SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Tax Free Fund of Vermont, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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TAX FREE FUND OF VERMONT, INC.
128 MERCHANTS ROW
RUTLAND, VERMONT 05701
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Tax Free Fund of Vermont, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of the Shareholders (the
Meeting) of Tax Free Fund of Vermont, Inc. ( the Fund) will be held at the
Cortina Inn, Mendon, Vermont 05701, on December 29, 1998 at 9:00 a.m. The
purpose of the Meeting is to consider and act upon the following proposals, and
to transact such other business as may properly come before the meeting or any
adjournments thereof.
1. To vote on the election of three directors to hold office until the next
annual meeting of the shareholders of the Fund.
2. To ratify the selection of Tait, Weller & Baker as the Fund's independent
auditors.
3. To ratify changes made to the investment advisory agreement by the Fund
to reduce the advisory fee to be paid to the adviser on total net assets of
the Fund in excess of $10 million and to allow the Fund added flexibility to
pay accrued advisory fees.
The Board of Directors of the Fund has fixed the close of business on
November 17, 1998 as the record date for the determination of the Shareholders
of the Fund entitled to notice of, and to vote at, such Meeting and any
adjournments thereof.
By order of the Board of Directors,
GLENN S. MORGAN, Secretary
December 4, 1998
YOUR VOTE IS IMPORTANT-
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER WHO
DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING INSTRUCTIONS
ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE
PROVIDED. IN ORDER TO AVOID UNNECESSARY EXPENSE TO THE FUND, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER THE NUMBER OF SHARES
YOU MAY HOLD.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies made by, and on behalf of, the Board of Directors of the Tax Free Fund
of Vermont, Inc. (the Fund) to be used at the Annual Meeting of Shareholders of
the Fund and any adjournments thereof (the Meeting), to be held December 29,
1998 at 9:00 a.m. at the Cortina Inn, Route 4, Mendon, Vermont 05701. The
purpose of the Meeting is set forth in the accompanying Notice. The solicitation
is made primarily by the mailing of this Proxy Statement and the accompanying
proxy card on or about December 4, 1998. Supplementary solicitations may be made
by mail, telephone or by personal interview by representatives of the Fund. The
expenses in connection with preparing this Proxy Statement and its enclosures
and of all solicitations will be paid by the Fund. The Fund will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares.
If the enclosed proxy card is executed and returned, it may nevertheless be
revoked at any time prior to its use by written notification received by the
Fund, by the execution of a later-dated proxy card or by attending the Meeting
and voting in person. All proxy cards solicited by the Board of Directors that
are properly executed and received by the Secretary prior to the Meeting, and
which are not revoked, will be voted at the Meeting. Shares represented by such
proxies will be voted in accordance with the instructions thereon. If no
specification is made on a proxy card, it will be voted FOR the matters
specified on the proxy card. Shareholders should note that while votes to
ABSTAIN will count toward establishing a quorum, passage of a proposal being
considered at the Meeting will occur only if a sufficient number of votes are
cast FOR the proposal. Accordingly, votes to ABSTAIN and votes AGAINST will have
the same effect in determining whether the proposal is approved.
If a quorum is present at the Meeting, but sufficient votes to approve one
or more of the proposed items are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a majority
of those shares present at the Meeting or represented by proxy. When voting on a
proposed adjournment, the persons named as proxies will vote FOR the proposed
adjournment all shares they are entitled to vote with respect to each item,
unless directed to vote AGAINST the item, in which case such shares will be
voted against the proposed adjournment with respect to that item. A shareholder
vote may be taken on one or more of the items in this Proxy Statement prior to
such adjournment if sufficient votes have been received and it is otherwise
appropriate.
A copy of the Fund's annual report for the fiscal year ended December 31, 1997
has been mailed or delivered to each shareholder entitled to vote at the
Meeting.
The principal executive office of the Fund is 128 Merchants Row, Rutland,
Vermont 05701.
On November 17, 1998 there were 914,020 shares of the Fund issued and
outstanding. Mr. Justin Mueller, Main Street, Manchester, Vermont 05254-0646
owned beneficially 59,779 shares or 6.55% of the outstanding shares of the Fund
on that date. To the knowledge of the Fund, no other shareholder, owned of
record or beneficially more than 5% of the outstanding shares of the Fund on
that date. Also, as of November 17, 1998, the Directors and officers of the Fund
owned, in the aggregate, less than 1% of the Fund's total outstanding shares.
Shareholders of record at the close of business November 17, 1998 will be
entitled to vote at the Meeting. The Fund issues full shares and fractional
shares computed to the nearest 1/1000 of a share. Each such shareholder will be
entitled to a number of votes equal to the number of full shares and a
fractional vote equal to any fractional share held on that date.
1. TO ELECT A BOARD OF DIRECTORS OF THE FUND
The Fund's articles of association and bylaws provide that the Fund shall
have a Board of three Directors. It is intended that the enclosed proxy card
will be voted for the election of the three nominees for Director listed below,
unless such authority is withheld by the proxy card.
The three nominees named below are currently Directors of the Fund and have
served in that capacity since being appointed initial Directors upon the
incorporation of the Fund. None of the nominees is related to one another, and
each has consented to serve as Director if elected. The nominee indicated by an
asterisk (*) is an "interested person" of the Fund by virtue of affiliation with
the Fund's investment adviser, Vermont Fund Advisors, Inc.
(a) Except as otherwise indicated, each individual has held the office shown for
the last five years:
YEAR OF
NOMINEE ELECTION OR
(AGE) PRINCIPAL OCCUPATION (A) APPOINTMENT
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STEPHEN A. CARBINE is Vice President, Kinney, 1991
98 Merchants Row Pike Bell & Conner, Inc.,
Rutland, VT 05701 (Insurance Brokers)
(57)
JOHN T. PEARSON* President and Treasurer, is 1991
110 Merchants Row President of Vermont Fund
Rutland, Vermont 05701 Advisers,Inc. (Investment Adviser)
(54) Prior to 1991, he was Vice
President Finance & Administration for
Vermont Yankee Nuclear Power
Corporation.
WINFRED A. THOMAS is Vice President, Clinton F. 1991
87 North Main Street Thomas Agency (Insurance Brokers).
Rutland, Vermont 05701
(49)
If elected, each of the Directors will hold office for one year and until
any successor is elected and qualified except that (a) any Director may resign
and (b) any Director may be removed for cause by vote of the majority of
shareholders then entitled to vote at a shareholders meeting called for such
purpose. In case a vacancy shall for any reason exist, then the majority of the
remaining Directors may elect a Director. A Director so elected to fill a
vacancy is elected for the unexpired term of his/her predecessor in office.
There will be annual meetings of shareholders for the purpose of electing
Directors.
The Fund's Board, which is currently composed of two non-interested
Directors and one interested Director, met three times during the fiscal year
ended December 31, 1997 and three times to date during the fiscal year ending
December 31, 1998. It is expected that the nominated Directors will meet at
least four times a year at regularly scheduled meetings. If the above nominees
are elected, the Fund's Board will consist of two non-interested Directors and
one interested Director.
As a group, the non-interested Directors received $2,100.00 of fees and
expenses from the Fund in their capacities as Directors during the fiscal year
ended December 31, 1997.
The Fund's Board has not established any committees.
2. TO RATIFY THE SELECTION OF TAIT, WELLER & BAKER AS INDEPENDENT ACCOUNTANTS OF
THE FUND FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.
By a vote of the non-interested Directors, the firm of Tait, Weller & Baker
has been selected as independent accountants for the Fund, to sign or certify
any financial statements of the Fund required by any law or regulation to be
certified by an independent public accountant and filed with the Securities and
Exchange Commission ( the SEC) or the State of Vermont in respect of all or any
part of the fiscal year ended December 31, 1998. Pursuant to the 1940 Investment
Company Act (the 1940 Act), such selection requires the ratification of
shareholders. In addition, as required by the 1940 Act, the vote of the
Directors is subject to the right of the Fund by vote of a majority of its
outstanding voting securities at any meeting called for the purpose of voting on
such action, to terminate such employment without penalty. Tait, Weller & Baker
has advised the Fund that it has no direct or material indirect ownership
interest in the Fund.
The services provided to the Fund include (1) audits of annual financial
statements and limited review of unaudited semi-annual financial statements, (2)
assistance and consultation in connection with SEC filings and (3) review of the
annual federal income tax returns filed on behalf of the Fund. In selecting the
Fund's accountants, the Board of Directors of the Fund reviewed the nature and
scope of the services to be provided (including non-audit services) and whether
the performance of such services would affect the accountant's independence.
Representatives of Tait, Weller & Baker are not expected to be present at the
meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
3. TO RATIFY CHANGES MADE TO THE INVESTMENT ADVISORY AGREEMENT BY THE FUND TO
REDUCE THE ADVISORY FEE TO BE PAID TO THE ADVISER ON TOTAL NET ASSETS OF THE
FUND IN EXCESS OF $10 MILLION AND TO ALLOW THE FUND ADDED FLEXIBILITY TO PAY
ACCRUED ADVISORY FEES.
By a vote of the non-interested Directors of the Fund, effective with the
renewal on May 31, 1998 of the investment advisory agreement between the Fund
and its adviser, Vermont Fund Advisors, Inc. ("VFA"), the Fund and VFA agreed
(a) to a reduction, from seven-tenths of one percent (0.7%) to six-tenths of one
percent (0.6%), in the advisory fee payable to VFA by the Fund on total net
assets of the Fund in excess of $10 million and (b) to allow the Fund to pay
advisory fees to VFA as and when accrued but not less frequently than monthly.
As of October 31, 1998 the Fund had total net assets of $9.451 million and
therefore the reduction in advisory fees has no immediate effect upon the fee
paid by the Fund for advisory services. Assuming the Fund's total net assets
continue to increase, the Fund will realize a reduction in advisory fees of
$1,000 annually for each $1 million in total net assets in excess of $10
million. Such a reduction will continue to implement the ongoing efforts of the
Fund to reduce the fees and expenses of the fund and increase the total return
and yield earned by the Fund's shareholders.
The Fund accrues the advisory fee due to VFA on a daily basis. The
amendment to the investment advisory agreement allows the Fund to pay such
accrued fee to VFA as and when accrued instead of at the beginning of the next
succeeding month. This amendment provides more timeliness and flexibility to VFA
with regard to the costs incurred by VFA in managing and operating the business
of the Fund.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matters in accordance with the judgement of the persons
therein designated.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a for the Fund's 1999 annual shareholders' meeting should send their written
proposals addressed to the Secretary, Tax Free Fund of Vermont, Inc., 128
Merchants Row, Rutland, Vermont 05701 no later than October 1, 1999.
Vote this proxy card TODAY! Your prompt response will
save your Fund the expense of additional mailings.
RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE OR MAIL TO:
TAX FREE FUND OF VERMONT
128 Merchants Row
Rutland, Vermont 05701
TAX FREE FUND OF VERMONT, INC.
PROXY SOLICITED BY THE DIRECTORS
The undersigned, revoking previous proxies, hereby appoints Stephen A. Carbine,
John T. Pearson and Winfred A. Thomas, or any one or more of them, attorneys,
with full power of substitution, to vote all shares of Tax Free Fund of Vermont,
Inc. which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Fund to be held at the Cortina Inn, Route 4, Mendon, Vermont
05701, on December 29, 1998 at 9:00 a.m. and at any adjournments thereof. All
powers may be exercised by a majority of said proxy holders or substitutes
voting or acting or, if only one votes and acts, then by that one. This proxy
shall be voted on the proposals described in the Proxy Statement as specified on
the reverse side. Receipt of the Notice of Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your
name appears on this Proxy. When
signing in a fiduciary capacity,
such as trustee, custodian, etc.,
please so indicate. Corporate and
partnership proxies should be
signed by an authorized person
indicating the person's title.
Date ______________________ , 199_
_____________________________
_____________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE
SEE OTHER SIDE
Please refer to the Proxy Statement discussion of each of these matters.
If no SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
1. To elect the three nominees specified below as __ FOR all nominees __ WITHHOLD
Directors: Stephen A. Carbine, John T. Pearson listed (except as marked authority to vote
and Winfred A. Thomas. to the contrary below) for all nominees
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
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2. To ratify the selection of Tait, Weller & Baker as FOR___ AGAINST___ ABSTAIN___
independent accountants of the Fund for the fiscal
year ended December 31, 1998.
3. To ratify changes made to the investment advisory FOR___ AGAINST___ ABSTAIN___
by the Fund to reduce the advisory fee to be paid to
the adviser on total net assets of the Fund in excess
of $10 million and to allow the Fund added flexibility
to pay accrued advisory fees.