Adviser and may include:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o similar services.
The Adviser exercises reasonable business judgment in selecting brokers
who offer brokerage and research services to execute securities
transactions. The Adviser determines in good faith that commissions
charged by such persons are reasonable in relationship to the value of
the brokerage and research services provided.
Research services provided by brokers and dealers may be used by the
Adviser in advising the Fund and other accounts. To the extent that
receipt of these services may supplant services for which the Adviser
might otherwise have paid, it would tend to reduce its expenses. The
Fund has no obligation to deal with any broker or group of brokers in
the execution of portfolio transactions.
Some of the Adviser's other clients have investment objectives and
programs similar to that of the Fund. Occasionally, the Adviser may make
recommendations to other clients which result in their purchasing or
selling securities simultaneously with the Fund. Consequently, the
demand for securities being purchased or the supply of securities being
sold may increase, and this could have an adverse effect on the price of
those securities. It is the Adviser's policy not to favor one client
over another in making recommendations or in placing orders. If two or
more of the Adviser's clients are purchasing a given security on the
same day from the same broker or dealer, the Adviser may average the
price of the transactions and allocate the average among the clients
participating in the transaction.
PURCHASING SHARES
Shares are sold at their net asset value without a sales charge on days
the Wachovia Banks, the New York Stock Exchange and the Federal Reserve
Wire System are open for business. The procedure for purchasing Shares
is explained in the respective prospectus under "Investing in
Institutional Shares" and "Investing in Investment Shares."
DISTRIBUTION PLAN (INVESTMENT SHARES ONLY)
With respect to the Investment Shares class of the Fund, the Trust has
adopted a plan (the "Plan") pursuant to Rule 12b-1 which was promulgated
by the Securities and Exchange Commission pursuant to the 1940 Act. The
Plan provides for payment of fees to Federated Securities Corp. to
finance any activity which is principally intended to result in the sale
of the Fund's Investment Shares subject to the Plan. Such activities may
include:  the advertising and marketing of Investment Shares; preparing,
printing, and distributing prospectuses and sales literature to
prospective shareholders, brokers, or administrators; and implementing
and operating the Plan. Pursuant to the Plan, Federated Securities Corp.
may pay fees to brokers for distribution and administrative services and
to administrators for administrative services as to Investment Shares.
The administrative services are provided by a representative who has
knowledge of the shareholder's particular circumstances and goals, and
include, but are not limited to: communicating account openings;
communicating account closings; entering purchase transactions; entering
redemption transactions; providing or arranging to provide accounting
support for all transactions; wiring funds and receiving funds for
Investment Share purchases and redemptions; confirming and reconciling
all transactions; reviewing the activity in Fund accounts; providing
training and supervision of broker personnel; posting and reinvesting
dividends to Fund accounts or arranging for this service to be performed
by the Fund's transfer agent; and maintaining and distributing current
copies of prospectuses and shareholder reports to the beneficial owners
of Investment Shares and prospective shareholders.
The Trustees expect that the adoption of the Plan will result in the
sale of a sufficient number of Investment Shares so as to allow the Fund
to achieve economic viability. It is also anticipated that an increase
in the size of the Fund will facilitate more efficient portfolio
management and assist the Fund in seeking to achieve its investment
objective.
For the fiscal years ended November 30, 1994 and 1993,  and for the
period from June 2, 1992 (date of initial public investment) to November
30, 1992,  brokers and administrators (financial institutions) received
fees in the amount of $127,921, $20,582 and $2,258, respectively,
pursuant to the Plan, of which $31,980, $5,145, and $564, respectively,
were voluntarily waived.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal
funds. The Wachovia Banks act as the shareholder's agent in depositing
checks and converting them to federal funds.
EXCHANGING SECURITIES FOR FUND SHARES
The Fund has no present intention of accepting securities in exchange
for Shares. However, if the Fund should allow such exchanges, it will do
so only upon the prior approval of the Fund and only upon a
determination by the Fund and Adviser that the securities to be
exchanged are acceptable.
Any securities exchanged must meet the investment objective and policies
of the Fund, must have a readily ascertainable market value, must be
liquid and must not be subject to restrictions on resale. The market
value of any securities exchanged in an initial investment, plus any
cash, must be at least equal to the minimum investment requirement of
the Fund. Securities accepted by the Fund will be valued in the same
manner as the Fund values its assets. The basis of the exchange will
depend upon the net asset value of Shares on the day the securities are
valued. One Share will be issued for each equivalent amount of
securities accepted.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the
property of the Fund, along with the securities.
   Tax Consequences
      If an exchange is permitted, it will be treated as a sale for
      federal income tax purposes. Depending upon the cost basis of the
      securities exchanged for Shares, a gain or loss may be realized by
      the investor.
DETERMINING NET ASSET VALUE
The Fund attempts to stabilize the value of a share at $1.00. The days
on which net asset value is calculated by the Fund are described in the
respective prospectus.
USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value
of portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at
current market value. The Fund's use of the amortized cost method of
valuing portfolio instruments depends on its compliance with certain
conditions in Rule 2a-7 (the "Rule") promulgated by the Securities and
Exchange Commission under the 1940 Act. Under the Rule, the Trustees
must establish procedures reasonably designed to stabilize the net asset
value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market
conditions and the Fund's investment objective.
Under the Rule, the Fund is permitted to purchase instruments which are
subject to demand features or standby commitments. As defined by the
Rule, a demand feature entitles the Fund to receive the principal amount
of the instrument from the issuer or a third party on (1) no more than
30 days' notice or (2) at specified intervals not exceeding 397 days on
no more than 30 days' notice. A standby commitment entitles the Fund to
achieve same day settlement and to receive an exercise price equal to
the amortized cost of the underlying instrument plus accrued interest at
the time of exercise.
The Fund acquires instruments subject to demand features and standby
commitments to enhance the instrument's liquidity. The Fund treats
demand features and standby commitments as a part of the underlying
instruments because the Fund does not acquire them for speculative
purposes and cannot transfer them separately from the underlying
instruments. Therefore, although the Rule defines demand features and
standby commitments as "puts," the Fund does not consider them to be
separate investments for the purposes of its investment policies.
   Monitoring Procedures
      The Trustees' procedures include monitoring the relationship
      between the amortized cost value per share and the net asset value
      per share based upon available indications of market value. The
      Trustees will decide what, if any, steps should be taken if there
      is a difference of more than 1/2 of 1% between the two values. The
      Trustees will take any steps they consider appropriate (such as
      redemption in kind or shortening the average portfolio maturity)
      to minimize any material dilution or other unfair results arising
      from differences between the two methods of determining net asset
      value.
   Investment Restrictions
      The Rule requires that the Fund limit its investments to
      instruments that, in the opinion of the Trustees, present minimal
      credit risk and that, if rated, meet minimum rating standards set
      forth in the Rule. If the instruments are not rated, the Trustees
      must determine that they are of comparable quality. The Rule also
      requires the Fund to maintain a dollar-weighted average portfolio
      maturity (not more than 90 days) appropriate to the objective of
      maintaining a stable net asset value of $1.00 per share. In
      addition, no instrument with a remaining maturity of more than 397
      days can be purchased by the Fund. Should the disposition of a
      portfolio security result in a dollar-weighted average portfolio
      maturity of more than 90 days, the Fund will invest its available
      cash to reduce the average maturity to 90 days or less as soon as
      possible. Shares of investment companies purchased by the Fund
      will meet these same criteria and will have investment policies
      consistent with the Rule.
      The Fund may attempt to increase yield by trading portfolio
      securities to take advantage of short-term market variations. This
      policy may, from time to time, result in high portfolio turnover.
      Under the amortized cost method of valuation, neither the amount
      of daily income nor the net asset value is affected by any
      unrealized appreciation or depreciation of the portfolio. In
      periods of declining interest rates, the indicated daily yield on
      Shares of the Fund computed by dividing the annualized daily
      income on the Fund's portfolio by the net asset value computed as
      above, may tend to be higher than a similar computation made by
      using a method of valuation based upon market prices and
      estimates. In periods of rising interest rates, the indicated
      daily yield on shares of the Fund computed the same way may tend
      to be lower than a similar computation made by using a method of
      calculation based upon market prices and estimates.
REDEEMING SHARES
The Fund redeems Shares at the next computed net asset value after the
Fund receives the redemption request. Redemption procedures are
explained in the respective prospectus under "Redeeming Institutional
Shares" and "Redeeming Investment Shares."
REDEMPTION IN KIND
Although the Trust intends to redeem shares in cash, it reserves the
right under certain circumstances to pay the redemption price in whole
or in part by a distribution of securities from the Fund's portfolio.
To the extent available, such securities will be readily marketable.
Redemption in kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the same value
employed in determining net asset value and selecting the securities in
a manner the Trustees determine to be fair and equitable.
Redemption in kind is not as liquid as cash redemption.  If redemption
is made in kind, shareholders receiving their securities and selling
them before their maturity could receive less than the redemption value
of their securities and could incur transaction costs.
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940, which obligates the Fund to redeem shares for any
one shareholder in cash only up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period.  Any redemption beyond
this amount will also be in cash unless the Trustees determine that
payments should be in kind.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund
must, among other requirements:
o derive at least 90% of its gross income from dividends, interest, and
  gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities
  held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
  during the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and any
short-term capital gains received as cash or additional Shares. No
portion of any income dividend paid by the Fund is eligible for the
dividends received deduction available to corporations. These dividends
and any short-term capital gains are taxable as ordinary income.
   Capital Gains
      Capital gains experienced by the Fund could result in an increase
      in dividends. Capital losses could result in a decrease in
      dividends. If, for some extraordinary reason, the Fund realizes
      net long-term capital gains, it will distribute them at least once
      every 12 months.
YIELD
The Fund's yield for the seven-day period ended November 30, 1994, was
5.27% for Institutional Shares. The yield for Investment Shares was
4.97% for the same period.
The Fund calculates the yield for both classes of Shares daily, based
upon the seven days ending on the day of the calculation, called the
"base period." This yield is computed by:
o determining the net change in the value of a hypothetical account
  with a balance of one Share at the beginning of the base period, with
  the net change excluding capital changes but including the value of
  any additional Shares purchased with dividends earned from the
  original one Share and all dividends declared on the original and any
  purchased Shares;
o dividing the net change in the account's value by the value of the
  account at the beginning of the base period to determine the base
  period return; and
o multiplying the base period return by 365/7.
To the extent that financial institutions and broker/dealers charge fees
in connection with services provided in conjunction with an investment
in either class of Shares, the performance will be reduced for those
shareholders paying those fees.
EFFECTIVE YIELD
The Fund's effective yield for the seven-day period ended November 30,
1994, was 5.41% for Institutional Shares. The effective yield for
Investment Shares was 5.09% for the same period.
The Fund's effective yield for both classes of Shares is computed by
compounding the unannualized base period return by:
o adding 1 to the base period return;
o raising the sum to the 365/7th power; and
o subtracting 1 from the result.
PERFORMANCE COMPARISONS
The performance of both classes of Shares depends upon such variables
as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested; .
o changes in interest rates on money market instruments;
o changes in the expenses of the Fund or of either class of Shares; and
o the relative amount of Fund cash flow.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors, such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which
the Fund uses in advertising may include:
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
  categories by making comparative calculations using total return.
  Total return assumes the reinvestment of all income dividends and
  capital gains distributions, if any. From time to time, the Fund will
  quote its Lipper ranking in the" institutional money market
  instruments funds" and "money market instruments funds" categories in
  advertising and sales literature.
o BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a
  financial reporting service which publishes weekly average rates of
  50 leading bank and thrift institution money market deposit accounts.
  The rates published in the index are averages of the personal account
  rates offered on the Wednesday prior to the date of publication by
  ten of the largest banks and thrifts in each of the five largest
  Standard Metropolitan Statistical Areas. Account minimums range
  upward from $2,500 in each institution and compounding methods vary.
  If more than one rate is offered, the lowest rate is used. Rates are
  subject to change at any time specified by the institution.
o IBC/DONOGHUE'S MONEY FUND REPORT publishes annualized yields of
  hundreds of money market funds on a weekly basis and, through its
  Money Market Insight  publication, reports monthly and 12-month-to-
  date investment results for the same money funds.
o Money,  a monthly magazine, regularly ranks money market funds in
  various categories based on the latest available seven-day compound
  (effective) yield.  From time to time, the Fund will quote its Money
  ranking in advertising and sales literature.
Advertisements and other sales literature for either class of Shares may
quote total returns, which are calculated on standardized base periods.
These total returns also represent the historic change in the value of
an investment in either class of Shares based on the monthly
reinvestment of dividends over a specified period of time.
090297-10-2
090297-20-1
2020203B (1/95)




                                  PROSPECTUS
                               JANUARY 31, 1995


The Institutional Shares of Biltmore Tax-Free Money Market Fund (the ``Fund'')
offered by this prospectus represent interests in a diversified portfolio of
securities, which is one of a series of investment portfolios in The Biltmore
Funds (the ``Trust''), an open-end management investment company (a mutual
fund).

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

The investment objective of the Fund is to provide current income exempt from
federal regular income tax consistent with stability of principal and
liquidity. The Fund pursues this investment objective by investing in a
diversified portfolio of short-term municipal securities.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY, WACHOVIA BANK OF NORTH CAROLINA, N.A. OR ITS
AFFILIATES OR SUBSIDIARIES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (``FDIC''), THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.

This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.

                              BILTMORE TAX-FREE
                              MONEY MARKET FUND

                     (A PORTFOLIO OF THE BILTMORE FUNDS)
                             INSTITUTIONAL SHARES


The Fund has also filed a Combined Statement of Additional Information for
Institutional Shares and Investment Shares, dated January 31, 1995, with the
Securities and Exchange Commission. The information contained in the Combined
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, purchase Institutional Shares, or obtain other
information, about the Fund by writing to the Fund or calling your Wachovia Bank
(as defined herein) account officer.


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.


================================================================================
            TABLE OF CONTENTS

- ---------------------------------------------------
SUMMARY OF FUND EXPENSES                                                       1
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES                                     2
- ---------------------------------------------------
GENERAL INFORMATION                                                            3
- ---------------------------------------------------
INVESTMENT INFORMATION                                                         3
Investment Objective                                                           3
Investment Policies                                                            3
     Acceptable Investments                                                    3
     Municipal Securities                                                      4
       Variable Rate Demand Notes                                              4
       Participation Interests                                                 4
       Municipal Leases                                                        4
     Ratings                                                                   4
     Investing in Securities of
       Other Investment Companies                                              4
     Credit Enhancement                                                        5
     Demand Features                                                           5
     Restricted and Illiquid Securities                                        5
     When-Issued and Delayed Delivery
       Transactions                                                            5
     Temporary Investments                                                     5
  Investment Risks                                                             6
  Investment Limitations                                                       6
  Regulatory Compliance                                                        6
- ---------------------------------------------------
THE BILTMORE FUNDS INFORMATION                                                 6
  Management of the Trust                                                      6
     Board of Trustees                                                         6
     Investment Adviser                                                        6
       Advisory Fees                                                           7
       Adviser's Background                                                    7
  Distribution of Institutional Shares                                         7
  Administration of the Fund                                                   7
     Administrative Services                                                   7
     Custodian                                                                 8
     Transfer Agent, Dividend Disbursing
       Agent, and Portfolio Accounting
       Services                                                                8
     Legal Services                                                            8
     Independent Auditors                                                      8
  Expenses of the Fund and Institutional Shares                                8
- ---------------------------------------------------
NET ASSET VALUE                                                                8
- ---------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES                                              8
  Share Purchases                                                              8
     Through the Wachovia Banks                                                8
     Via a Sweep Account                                                       9
  Minimum Investment Required                                                  9
  What Shares Cost                                                             9
  Certificates and Confirmations                                               9
  Dividends                                                                    9
  Capital Gains                                                                9
- ---------------------------------------------------
EXCHANGES                                                                      9
- ---------------------------------------------------
REDEEMING INSTITUTIONAL SHARES                                                10
  By Telephone                                                                10
- ---------------------------------------------------
SHAREHOLDER INFORMATION                                                       10
  Voting Rights                                                               10
  Massachusetts Business Trusts                                               11
- ---------------------------------------------------
EFFECT OF BANKING LAWS                                                        11
- ---------------------------------------------------
TAX INFORMATION                                                               12
  State and Local Taxes                                                       12
- ---------------------------------------------------
PERFORMANCE INFORMATION                                                       12
- ---------------------------------------------------
OTHER CLASSES OF SHARES                                                       13
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES                                       14
- ---------------------------------------------------
FINANCIAL STATEMENTS                                                          15
- ---------------------------------------------------

REPORT OF ERNST & YOUNG LLP,
  INDEPENDENT AUDITORS                                                        26

- ---------------------------------------------------
ADDRESSES                                                             BACK COVER


================================================================================
                            SUMMARY OF FUND EXPENSES

                              INSTITUTIONAL SHARES
                        SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S>                                                                                                       <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)                               None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)                    None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable)                                                                    None
Redemption Fees (as a percentage of amount redeemed, if applicable)                                       None
Exchange Fee                                                                                              None
</TABLE>

                 ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
                    (As a percentage of average net assets)

<TABLE>
<S>                                                                                                       <C>
Management Fee (after waiver) (1)                                                                         0.05%
12b-1 Fees                                                                                                None
Other Expenses                                                                                            0.27%
          Total Institutional Shares Operating Expenses (after waiver) (2)                                0.32%
</TABLE>


(1)  The management fee has been reduced to reflect the voluntary waiver by the
     investment adviser. The adviser can terminate this voluntary waiver at any
     time at its sole discretion. The maximum management fee is 0.50%.



(2)  The Annual Institutional Shares Operating Expenses were 0.38% for the
     fiscal year ended November 30, 1994. The Annual Institutional Shares
     Operating Expenses in the table above reflect an anticipated reduction in
     the voluntary waiver of the administrative fee for the fiscal year ending
     November 30, 1995. The Annual Institutional Shares Operating Expenses are
     expected to be 0.77%, absent the voluntary waiver described above in note
     1.


The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of the Institutional Shares of the
Tax-Free Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "The Biltmore Funds
Information" and "Investing in Institutional Shares."

<TABLE>
<S>                                                              <C>        <C>        <C>        <C>
EXAMPLE                                                           1 year     3 years    5 years   10 years
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period. As noted in the table above, the Fund charges
no redemption fees for Institutional Shares.                        $3         $10        $18        $41
</TABLE>

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

The information set forth in the foregoing table and example relates only to
Institutional Shares of the Fund. The Fund also offers another class of shares
called Investment Shares. Investment Shares are subject to certain of the same
expenses with the addition of a maximum 12b-1 fee of 0.40% of the Investment
Shares' average net assets. See "Other Classes of Shares."

================================================================================
            BILTMORE TAX-FREE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                              INSTITUTIONAL SHARES

                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)


Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 26.


<TABLE>
<CAPTION>
                                                  Year Ended November 30,    1994       1993       1992*
<S>                                                                        <C>        <C>        <C>
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                       $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                         0.02       0.02       0.01
Less distributions
  Dividends to shareholders from net investment income                         (0.02)     (0.02)     (0.01)
                                                                           ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                             $    1.00  $    1.00  $    1.00
                                                                           ---------  ---------  ---------
Total Return**                                                                  2.42%      2.30%      1.49%
Ratios to Average Net Assets
  Expenses                                                                      0.38%      0.29%      0.16%(a)
  Net investment income                                                         2.41%      2.28%      2.71%(a)
  Expense waiver/reimbursement (b)                                              0.45%      0.60%      0.78%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                    $93,867    $59,269    $61,632
</TABLE>


 * Reflects operations for the period from May 14, 1992 (date of initial public
   investment) to November 30, 1992.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expenses and net
    investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)


================================================================================
                              GENERAL INFORMATION


The Biltmore Funds was established as a Massachusetts business trust under a
Declaration of Trust dated November 19, 1991. The Declaration of Trust permits
the Trust to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. As of the date of this prospectus, the Board
of Trustees (the "Trustees") has established two classes of shares of Biltmore
Tax-Free Money Market Fund (the "Fund"), Institutional Shares and Investment
Shares. This prospectus relates only to Institutional Shares of the Fund.



Institutional Shares are offered only for purchase through the bank subsidiaries
of Wachovia Corporation: Wachovia Bank of North Carolina, N.A., Wachovia Bank of
Georgia, N.A., Wachovia Bank of South Carolina, N.A. (formerly known as The
South Carolina National Bank), and their affiliates (collectively, the "Wachovia
Banks"). Institutional Shares are offered only to accounts held by the Wachovia
Banks in a fiduciary, advisory, agency, custodial, or similar capacity. The Fund
offers a convenient means of accumulating an interest in a
professionally-managed, diversified portfolio limited to short-term municipal
securities. Investors should consult their account agreement with the Wachovia
Banks for any applicable minimum investment.


The Fund attempts to stabilize the value of a share at $1.00. Institutional
Shares are currently sold and redeemed at that price.


The other portfolios in the Trust are Biltmore Balanced Fund, Biltmore Emerging
Markets Fund, Biltmore Equity Fund, Biltmore Equity Index Fund, Biltmore Fixed
Income Fund, Biltmore Money Market Fund (Institutional Shares and Investment
Shares), Biltmore Prime Cash Management Fund (Institutional Shares), Biltmore
Quantitative Equity Fund, Biltmore Short-Term Fixed Income Fund, Biltmore
Special Values Fund, and Biltmore U.S. Treasury Money Market Fund (Institutional
Shares and Investment Shares).


================================================================================
                             INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide current income exempt from
federal regular income tax consistent with stability of principal and liquidity.
Interest income of the Fund that is exempt from federal regular income tax
retains its tax-free status when distributed to the Fund's shareholders. While
there is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus. The investment objective cannot be changed without approval of
shareholders.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in a
diversified portfolio of municipal securities maturing in 397 days or less. The
average maturity of money market instruments in the Fund's portfolio, computed
on a dollar weighted basis, will be 90 days or less. Unless indicated otherwise,
the investment policies of the Fund may be changed by the Trustees without the
approval of shareholders. Shareholders will be notified before any material
change in these policies becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued by
or on behalf of states, territories and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of qualified
legal counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:

 tax and revenue anticipation notes ("TRANs") issued to finance working capital
 needs in anticipation of receiving taxes or other revenues;

 bond anticipation notes ("BANs") that are intended to be refinanced through a
 later issuance of longer-term bonds;

 municipal commercial paper and other short-term notes;

 variable rate demand notes;

 municipal bonds (including bonds having serial maturities and pre-refunded
 bonds) and leases; and

 participation, trust and partnership interests in any of the foregoing
 obligations.


For further discussion of the instruments described above, consult the Fund's
Combined Statement of Additional Information.


MUNICIPAL SECURITIES. Municipal Securities are generally issued to finance
public works such as airports, bridges, highways, housing, hospitals, mass
transportation projects, schools, streets, and water and sewer works. They are
also issued to repay outstanding obligations, to raise funds for general
operating expenses, and to make loans to other public institutions and
facilities.

Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.

The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

Variable Rate Demand Notes. Variable rate demand notes are long-term Municipal
Securities that have variable or floating interest rates and provide the Fund
with the right to tender the security for repurchase at its stated principal
amount plus accrued interest. Such securities typically bear interest at a rate
that is intended to cause the securities to trade at par. The interest rate may
float or be adjusted at regular intervals (ranging from daily to annually), and
is normally based on a municipal interest rate index or a published interest
rate. Most variable rate demand notes allow the Fund to demand the repurchase of
the security on not more than seven days' prior notice. Other notes only permit
the Fund to tender the security at the time of each interest rate adjustment or
at other fixed intervals. See "Demand Features." The Fund treats variable rate
demand notes as maturing on the later of the date of the next interest rate
adjustment or the date on which the Fund may next tender the security for
repurchase.

Participation Interests. The Fund may purchase interests in Municipal Securities
from financial institutions such as commercial and investment banks, savings and
loan associations and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests or any
other form of indirect ownership that allows the Fund to treat the income from
the investment as exempt from federal income tax. The Fund invests in these
participation interests in order to obtain credit enhancement or demand features
that would not be available through direct ownership of the underlying Municipal
Securities.

Municipal Leases. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract or a
participation interest in any of the above.


RATINGS. The Municipal Securities in which the Fund invests must be rated in the
highest short-term rating category by one or more nationally recognized
statistical rating organizations ("NRSROs") or be of comparable quality to
securities having such ratings. An NRSRO's highest rating category is determined
without regard for sub-categories and gradations. For example, securities rated
SP-1+, SP-1, A-1+,
or A-1 by Standard & Poor's Ratings Group ("S&P"), MIG-1, P-1 or VMIG-1 by
Moody's Investors Service, Inc. ("Moody's"), or FIN-1+ or FIN-1 by Fitch
Investors Service, Inc. ("Fitch") are all considered rated in the highest
short-term rating category. The Fund will follow applicable regulations in
determining whether a security rated by more than one NRSRO can be treated as
being in the highest short-term rating category; currently, such securities must
be rated by two NRSROs in their highest rating category. See "Regulatory
Compliance."


INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3%
of the total outstanding voting stock of any investment company, invest more
than 5% of its total assets in any one investment company, or invest more than
10%

of its total assets in investment companies in general. The Fund will only
invest in other investment companies that are money market funds having
investment objectives and policies similar to its own and primarily for the
purpose of investing short-term cash which has not yet been invested in other
portfolio instruments. The adviser to the Fund will waive its investment
advisory fee on assets invested in securities of open-end investment companies.

CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may have been
credit enhanced by a guaranty, letter of credit or insurance. The Fund typically
evaluates the credit quality and ratings of credit enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, the Fund
will not treat credit enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain circumstances,
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership or default of the credit enhancer will adversely affect the quality
and marketability of the underlying security.

The Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.

DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities law. However, the Fund will
limit investments in
illiquid securities, including certain restricted securities not determined by
the Trustees to be liquid, and repurchase agreements providing for settlement in
more than seven days after notice, to 10% of its net assets.


WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.



The Fund may dispose of a commitment prior to settlement if the Fund's
investment adviser deems it appropriate to do so. In addition, the Fund may
enter into transactions to sell purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or losses
upon the sale of such commitments.


Temporary Investments. As a matter of fundamental investment policy, which
cannot be changed without approval of shareholders, the Fund invests its assets
so that at least 80% of its annual interest income is
exempt from federal regular income tax. However, from time to time when the
investment adviser determines that market conditions call for a temporary
defensive posture, the Fund may invest in short-term temporary investments.
Interest income from temporary investments may be taxable to shareholders as
ordinary income. These temporary investments include: obligations issued by or
on behalf of municipal or corporate issuers having the same quality
characteristics as Municipal Securities purchased by the Fund; marketable
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities; instruments issued by banks or other depository institutions
which have capital, surplus, and undivided profits in excess of $100,000,000 at
the time of investment and if their deposits are insured by the Bank Insurance
Fund or Savings Association Insurance Fund (which are administered by the FDIC);

repurchase agreements (arrangements in which the organization is selling the
Fund a temporary investment and agrees at the time of sale to repurchase it at a
mutually agreed upon time and price); and prime commercial paper rated A-1 by
S&P, Prime-1 by Moody's, or F-1 by Fitch and other short-term credit
instruments.

Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax.
However, the Fund may purchase Municipal Securities, the interest on which is
subject to the federal alternative minimum tax, in an amount not to exceed 20%
of the total net assets of the Fund.

INVESTMENT RISKS

Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Fund to achieve its
investment objective also depends on the continuing ability of the issuers of
Municipal Securities and demand features, or the guarantors of either, to meet
their obligations for the payment of interest and principal when due.

INVESTMENT LIMITATIONS

The Fund will not:

 borrow money directly or through reverse repurchase agreements (arrangements in
 which the Fund sells a money market instrument for a percentage of its cash
 value with an agreement to buy it back on a set date) except, under certain
 circumstances, the Fund may borrow up to one-third of the value of its total
 assets; nor

 with respect to 75% of the value of its total assets, invest more than 5% of
 its total assets in securities of one issuer (except cash, cash items,
 repurchase agreements collateralized by U.S. government securities and U.S.
 government obligations). The remaining 25% of its total assets may be invested
 in a single issuer if the investment adviser believes such a strategy is
 prudent.

The above investment limitations cannot be changed without shareholder approval.
The following limitation, however, can be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.

The Fund will not:

 invest more than 5% of the value of its total assets in industrial revenue
 bonds where the payment of principal and interest is the responsibility of
 companies (or guarantors, if applicable) that have records of less than three
 years of continuous operations, including the operation of any predecessor.

REGULATORY COMPLIANCE

The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and the Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.

================================================================================
                         THE BILTMORE FUNDS INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Board of Trustees is responsible for managing the Trust's
business affairs and for exercising all the Trust's powers except those reserved
for the shareholders.

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Wachovia Investment Management
Group (the "Adviser"), a business unit of Wachovia Bank of North Carolina, N.A.,
subject to direction by the Trustees. The Adviser continually conducts

investment research and supervision of investments for the Fund and is
responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the assets of the Fund.

Advisory Fees. The Adviser receives an annual investment advisory fee equal to
0.50 of 1% of the Fund's average daily net assets. The investment advisory
contract provides that such fee shall be accrued and paid daily. The Adviser has
undertaken to reimburse the Fund for operating expenses in excess of limitations
established by certain states. The Adviser may voluntarily choose to waive a
portion of its fee or reimburse the Funds for certain other expenses of the
Fund, but reserves the right to terminate such waiver or reimbursement at any
time at its sole discretion.

Adviser's Background. Wachovia Bank of North Carolina, N.A. is a direct,
wholly-owned subsidiary of Wachovia Corporation, a registered bank holding
company headquartered in Winston-Salem, North Carolina and Atlanta, Georgia.
Through offices in eight states, Wachovia Corporation and its subsidiaries
provide a broad range of financial services to individuals and businesses.

Wachovia Bank of North Carolina, N.A. is a national banking association, which
offers a broad range of financial services, including commercial and consumer
loans, corporate, institutional and personal trust services, demand and time
deposit accounts, letters of credit and international financial services.


Wachovia Investment Management Group employs an experienced staff of
professional investment analysts, portfolio managers and traders. The Adviser
uses fundamental analysis and other investment management disciplines to
identify investment opportunities. Wachovia Bank of North Carolina, N.A.,
together with its affiliates, Wachovia Bank of Georgia, N.A. and Wachovia Bank
of South Carolina, N.A., have been managing trust assets for over 100 years,
with approximately $17.3 billion in managed assets as of September 30, 1994.
Wachovia Investment Management Group has served as investment adviser for The
Biltmore Funds since March 9, 1992. Wachovia Bank of North Carolina N.A. also
serves as investment adviser to the Biltmore North Carolina Municipal Bond Fund,
a portfolio of The Biltmore Municipal Funds, another investment company. As part
of their regular banking operations, the Wachovia Banks may make loans to public
companies. Thus, it may be possible, from time to time, for the Fund to hold or
acquire the securities of issuers which are also lending clients of the Wachovia
Banks. The lending relationship will not be a factor in the selection of
securities.


DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the distributor for shares of the Fund. It is a
Pennsylvania corporation organized on November 14, 1969, and is the distributor
for a number of investment companies. Federated Securities Corp. is a subsidiary
of Federated Investors.

ADMINISTRATION OF THE FUND


ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with the
administrative personnel and services necessary to operate the Fund. Such
services include the preparation of filings with the Securities and Exchange
Commission and other regulatory authorities, assistance with respect to meetings
of the Trustees, shareholder servicing and accounting services, and other
administrative services. Federated Administrative Services provides these at an
annual rate, computed and payable daily, as specified below:


<TABLE>
<CAPTION>
                         Average Aggregate Daily
     Maximum                  Net Assets of
 Administrative           The Biltmore Funds and
       Fee             The Biltmore Municipal Funds

<S>                <C>
   0.150 of 1%          on the first $250 million
   0.125 of 1%           on the next $250 million
   0.100 of 1%           on the next $250 million
   0.075 of 1%     on assets in excess of $750 million
</TABLE>


The administrative fee received during any fiscal year for the Fund and for each
of the other portfolios of The Biltmore Funds shall aggregate at least $75,000.

Federated Administrative Services may choose voluntarily to waive or reimburse a
portion of its fee at any time.


CUSTODIAN. Wachovia Bank of North Carolina, N.A., Winston-Salem, North Carolina,
is custodian (the "Custodian") for the securities and cash of the Fund. Under
the Custodian Agreement, Wachovia Bank of North Carolina, N.A. holds the Fund's
portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties. For the services to be provided to the Trust
pursuant to the Custodian Agreement, the Trust pays Wachovia Bank of North
Carolina, N.A. an annual fee based upon the average daily net assets of the Fund
and which is payable monthly. The Custodian will also charge transaction fees
and out-of-pocket expenses.


TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent for the shares of the Fund and dividend disbursing
agent for the Fund. Federated Services Company also provides certain accounting
and recordkeeping services with respect to the Fund's portfolio investments.



LEGAL SERVICES. Legal services for the Fund are provided by Kirkpatrick &
Lockhart, Washington, D.C. Piper & Marbury, Washington, D.C. serves as counsel
to the independent Trustees.


INDEPENDENT AUDITORS. The independent auditors are Ernst & Young LLP,
Pittsburgh, Pennsylvania.

EXPENSES OF THE FUND AND INSTITUTIONAL SHARES

Holders of Institutional Shares pay their allocable portion of Fund and Trust
expenses. The Trust expenses for which holders of Institutional Shares pay their
allocable portion include, but are not limited to: the cost of organizing the
Trust and continuing its existence; registering the Trust; Trustees' fees;
auditors' fees; the cost of meetings of Trustees; legal fees of the Trust;
association membership dues; and such non-recurring and extraordinary items as
may arise.

Each Fund's expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund
under state and federal law; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise.

At present, no expenses are allocated to Institutional Shares as a class.
However, the Trustees reserve the right to allocate certain other expenses to
the shareholders of a particular class as they deem appropriate ("Class
Expenses"). In any case, Class Expenses would be limited to: transfer agent fees
as identified by the transfer agent as attributable to holders of Institutional
Shares; printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange Commission
and registration fees paid to states; expenses related to administrative
personnel and services as required to support holders of Institutional Shares;
legal fees relating solely to Institutional Shares; and Trustees' fees incurred
as a result of issues relating solely to Institutional Shares.

================================================================================
                                NET ASSET VALUE

The Fund attempts to stabilize the net asset value of Institutional Shares at
$1.00 by valuing the portfolio securities using the amortized cost method. The
net asset value per share is determined by adding the interest of the
Institutional Shares in the value of all securities and other assets of the
Fund, subtracting the interest of the Institutional Shares in the liabilities of
the Fund and those attributable to Institutional Shares, and dividing the
remainder by the total number of Institutional Shares outstanding. The Fund, of
course, cannot guarantee that its net asset value will always remain at $1.00
per share.

================================================================================
                       INVESTING IN INSTITUTIONAL SHARES

SHARE PURCHASES
Institutional Shares are sold on days on which the New York Stock Exchange and
Federal Reserve Wire System are open for business. Institutional Shares may be
purchased by or through the Wachovia Banks. Texas residents must purchase,
exchange, and redeem shares through Federated Securities Corp. at 1-800-
618-8573. The Fund and the distributor reserve the right to reject any purchase
request.

THROUGH THE WACHOVIA BANKS. To place an order to purchase Institutional Shares
of the Fund, customers of the Wachovia Banks may telephone, send written
instructions, or place the order in person with their account

officer in accordance with the procedures established by the Wachovia Banks and
as set forth in the relevant account agreement.


Payment may be made to the Wachovia Banks by check, federal funds, or by
debiting a customer's account with the Wachovia Banks. Orders are considered
received after payment by check is converted into federal funds and received by
the Wachovia Banks, normally the next business day. When payment is made with
federal funds, the order is considered received when federal funds are received
by the Wachovia Banks or available in the customer's account. Purchase orders
must be communicated to the Wachovia Banks by 11:00 a.m. (Eastern Time) and
payment by federal funds must be received by the Wachovia Banks before 4:00 p.m.
(Eastern time) on the same day as the order to earn dividends for that day.
Shares cannot be purchased on days on which the Wachovia Banks, the New York
Stock Exchange, and the Federal Reserve Wire System are not open for business.


VIA A SWEEP ACCOUNT. If you are investing in the Fund as part of a Wachovia Bank
sweep account program, automatic purchases and redemptions will be made by the
Wachovia Banks on your behalf pursuant to the sweep agreement you signed as part
of your trust account with the Wachovia Banks.

MINIMUM INVESTMENT REQUIRED
Investors should consult their account agreement with the Wachovia Banks for any
applicable minimum investment. Minimum investment requirements may vary under
different sweep agreements.

WHAT SHARES COST

Institutional Shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.


The net asset value is determined at 12:00 noon and 4:00 p.m. (Eastern time),
Monday through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net asset value
might be materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) the following
holidays; New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas Day.


CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued unless
requested in writing to the Fund.


Federated Services Company provides the Wachovia Banks, as shareholders of
record, with detailed statements on a monthly basis that include account
balances, information on each purchase or redemption, and a report of dividends
paid during the month. These statements will serve as confirmations of all
transactions in the shareholders' accounts for the statement period.

Investors purchasing through the Wachovia Banks will receive account statements
from those institutions periodically as required by the relevant account
agreement.

DIVIDENDS
Dividends are declared daily and paid monthly. Dividends will be reinvested on
payment dates in additional Institutional Shares of the Fund unless cash
payments are requested by writing to the Wachovia Banks.

CAPITAL GAINS
Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If for some extraordinary reason the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.

================================================================================
                                   EXCHANGES

A shareholder may exchange Institutional Shares of one fund for Institutional
Shares of any other fund that does not assess a sales charge on the basis of
their respective net asset values by calling or writing to his account officer
at the Wachovia Banks. Telephone exchange instructions may be recorded. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent

telephone instructions. Institutional Shares purchased by check are eligible for
exchange after the purchase check has cleared, which could take up to ten
calendar days. The exchange feature applies to Institutional Shares of each fund
that does not assess a sales charge as of the effective offering date of each
fund's Institutional Shares.


Orders to exchange Institutional Shares of one fund for Institutional Shares of
any of the other Biltmore Funds that do not assess a sales charge will be
executed by redeeming the Institutional Shares owned at net asset value next
determined after receipt of the order and purchasing Institutional Shares of any
such other Biltmore Funds at the net asset value determined after the proceeds
from such redemption become available. Orders for exchanges received by the Fund
after 12:00 noon but prior to 4:00 p.m. (Eastern time) on any day the Trust is
open for business will be executed at the price determined at 4:00 p.m. (Eastern
time) that day. Orders for exchanges received after 4:00 p.m. (Eastern time) on
any business day will be executed at the price determined at 12:00 noon (Eastern
time) on the next business day.


An excessive number of exchanges may be disadvantageous to the Trust. Therefore
the Trust, in addition to its right to reject any exchange, reserves the right
to modify or terminate the exchange privilege of any shareholder, provided the
shareholder is given 60 days' written notice.

An exchange order must comply with the requirements for a redemption and
purchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial investment requirement
imposed by the relevant account agreement. An exchange constitutes a sale for
federal income tax purposes.

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Before the exchange, a shareholder
should review a prospectus of the fund for which the exchange is being made.

================================================================================

                         REDEEMING INSTITUTIONAL SHARES

The Fund redeems Institutional Shares at their net asset value next determined
after the Wachovia Banks receive the redemption request. Redemptions will be
made on days on which the Fund computes its net asset value. Requests for
redemption can be made in person, by telephone or by writing to your account
officer. If at any time the Fund shall deem it necessary to terminate or modify
these methods of redemption, shareholders would be promptly notified.


BY TELEPHONE. A shareholder who is a customer of the Wachovia Banks may redeem
Institutional Shares by telephoning his account officer. For calls received by
the Wachovia Banks before 11:00 a.m. (Eastern time), proceeds will normally be
wired the same day to the shareholder's account at the Wachovia Banks or a check
will be sent to the address of record. Those Institutional Shares will not be
entitled to the dividend declared that day. For calls received by the Wachovia
Banks after 11:00 a.m. (Eastern time) proceeds will normally be wired or a check
mailed the following business day. Those Institutional Shares will be entitled
to the dividend declared on the day the redemption request was received. In no
event will proceeds be wired or a check mailed more than seven days after a
proper request for redemption has been received. In the event of drastic
economic or market changes, a shareholder may experience difficulty in redeeming
by telephone. If such a case should occur, another method of redemption should
be considered. Telephone redemption instructions may be recorded. If reasonable
procedures are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.


================================================================================

                            SHAREHOLDER INFORMATION

VOTING RIGHTS


Each Institutional Share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
all classes of each fund in the Trust have equal voting rights, except that in
matters affecting only a particular fund or class, only shares of that fund or
class are entitled to vote. As of January 6, 1995, the Wachovia Banks and their
various affiliates and subsidiaries, acting in various capacities for numerous
accounts, were the owner of record of in excess of 25% of the


outstanding Shares of the Fund, and therefore may for certain purposes, be
deemed to control the Fund and be able to affect the outcome of certain matters
presented for a vote of shareholders.

As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or the Fund's operation and for the election of Trustees
under certain circumstances.

Trustees may be removed by the Trustees or shareholders at a special meeting. A
special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

MASSACHUSETTS BUSINESS TRUSTS

Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect shareholders,
the Trust has filed legal documents with Massachusetts that expressly disclaim
the liability of shareholders for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or the Trustees enter into or sign on behalf
of the Fund.

In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of the Fund, the Trust is required by the Declaration of
Trust to use the property of the Fund to protect or compensate the shareholder.
On request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Fund for any act or obligation of the Trust on behalf of the
Fund. Therefore, financial loss resulting from liability as a shareholder of the
Fund will occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.

================================================================================

                             EFFECT OF BANKING LAWS


The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibits banks
generally from issuing, underwriting or distributing most securities. However,
such banking laws and regulations do not prohibit such a holding company or its
bank and non-bank affiliates generally from acting as investment adviser,
transfer agent or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of their customer. The
Fund's investment adviser, Wachovia Investment Management Group, and its
affiliate banks, are subject to such banking laws and regulations.


The Adviser believes, based on the advice of its counsel, that it may perform
the services for the Fund contemplated by its investment advisory and custody
agreements with the Trust without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present or future statutes and regulations,
could prevent the Adviser from continuing to perform all or a part of the above
services for its customers and/or the Fund. If it were prohibited from engaging
in these customer-related activities, the Trustees would consider alternative
service providers and means of continuing available investment services. In such
event, changes in the operation of the Fund may occur, including the possible
termination of any automatic or other fund share investment and redemption
services then being provided by the Adviser. It is not expected that existing
Fund shareholders would suffer any adverse financial consequences (if another
adviser with equivalent abilities to the Adviser is found) as a result of any of
these occurrences.


The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above, or should Congress relax current restrictions on depository institutions,


the Trustees will consider appropriate changes in the services.


State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

================================================================================

                                TAX INFORMATION

The Fund expects to pay no federal income tax because it will meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.

Shareholders will be subject to the federal regular income tax on any dividends
received from the Fund that represent net interest on tax-exempt municipal
bonds. However, under the Tax Reform Act of 1986, dividends representing net
interest earned on some municipal bonds may be included in calculating the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations.

The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal to
the regular taxable income of the taxpayer increased by certain "tax preference"
items not included in regular taxable income and reduced by only a portion of
the deductions allowed in the calculation of the regular tax.

The Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax preference item for both individuals and
corporations. Unlike traditional governmental purpose municipal bonds, which
finance roads, schools, libraries, prisons and other public facilities, private
activity bonds provide benefits to private parties. The Fund may purchase all
types of municipal bonds, including private activity bonds. Thus, while the Fund
has no present intention of purchasing any private activity bonds, should it
purchase any such bonds, a portion of the Fund's dividends may be treated as a
tax preference item.

In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds will be subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate minimum tax treats 75% of the excess
of a taxpayer's pre-tax "adjusted current earnings" over the taxpayer's
alternative minimum taxable income as a tax preference item. "Adjusted current
earnings" is based upon the concept of a corporation's "earnings and profits."
Since "earnings and profits" generally includes the full amount of any Fund
dividend, and alternative minimum taxable income does not include the portion of
the Fund's dividend attributable to municipal bonds which are not private
activity bonds, the 75% difference will be included in the calculation of the
corporation's alternative minimum tax.

Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.

STATE AND LOCAL TAXES

Distributions representing net interest received on tax-exempt municipal
securities are not necessarily free from income taxes of any state or local
taxing authority. State laws differ on this issue and shareholders are urged to
consult their own tax advisers.

================================================================================

                            PERFORMANCE INFORMATION

From time to time, the Fund advertises its yield, effective yield and
tax-equivalent yield for Institutional Shares.

The yield of Institutional Shares represents the annualized rate of income
earned on an investment in Institutional Shares over a seven-day period. It is
the annualized dividends earned during the period on the investment, shown as a
percentage of the investment. The effective yield is calculated similarly to the
yield, but, when annualized, the income earned by an investment in Institutional
Shares is assumed to be reinvested daily. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield of the Institutional Shares is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that the
Institutional Shares would have had to earn to equal its actual yield, assuming
a specific tax rate. The yield and the tax-equivalent yield do not necessarily
reflect income actually earned by Institutional Shares and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.

Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in Institutional Shares after reinvesting all distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

Yield, effective yield and tax-equivalent yield will be calculated separately
for Institutional Shares and Investment Shares. Because Investment Shares are
subject to a 12b-1 fee, the yield and effective yield for Institutional Shares,
for the same period, will exceed that of Investment Shares.

From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.

================================================================================
                            OTHER CLASSES OF SHARES


Investment Shares are sold to customers of the Wachovia Banks who are not
eligible to purchase Institutional Shares and customers of Wachovia Investments,
Inc. Investment Shares are subject to a minimum initial investment of $1,000.
Investment Shares are sold at net asset value and are distributed pursuant to a
Rule 12b-1 Plan adopted by the Trust, whereby the distributor is paid a maximum
fee of 0.40 of 1% of the Investment Shares' average daily net assets.
Institutional Shares are distributed without a 12b-1 Plan.


Financial institutions and brokers providing sales and/or administrative
services may receive different compensation from one class of shares than from
another class of shares.

The amount of dividends payable to Investment Shares will be less than those
payable to Institutional Shares by the difference between class expenses and
distribution expenses borne by shares of each respective class. The stated
advisory fee is the same for both classes of shares.

================================================================================
            BILTMORE TAX-FREE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
                               INVESTMENT SHARES


                (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 26.


<TABLE>
<CAPTION>
                                                  Year Ended November 30,    1994       1993       1992*
<S>                                                                        <C>        <C>        <C>
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                                       $    1.00  $    1.00  $    1.00
Income from investment operations
  Net investment income                                                         0.02       0.02       0.01
Less distributions
  Dividends to shareholders from net investment income                         (0.02)     (0.02)     (0.01)
                                                                           ---------  ---------  ---------
NET ASSET VALUE, END OF PERIOD                                             $    1.00  $    1.00  $    1.00
                                                                           ---------  ---------  ---------
Total Return**                                                                  2.11%      1.99%      1.29%
Ratios to Average Net Assets
  Expenses                                                                      0.68%      0.59%      0.50%(a)
  Net investment income                                                         2.11%      1.98%      2.37%(a)
  Expense waiver/reimbursement (b)                                              0.55%      0.70%      0.88%(a)
Supplemental Data
  Net assets, end of period (000 omitted)                                    $42,820    $23,976     $5,338
</TABLE>

 * Reflects operations for the period from May 20, 1992 (date of initial public
   investment) to November 30, 1992.

 ** Based on net asset value, which does not reflect the sales load or
    contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expenses and net
    investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)

================================================================================
          BILTMORE TAX-FREE MONEY MARKET FUND PORTFOLIO OF INVESTMENTS

                               NOVEMBER 30, 1994

<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
 Principal                                                                      Moody's
   Amount                                                                       or S&P*       Value
<C>           <S>                                                              <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--96.3%
              ALABAMA--6.0%

$  3,210,000  Alabama, HFA, Weekly VRDNs Revenue Refunding Bonds
              (Series A & D)/(SouthTrust Bank of Alabama LOC)                  A-1        $    3,210,000

   5,000,000  Birmingham, AL, Weekly VRDNs GO UT Refunding Bonds
              (Series 1992-A)/(First Alabama Bank LOC)                         SP-1+           5,000,000
                                                                                          --------------
              Total                                                                            8,210,000
                                                                                          --------------
              ARKANSAS--3.1%

   1,300,000  Arkansas Hospital Equipment Finance Authority, Weekly
              VRDNs Revenue Refunding Bonds (Credit Suisse LOC)                A1+             1,300,000

     725,000  Fayetteville, AR Public Facility, Weekly VRDNs Revenue
              Refunding Bonds (Charter Vista Hospital)/(Mitsubishi Bank Ltd.
              LOC)                                                             VMIG1             725,000

   2,200,000  University of Arkansas, Weekly VRDNs Revenue Bonds
              (Law & Medical School Project)/(First Union LOC)                 A-1+            2,200,000
                                                                                          --------------
              Total                                                                            4,225,000
                                                                                          --------------
              CALIFORNIA--0.7%

   1,000,000  Orange County, CA, Monthly VRDNs Revenue Bonds (Series B) RANs
              and TANs                                                         MIG1            1,000,000
                                                                                          --------------
              CONNECTICUT--1.6%

   2,200,000  Connecticut State Economic Recovery Notes, Weekly VRDNs GO UT
              Refunding Bonds (Series B)/(Industrial Bank Japan SPA)           VMIG1           2,200,000
                                                                                          --------------
              FLORIDA--13.3%

   1,800,000  Bay County, FL, Hospital System Revenue, Daily VRDNs
              (Bay Medical Center Project)/(Citibank, NY LOC)                  MIG1            1,800,000

   5,000,000  Broward County, FL, HFA, Weekly VRDNs Revenue Bonds
              (Welleby Apt. Project)/(Security Pacific National Bank LOC)      VMIG1           5,000,000

   4,100,000  Collier County, FL, HFA, Weekly VRDNs Revenue Bonds
              (River Beach Project)/(Morgan Guaranty LOC)                      VMIG1           4,100,000

     900,000  Florida Escambia County Facility Authority, IDR, Monthly VRDNs
              Revenue Refunding Bonds (Florida Convalescent Center
              Project)/(Series A)/(Toronto Dominion LOC)                       P-1               900,000
   1,500,000  Martin County, FL School District, 4.35% TANs, 6/30/95           MIG1            1,503,761
   2,000,000  Palm Beach County, FL School District, 4.75%, 9/13/95            MIG1            2,012,053
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
 Principal                                                                      Moody's
   Amount                                                                       or S&P*       Value
<C>           <S>                                                              <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
              FLORIDA--CONTINUED
$    850,000  Polk County, FL, IDA, Monthly VRDNs Revenue Refunding Bonds
              (Florida Convalescent Center Project)/(Toronto Dominion LOC)     P-1        $      850,000
   2,000,000  St. Lucie County, FL, 3.20% (Florida Power & Light
              Project), 1/30/95                                                VMIG1           2,000,000
                                                                                          --------------
              Total                                                                           18,165,814
                                                                                          --------------
              GEORGIA--12.0%
   3,000,000  Burke County, GA, Development Pollution Authority, 3.60%-3.80%,
              Revenue Refunding Bonds (Oglethorpe Power Corp.
              Project)/(Series A), 1/24/95-2/23/95 (Credit Suisse LOC)         P-1             3,000,000
   4,000,000  Cobb County, GA, 3.50% GO UT Bonds, TANs, 12/30/94               SP-1+           4,001,865
   5,000,000  De Kalb Private Hospital Authority, GA Weekly VRDNs (Engleston
              Childrens' Hospital)/(Series B)/(Trust Company Bank LOC)         A-1+            5,000,000
   1,500,000  Georgia State, 6.75% GO UT Bonds (Series E), 12/1/95                             1,529,940
   1,895,000  Marietta, GA, HFA, VRDNs Revenue Bonds (Falls at Bells
              Ferry)/(Guardian S&L LOC)                                        VMIG1           1,895,000
   1,000,000  Newton County, GA, IDA, Weekly VRDNs Refunding Bonds (John H.
              Harland Co. Project)/(NationsBank, GA LOC)                       A-1             1,000,000
                                                                                          --------------
              Total                                                                           16,426,805
                                                                                          --------------
              ILLINOIS--8.1%
   1,000,000  Chicago, IL, School Finance Authority, 7.75% GO UT Refunding
              Bonds, 6/1/95                                                    AAA             1,038,744
   3,000,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
              (Aurora Central Catholic High School)/(Northern Trust Co. LOC)   AA+             3,000,000
   1,000,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
              Refunding Bonds (Catholic Charities Housing)/ (Series
              B)/(National Westminister LOC)                                   VMIG1           1,000,000
   1,500,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
              (Little City Foundation Special Facilities)/(LaSalle National
              Bank LOC)                                                        AA+             1,500,000
   1,500,000  Illinois Development Finance Authority Revenue, Weekly VRDNs
              (St. Ignatius College Prep.)/(Northern Trust Co. LOC)            A-1+            1,500,000
   3,000,000  Illinois State Toll Highway Authority, Weekly VRDNs Revenue
              Refunding Bonds (Series B)/(Societe Generale LOC)                VMIG1           3,000,000
                                                                                          --------------
              Total                                                                           11,038,744
                                                                                          --------------
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
 Principal                                                                      Moody's
   Amount                                                                       or S&P*       Value
<C>           <S>                                                              <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
              INDIANA--1.7%
$  2,300,000  Indianapolis, IN, Weekly VRDNs Revenue Refunding Bonds (Canal
              Square Project)/(Societe Generale LOC)                           VMIG1      $    2,300,000
                                                                                          --------------
              IOWA--0.5%
     600,000  Indianola, IA, IDR Monthly VRDNs Revenue Bonds
              (HY-VEE Foods)/(Rabobank Nederland LOC)                          A-1+              600,000
                                                                                          --------------
              KANSAS--1.6%
   2,175,000  Topeka, KS, 4.50% GO UT Bonds (Series A), 6/1/95                 MIG1            2,183,828
                                                                                          --------------
              KENTUCKY--0.7%
     900,000  City of Georgetown, KY, Educational Institutional Weekly VRDNs
              Revenue Bonds (Georgetown College Project)/PNC Bank, KY LOC)     VMIG1             900,000
                                                                                          --------------
              LOUISIANA--5.9%
   1,700,000  Calcasieu Parish, LA, Weekly VRDNs Revenue Bonds (Citgo
              Petroleum Corp.)/(Sumitomo Bank LOC)                             A1              1,700,000
   2,800,000  Lake Charles, LA Harbor & Terminal District, Weekly VRDNs
              Revenue Bonds (Citgo Petroleum Corp.)/(National Westminister
              Bank LOC)                                                        P-1             2,800,000
   3,600,000  Louisiana State Recovery District Sales Tax Revenue, Daily
              VRDNs (Swiss Bank SPA)                                           VMIG1           3,600,000
                                                                                          --------------
              Total                                                                            8,100,000
                                                                                          --------------
              MARYLAND--4.4%
   6,000,000  Maryland State Health and Higher Education Facility Anne
              Arundel Hospital, Weekly VRDNs Revenue Bonds (Series B)/(Mellon
              Bank LOC)                                                        VMIG1           6,000,000
                                                                                          --------------
              MASSACHUSETTS--3.4%
   1,600,000  Massachusetts State, Daily VRDNs GO UT Bonds (Series D)/
              (ABN-AMRO LOC)                                                   VMIG1           1,600,000
   3,000,000  Massachusetts Municipal Wholesale Electric Co., Weekly VRDNs
              Supply System Revenue Refunding Bonds (Series C)/ (Canadian
              Imperial Bank LOC)                                               A-1+            3,000,000
                                                                                          --------------
              Total                                                                            4,600,000
                                                                                          --------------
              MINNESOTA--1.5%
   2,020,000  Minnesota State, 6.60% GO UT Refunding Bonds, 8/1/95             Aa1             2,053,251
                                                                                          --------------
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
                                                                                Credit
                                                                                Rating:
 Principal                                                                      Moody's
   Amount                                                                       or S&P*       Value
<C>           <S>                                                              <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
              NEW YORK--0.7%
$  1,000,000  New York, NY, Daily VRDNs GO UT Refunding Bonds (Morgan
              Guaranty LOC)                                                    VMIG1      $    1,000,000
                                                                                          --------------
              NORTH CAROLINA--1.8%
   2,500,000  North Carolina Eastern Municipal Power, 3.55% Revenue Bonds
              (Series B), 1/9/95, (UBS & Morgan Guaranty LOC)                  A-1+            2,500,000
                                                                                          --------------
              OHIO--0.7%
   1,000,000  Centerville, OH, Healthcare Revenue, Weekly VRDNs (Bethany
              Lutheran Village Project)/(PNC Bank LOC)                         VMIG1           1,000,000
                                                                                          --------------
              PENNSYLVANIA--6.3%
   3,600,000  Allegheny County, PA, Port Authority, 4.10% GANs,
              7/3/95 (PNC Bank LOC)                                            MIG1            3,600,111
   2,000,000  Pennsylvania State University, 3.00%, 12/5/94                    SP-1+           2,000,057
   2,000,000  Philadelphia, PA, 4.75% GO UT Bonds (Series A) RANs and TANs,
              6/15/95, (Canadian Imperial Bank LOC)                            MIG1            2,008,800
   1,000,000  Sewickley Valley Hospital Authority, PA, 3.00% Revenue
              Refunding Bonds (Series B), 12/15/94, (PNC Bank LOC)             VMIG1           1,000,139
                                                                                          --------------
              Total                                                                            8,609,107
                                                                                          --------------
              TENNESSEE--7.4%
   3,000,000  Metro Government Nashville & Davidson County, TN, IDB, Weekly
              VRDNs Revenue Bonds (Arbor Crest)/(Series B)/ (Chemical Bank,
              NY LOC)                                                          VMIG1           3,000,000
   2,000,000  Metro Government Nashville & Davidson County, TN, Health and
              Education Facilities, Weekly VRDNs Revenue Refunding Bonds
              (West Meade Place Project)/(NationsBank, GA LOC)                 A-1             2,000,000
   5,100,000  Tennessee State, Weekly VRDNs GO UT Bonds (Series B) BANs        VMIG1           5,100,000
                                                                                          --------------
              Total                                                                           10,100,000
                                                                                          --------------
              TEXAS--7.3%
   1,000,000  Fort Worth, TX, 8.70% GO LT Refunding Bonds, 3/1/95              AAA             1,013,366
   3,000,000  Lower Neches Valley Authority, TX, 3.50% Revenue Refunding
              Bonds (Chevron USA, Inc. Project), 2/15/95                       A-1+            3,000,000
   1,000,000  San Antonio, TX, 8.30% GO LT Refunding Bonds, 8/1/95             AAA             1,027,885
   1,860,000  **San Antonio, TX, Electric & Gas Revenue, 9.60%, 2/1/95         AAA             1,907,317
</TABLE>

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
                                                                                Credit
 Principal                                                                      Rating:
   Amount                                                                       Moody's
 or Shares                                                                      or S&P*       Value
<C>           <S>                                                              <C>        <C>
- --------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
              TEXAS--CONTINUED
$  3,000,000  Texas State, Weekly VRDNs                                        MIG1       $    3,000,000
                                                                                          --------------
              Total                                                                            9,948,568
                                                                                          --------------
              VIRGINIA--4.0%
   1,500,000  **Harrisonburg, VA, HFA, 2.75 % Revenue Bonds (Rolling Brook
              Village Apartments)/(Series A)/(Guardian S&L LOC),
              2/1/95                                                           VMIG1           1,500,000
   3,000,000  Peninsula Ports Authority, VA, Daily VRDNs Revenue Refunding
              Bonds (Port Facility-Shell Oil Co.)                              AAA             3,000,000
   1,000,000  Virginia State, HSG Dev. Auth., 4.25% Revenue Bonds
              (Series D), 7/12/95                                              VMIG1           1,000,000
                                                                                          --------------
              Total                                                                            5,500,000
                                                                                          --------------
              WASHINGTON--2.2%
   3,000,000  Port Anacortes, WA, IDA, 3.95% Revenue Refunding Bonds (Texaco
              Project), 2/15/95                                                P-1             3,000,000
                                                                                          --------------
              WISCONSIN--0.7%
   1,000,000  West Allis Milwaukee, WI, 5.00% GO UT Bonds, RANs & TANs,
              8/22/95                                                          MIG1            1,006,631
                                                                                          --------------
              WYOMING--0.7%
   1,000,000  **Unita County, WY, Pollution Control Revenue, 3.75%
              (Chevron USA, Inc. Project), 6/15/95                             P-1             1,000,000
                                                                                          --------------
              Total Short-Term Municipal Securities                                          131,667,748
                                                                                          --------------
Regulated Investment Companies--4.4%
   5,932,526  Fidelity Tax-Exempt Money Market Fund Instruments
              Portfolio (at net asset value)                                                   5,932,526
                                                                                          --------------
              Total Investments, at amortized cost and value                              $  137,600,274+
                                                                                          --------------
</TABLE>


  On December 6, 1994, 0range County, California filed for protection under
  Chapter 9 of the United States Bankruptcy Code with the U.S. Bankruptcy Court
  in Santa Ana, California. On December 7, 1994, Wachovia Corp. purchased the
  indicated security from the Fund's portfolio of investments at its amortized
  cost, resulting in no loss to the Fund or its shareholders.


+ Also represents cost for federal tax purposes.

         * Please refer to the Appendix of the Statement of Additional
           Information for an explanation of the credit ratings. Current credit
           ratings are unaudited.

        ** Denotes variable rate securities which show current rate and next
           demand date.

Note: The categories of investments are shown as a percentage of net assets
      ($136,687,018) at November 30, 1994.

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND

The following abbreviations are used throughout this portfolio:

BANs--Bond Anticipation Notes
GANs--Grant Anticipation Notes
GO--General Obligation
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Board
IDR--Industrial Development Revenue
LOC--Letter(s) of Credit
LT--Limited Tax
RANs--Revenue Anticipation Notes
SPA--Standby Purchase Agreement
TANs--Tax Anticipation Notes
UT--Unlimited Tax
VRDNs--Variable Rate Demand Notes

(See Notes which are an integral part of the Financial Statements)

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND
                      STATEMENT OF ASSETS AND LIABILITIES


                               NOVEMBER 30, 1994


<TABLE>
<S>                                                                         <C>           <C>
Assets:
Investments, at amortized cost and value                                                  $  137,600,274
Cash                                                                                              17,117
Interest receivable                                                                              972,051
Deferred expenses                                                                                 11,321
                                                                                          --------------
     Total assets                                                                            138,600,763
Liabilities:
Payable for investments purchased                                           $  1,533,878
Dividends payable                                                                342,201
Accrued expenses                                                                  37,666
                                                                            ------------
     Total liabilities                                                                         1,913,745
                                                                                          --------------
Net Assets for 136,687,018 shares of beneficial interest outstanding                      $  136,687,018
                                                                                          --------------
Net Asset Value, Offering Price, and Redemption Proceeds Per Share:
Institutional Shares ($93,866,997 / 93,866,997 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
Investment Shares ($42,820,021 / 42,820,021 shares of beneficial interest
outstanding)                                                                                       $1.00
                                                                                          --------------
</TABLE>


(See Notes which are an integral part of the Financial Statements)


================================================================================
          BILTMORE TAX-FREE MONEY MARKET FUND STATEMENT OF OPERATIONS


                          YEAR ENDED NOVEMBER 30, 1994


<TABLE>
<S>                                                                <C>         <C>           <C>
Investment Income:
Interest income                                                                              $  3,466,650
Expenses:
Investment advisory fee                                                        $    620,752
Trustees' fees                                                                        5,447
Administrative personnel and services fees                                          124,799
Custodian fees                                                                       24,830
Transfer and dividend disbursing agent fees and expenses                             52,855
Fund share registration costs                                                        35,102
Auditing fees                                                                        15,373
Legal fees                                                                           18,482
Printing and postage                                                                 39,391
Portfolio accounting fees                                                            51,896
Insurance premiums                                                                   13,213
Distribution services fees                                                          139,886
Miscellaneous                                                                        16,448
                                                                               ------------
     Total expenses                                                               1,158,474
Deduct--
  Waiver of investment advisory fee                                $  463,428
  Waiver of administrative personnel and services fees                 31,039
  Waiver of distribution services fees                                 34,972
  Reimbursement of other operating expenses
  by Administrator                                                     57,028       586,467
                                                                   ----------  ------------
     Net expenses                                                                                 572,007
                                                                                             ------------
          Net investment income                                                              $  2,894,643
                                                                                             ------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND
                       STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                Year Ended November 30,       1994             1993
<S>                                                                      <C>              <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income                                                    $     2,894,643  $     1,687,496
                                                                         ---------------  ---------------
Distributions to Shareholders--
Dividends to shareholders from net investment income:
  Institutional Shares                                                        (2,150,380)      (1,400,375)
  Investment Shares                                                             (744,263)        (287,121)
                                                                         ---------------  ---------------
     Change in net assets from distributions to shareholders                  (2,894,643)      (1,687,496)
                                                                         ---------------  ---------------
Fund Share (Principal) Transactions--
Proceeds from sale of shares                                                 263,497,759      202,842,602
Cost of shares redeemed                                                     (210,055,320)    (186,567,848)
                                                                         ---------------  ---------------
     Change in net assets from Fund share transactions                        53,442,439       16,274,754
                                                                         ---------------  ---------------
          Change in net assets                                                53,442,439       16,274,754
Net Assets:
Beginning of period                                                           83,244,579       66,969,825
                                                                         ---------------  ---------------
End of period                                                            $   136,687,018  $    83,244,579
                                                                         ---------------  ---------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

================================================================================
                      BILTMORE TAX-FREE MONEY MARKET FUND
                         NOTES TO FINANCIAL STATEMENTS


                               NOVEMBER 30, 1994


(1) ORGANIZATION


The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Tax-Free Money Market Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.



The Fund offers two classes of shares: Institutional Shares and Investment
Shares. Investment Shares are identical in all respects to Institutional Shares,
except that Investment Shares are sold pursuant to a Distribution Plan (the
"Plan") adopted in accordance with Rule 12b-1.


(2) SIGNIFICANT ACCOUNTING POLICIES


The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.



A.   INVESTMENT VALUATIONS--The Fund's use of amortized cost method to value its
     portfolio securities is in accordance with Rule 2a-7 under the Act.



B.   INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
     are accrued daily. Bond premium and discount, if applicable, are amortized
     as required by the Internal Revenue Code, as amended (the "Code").
     Distributions to shareholders are recorded on the ex-dividend date.



C.   FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
     Code applicable to regulated investment companies and to distribute to
     shareholders each year substantially all of its income. Accordingly, no
     provisions for federal income are necessary.



D.   WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
     when-issued or delayed delivery transactions. The Fund records when-issued
     securities on the trade date and maintains security positions such that
     sufficient liquid assets will be available to make payment for the
     securities purchased. Securities purchased on a when-issued or delayed
     delivery basis are marked to market daily and begin earning interest on the
     settlement date.



E.   DEFERRED EXPENSES--The costs incurred by the Fund with respect to
     registration of its shares in its first fiscal year, excluding the initial
     expense of registering the shares, have been deferred and are being
     amortized using the straight-line method not to exceed a period of five
     years from the Fund's commencement date.



F.   OTHER--Investment transactions are accounted for on the trade date.


================================================================================

                      BILTMORE TAX-FREE MONEY MARKET FUND



(3) SHARES OF BENEFICIAL INTEREST



The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value) for each class of shares. At November 30, 1994, capital
paid-in aggregated $136,687,018. Transactions in Fund shares were as follows:

<TABLE>
<CAPTION>
Institutional Shares                           Year Ended November 30,          1994            1993
<S>                                                                        <C>             <C>
- ---------------------------------------------------------------------------------------------------------
Shares sold                                                                   175,432,174     157,797,806
Shares redeemed                                                              (140,833,740)   (160,161,423)
                                                                           --------------  --------------
     Net change resulting from Institutional Share transactions                34,598,434      (2,363,617)
                                                                           --------------  --------------

<CAPTION>

Investment Shares                             Year Ended November 30,           1994            1993
<S>                                                                        <C>             <C>
- ---------------------------------------------------------------------------------------------------------
Shares sold                                                                    88,065,585      45,044,796
Shares redeemed                                                               (69,221,580)    (26,406,425)
                                                                           --------------  --------------
     Net change resulting from Investment Share transactions                   18,844,005      18,638,371
                                                                           --------------  --------------
          Total net change resulting from Fund share transactions              53,442,439      16,274,754
                                                                           --------------  --------------
</TABLE>

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.50 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee. The
Adviser can modify or terminate the voluntary waiver at any time at its sole
discretion.

ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse a portion of the Fund's other operating expenses. FAS can modify
or terminate the voluntary waiver and reimbursement at any time at its sole
discretion.


DISTRIBUTION PLAN--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Investment Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.40 of 1% of the average daily net assets of the
Investment Shares, annually, to compensate FSC. FSC may voluntarily choose to
waive a portion of its fee. FSC can modify or terminate the voluntary waiver at
any time at its sole discretion.

TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund for which it is paid a fee. The FServ fee is based on the size, type
and number of accounts and transactions made by shareholders.

FServ also maintains the Fund's accounting records for which it is paid a fee.
The fee is based on the level of the Fund's average net assets for the period,
plus out-of-pocket expenses.

Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.

ORGANIZATIONAL EXPENSES--Organizational expenses ($59,661) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following May 4, 1992 (the date the Fund became
effective). For the fiscal year ended November 30, 1994, the Fund paid $12,360
pursuant to this agreement.

Certain of the Officers of the Trust are Officers and Directors or Trustees of
the above companies.

================================================================================
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Trustees and Shareholders of
THE BILTMORE FUNDS:


We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Tax-Free Money Market Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights (see pages 2 and 14 of this prospectus) for the periods
presented. 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.


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 included confirmation of securities owned as of
November 30, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.


In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Tax-Free Money Market Fund of The Biltmore Funds at November 30, 1994,
and the results of its operations for the year then ended, changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for the periods presented, in conformity with general accepted
accounting principles.


                                                               ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 12, 1995


================================================================================
                                   ADDRESSES

- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND        Federated Investors Tower
  INSTITUTIONAL SHARES                     Pittsburgh, Pennsylvania 15222-3779

- --------------------------------------------------------------------------------
DISTRIBUTOR                                Federated Securities Corp.
                                           Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779

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

INVESTMENT ADVISER                         Wachovia Investment Management Group
                                           301 North Main Street
                                           Winston-Salem, North Carolina 27150

- --------------------------------------------------------------------------------
CUSTODIAN                                  Wachovia Bank of North Carolina, N.A.
                                           Wachovia Trust Operations
                                           301 North Main Street
                                           Winston-Salem, North Carolina 27150

- --------------------------------------------------------------------------------
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, Federated Services Company
AND PORTFOLIO RECORDKEEPER                 Federated Investors Tower
                                           Pittsburgh, Pennsylvania 15222-3779

- --------------------------------------------------------------------------------
COUNSEL TO THE BILTMORE FUNDS              Kirkpatrick & Lockhart
                                           1800 M Street, N.W.
                                           Washington, D.C. 20036-5891

- --------------------------------------------------------------------------------
COUNSEL TO THE INDEPENDENT TRUSTEES        Piper & Marbury
                                           1200 Nineteenth Street, N.W.
                                           Washington, D.C. 20036-2430

- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS                       Ernst & Young LLP
                                           One Oxford Centre
                                           Pittsburgh, Pennsylvania 15219

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

                BILTMORE TAX-FREE MONEY MARKET FUND PROSPECTUS
                 A DIVERSIFIED PORTFOLIO OF THE BILTMORE FUNDS
                  An Open-End, Management Investment Company


                                                                       090297300
January 31, 1995                                             2020206A-I&R (1/95)






BILTMORE TAX-FREE MONEY MARKET FUND

(A PORTFOLIO OF THE BILTMORE FUNDS)
INSTITUTIONAL SHARES
INVESTMENT SHARES
Combined Statement of Additional Information










    This Combined Statement of Additional Information should be read
    with the respective prospectus for Institutional Shares and
    Investment Shares of Biltmore Tax-Free Money Market Fund (the
    "Fund"),  a portfolio in The Biltmore Funds (the "Trust"), dated
    January 31, 1995. This Combined Statement is not a prospectus
    itself. To receive a copy of either prospectus, write to the Fund,
    call The Biltmore Service Center toll-free at 1-800-994-4414, or
    contact your Wachovia Bank account officer.
    Federated Investors Tower
    Pittsburgh, Pennsylvania 15222-3779
    Statement dated January 31, 1995
    
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED
INVESTORS
GENERAL INFORMATION ABOUT THE
FUND                                    1
INVESTMENT OBJECTIVE AND POLICIES       1
 Acceptable Investments                1
 Investment Limitations                2
THE BILTMORE FUNDS MANAGEMENT           4
 Officers and Trustees                 4
 Fund Ownership                        5
 Trustees Compensation                 6
 Trustee Liability                     6
INVESTMENT ADVISORY SERVICES            6
 Adviser to the Fund                   6
 Advisory Fees                         6
ADMINISTRATIVE SERVICES                 7
BROKERAGE TRANSACTIONS                  7
PURCHASING SHARES                       8
 Distribution Plan (Investment
   Shares Only)                         8
 Conversion to Federal Funds           8
DETERMINING NET ASSET VALUE             9
 Use of the Amortized Cost
   Method                               9
REDEEMING SHARES                       10
 Redemption in Kind                   10
TAX STATUS                             10
 The Fund's Tax Status                10
YIELD                                  10
TAX-EQUIVALENT YIELD                   11
 Tax-Equivalency Table                12
EFFECTIVE YIELD                        12
PERFORMANCE COMPARISONS                12

GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in the Trust.  The Trust was established as a
Massachusetts business trust under a Declaration of Trust dated November
19, 1991.
Shares of the Fund are offered in two classes, Institutional Sha


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