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:
[X] Preliminary Proxy Statement [ ]Confidential, For Use of the Commission Only
[ ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12

Tax Free Fund of Vermont, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(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) (4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] 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:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:

TAX FREE FUND OF VERMONT, INC.
87 North Main Street
Rutland, Vermont 05701

August 31, 2001

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
the Tax Free Fund of Vermont, Inc. (the "Fund"), to be held on Thursday,
September 27, 2001 at 10:00 a.m., Eastern time, at the offices of the Fund at 87
North Main Street, Rutland, Vermont 05701. Formal notice of the Meeting appears
on the next page, followed by the proxy statement. We hope that you can attend
the Meeting in person; however, we urge you in any event to vote your shares by
completing and returning the enclosed proxy in the envelope provided at your
earliest convenience.

At the Meeting, you will be asked to approve a Plan of Liquidation
providing for the liquidation and termination of the Fund. Due to the Fund's
inability to attract sufficient assets to realize any meaningful economies of
scale, the Fund's investment adviser has determined that it intends to
discontinue its business operations. The Fund's Board of Directors made the
decision to liquidate the Fund only after consideration of other alternatives,
including finding an alternative investment adviser interested in managing the
Fund or merging the Fund into another mutual fund with a similar investment
objective. The Board of Directors believes liquidation of the Fund is in the
best interests of shareholders and therefore recommends that you vote "FOR" the
proposal.

Your vote is important regardless of the number of shares you own. In order
to avoid the added cost of follow-up solicitations and possible adjournments,
please take a few minutes to read the proxy statement and cast your vote as soon
as you can. A postage paid envelope is enclosed.

We appreciate the time you will take to review this important matter.
Please take a few minutes to read the enclosed material and mail back the proxy
voting card. The Question and Answer section that follows will assist you in
understanding the proposal; however, if we may be of any assistance, please call
us toll-free at 1-800-675-3333, or in Rutland at 802-773-0674.

Sincerely,

/s/ William Hahn

William Hahn
President

QUESTIONS AND ANSWERS REGARDING THE PROPOSAL
--------------------------------------------

Q. WHY AM I RECEIVING THIS PROXY STATEMENT?
A. The purpose of the Proxy Statement is to seek shareholder approval of a plan
to liquidate the Fund.

Q. WHY IS THE LIQUIDATION BEING PROPOSED?
A. The Board of Directors has recommended that the Fund be liquidated. The
reasons for the recommendation include, among other reasons, the Fund's small
size and the fact that the expenses of operating the Fund remain very high. The
Board of Trustees believes that it would be in the best interests of Fund
shareholders to approve the liquidation of the Fund. Accordingly, the Board of
Directors has recommended liquidating the Fund's assets and distributing the
proceeds to Fund shareholders.

Q. HOW WILL APPROVAL OF THIS PROPOSAL AFFECT MY ACCOUNT?
A. If the proposal to liquidate the Fund is approved, the Fund's assets will be
liquidated and the proceeds will be distributed to Fund shareholders.
Shareholders should carefully read and consider the discussion of the proposal
in the Proxy Statement.

Q. IF THE FUND LIQUIDATES, WHAT WILL BE THE FEDERAL INCOME TAX CONSEQUENCES FOR
ME?
A. In connection with the liquidation, the Fund will make a liquidating
distribution. The liquidating distribution that you receive will be in exchange
for your shares and will generally be taxable as capital gains to the extent
that the distributions exceed your basis in your shares, or capital loss to the
extent your basis in your shares exceeds the distributions. Capital gain or loss
(if any) that you realize in the liquidating distribution will be recognized by
you in the taxable year in which the distributions are received. Any such
capital gain or loss will be long-term capital gain or loss if you have owned
your shares for more than one year and will be short-term capital gain or loss
if you have owned your shares for one year or less. You are urged to consult
your own tax advisor regarding the tax consequences to you, in light of your
particular circumstances, of the receipt of the liquidating distribution.

Q. MAY I HAVE MY SHARES REDEEMED PRIOR TO THE LIQUIDATION?
A. Yes. You may demand that the Fund redeem all or any portion of your shares at
any time prior to the meeting. Even if you intend to liquidate your shares prior
to the meeting, you are still entitled to vote and we urge you to do so.

Q. HOW CAN I VOTE?
A. You can vote by completing and signing the enclosed proxy card and mailing it
in the enclosed postage-paid envelope. Shareholders can also vote in person at
the meeting.

Q. WILL MY VOTE MAKE A DIFFERENCE?
A. Yes. Your vote is needed to ensure that the proposal can be acted upon. Your
immediate response will help save on the costs of any further solicitations for
a shareholder vote. We encourage you to participate in the governance of the
Fund.

Q. HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of Directors unanimously recommends
that you vote "FOR" the proposed liquidation.

Q. HOW DO I CONTACT YOU?
A. If you have any questions, call the Fund toll free at 1-800-675-3333.

PLEASE VOTE. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN, AND
WHETHER OR NOT YOU HAVE PREVIOUSLY REDEEMED YOUR SHARES.

TAX FREE FUND OF VERMONT, INC.
Annual Meeting of Shareholders
September 28, 2001

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoint(s) Winfred Thomas, Steven Carbine, and William
Hahn, and each of them, as Proxies with full power of substitution and hereby
authorize(s) each of them to represent and to vote, as provided on the reverse
side, all shares of the Tax Free Fund of Vermont, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held at 87 North
Main Street, Rutland, Vermont 05701 on Friday, September 28, 2001 at 10:00 a.m.
(Eastern time) or at any adjournment thereof.

The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement dated August 31, 2001.

Date _______________________________

____________________________________

____________________________________
Signature(s) (Title(s), if applicable)

NOTE: Please sign exactly as your name
appears on this proxy. If signing for an
estate, trust or corporation, title or
capacity should be stated. If the shares
are held jointly, both signers should sign,
although the signature of one will bind the
other.

PLEASE INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW.

IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL DESCRIBED
HEREIN.

1. With respect to the approval or disapproval of a Plan of Liquidation
providing for the liquidation and termination of the Tax Free Fund of
Vermont, Inc., as discussed in the accompanying Proxy Statement.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

2. To transact any other business that may properly come before the Annual
Meeting of Shareholders or any adjournment thereof.

PLEASE MARK YOUR PROXY, DATE AND SIGN IT ON THE REVERSE SIDE, AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.

TAX FREE FUND OF VERMONT, INC.
1-800-675-3333

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 Shareholders (the
"Meeting") of Tax Free Fund of Vermont, Inc. (the "Fund") will be held at the
offices of the Fund at 87 North Main Street, Rutland, Vermont 05701, at 10:00
a.m., Eastern time, on Thursday, September 27, 2001. The purpose of the meeting
is to consider and vote on the following:

1. To approve or disapprove a Plan of Liquidation providing for the
liquidation and termination of the Fund.

2. To transact any other business that may properly come before the meeting or
any adjournments thereof.

Shareholders of record as of the close of business on August 17, 2001 will
be entitled to vote at the Annual Meeting or any adjournment thereof. The
enclosed proxy is being solicited on behalf of management of the Fund.

IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO THE ADDRESS NOTED ON THE
POSTAGE-PAID RETURN ENVELOPE ENCLOSED FOR YOUR USE.

By order of the Board of Directors,

/s/ Marvin Elliott

Marvin Elliott
Secretary

Dated: August 31, 2001

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS
of
TAX FREE FUND OF VERMONT, INC.
To be held on September 27, 2001

INTRODUCTION

The accompanying Proxy is being solicited by the management of the Fund for
use at the Annual Meeting of Shareholders to be held at 10:00 a.m., Eastern
time, on September 27, 2001 and at any adjournments thereof. All costs of
solicitation, including printing and mailing of this Proxy Statement and the
accompanying Notice of Meeting and Proxy, the reimbursement of brokerage firms
and others for their expenses in forwarding solicitation material to the
beneficial owners of shares of the Fund, and supplementary solicitations to
submit proxies, which may be made by mail, telephone, telegraph, e-mail and
personal interviews by officers of the Fund, will be borne by the Fund. In order
to obtain the necessary quorum at the Meeting, such solicitation may be made by,
among others, officers and employees of the Fund or the investment adviser to
the Fund. It is anticipated that the cost of such supplementary solicitation, if
any, will be nominal.

If the enclosed Proxy is properly executed and returned in time to be voted
at the Meeting, the full and fractional shares represented thereby (each full
share is entitled to one vote and each fractional share is entitled to
proportionate voting rights) will be voted in accordance with the instructions
marked thereon. Except when instructions to the contrary are marked thereon with
respect to a proposal, the Proxy will be voted FOR the proposals stated in the
accompanying notice of meeting. All Proxies not voted, including broker
non-votes, will not be counted toward establishing a quorum. Shareholders should
note that while votes to ABSTAIN will count toward establishing a quorum,
passage of any 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. On any motion for adjournment of the Meeting, even if a
quorum is present, management will vote all Proxies in its discretion pursuant
to Item 3 thereof. Any shareholder giving a Proxy has the right to attend the
Meeting to vote his shares in person (thereby revoking any prior Proxy) and also
the right to revoke the Proxy at any time by submitting a Proxy bearing a later
date or by sending written notice of revocation to the Fund prior to its
exercise.

This Proxy Statement and accompanying Proxy are being mailed to
shareholders on or about August 31, 2001. The Directors of the Fund intend to
vote all of their shares in favor of the proposal described in this Proxy
Statement.

The address of the principal executive offices of the Fund is 87 North Main
Street, Rutland, Vermont 05701.

A COPY OF THE FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2000 OR THE FUND'S SEMIANNUAL REPORT FOR THE SIX MONTHS ENDED JUNE 30, 2001 WILL
BE SENT TO YOU WITHOUT CHARGE BY SENDING A WRITTEN REQUEST TO THE FUND AT 87
NORTH MAIN STREET, RUTLAND, VERMONT 05701, OR BY CALLING 1-800-675-3333.

OUTSTANDING SHARES AND VOTING REQUIREMENTS

The number of shares outstanding of the Fund as of the close of business on
August 17, 2001, the record date for determining shareholders entitled to
receive notice of, and to vote at the Meeting and all adjournments thereof, is
733,534.31. Each share is entitled to one vote at the Meeting.

As of August 17, 2001, Justin J. Mueller, P.O. Box 646, Manchester,
Vermont, was the record owner of 9.3% of the outstanding shares of the Fund.
There are no other persons known to the Fund to be record or beneficial owners
of 5% or more of the Fund's outstanding shares as of August 17, 2001. On such
date, the Directors and officers of the Fund owned in the aggregate less than 1%
of the Fund's outstanding shares.

THE PROPOSAL: APPROVAL OF PLAN OF LIQUIDATION

BACKGROUND

The Fund was organized on May 20, 1991 and commenced operations on
September 18, 1991. The Fund is a non-diversified, open-end management
investment company. Its investment objective is to achieve the highest level of
current income free from federal and Vermont income taxes that is obtainable
consistent with the prudent investment management of the shareholders'
principal. The investment adviser of the Fund is Independent Fund Advisors, of
Vermont, Inc., 87 North Main Street, Rutland, Vermont 05701.

REASONS FOR THE PROPOSAL

Growth in the Fund's assets has not been sufficient to allow the Fund to
reach a size adequate, in the judgment of the Adviser, to spread expenses over a
sufficient asset base to realize any meaningful economies of scale. Since the
commencement of operations through June 30, 2001, net assets have reached a
level of only $7.5 million. Marketing efforts were not able to increase the size
of the Fund. In fact, in spite of these marketing efforts the attrition of
assets from the Fund that started in 2000 could not be reversed and the Fund
continued to shrink in size.

As a result, the Adviser recently gave notice to the Board of Directors of
its intention to discontinue its business operations. On August 14, 2001, the
Fund was closed to new investors and no sales of shares have been accepted from
investors since that date other than through reinvestment of dividends.

On August 17, 2001, the Board of Directors considered the recommendation of
the Adviser that the Fund be liquidated and terminated. At previous meetings of
the Board of Directors, the Board considered other alternatives, including
finding an alternative investment adviser interested in managing the Fund or
merging the Fund into another mutual fund with a similar investment objective.
Ultimately, the Board rejected these other alternatives for varying reasons,
including the costs involved. Furthermore, the Adviser informed the Directors
that it believes that the small size of the Fund would make it difficult to find
an alternative investment adviser interested in managing the Fund. The Adviser
reviewed the tax consequences of a liquidation with the Directors and explained
that the payment of liquidating distributions would be a taxable event to
shareholders (see "Federal Income Tax Consequences" below). The Board of
Directors, including the independent Directors, unanimously approved a plan of
liquidation for the Fund (the "Plan of Liquidation"), subject to approval by the
shareholders of the Fund. A copy of the Plan of Liquidation is set forth as
Exhibit A to this Proxy Statement. The Board of Directors also determined to
recommend that shareholders of the Fund approve the Plan of Liquidation. If the
Plan of Liquidation is approved by the Fund's shareholders, the portfolio
securities and other assets of the Fund will be sold, creditors will be paid or
reserves for payments to creditors established, and the net proceeds of such
sales will be distributed to shareholders in cash, pro rata in accordance with
their shareholdings.

If shareholders of the Fund do not approve the Plan of Liquidation, the
Board of Directors will meet to determine an alternative course of action.

SUMMARY OF THE PLAN OF LIQUIDATION

The Fund's Plan of Liquidation will become effective on the day of its
approval by shareholders (the "Effective Date"). From the Effective Date through
the completion of liquidation, the Adviser will continue to act as the
investment adviser for the Fund. As soon as practicable after the Effective Date
of the Fund's Plan of Liquidation, the Fund will complete the sale of its
portfolio securities in order to convert its assets to cash. After the Effective
Date, the Fund will not engage in any business activity except for the purpose
of winding up its business affairs, preserving the value of the Fund's assets
and distributing such assets to shareholders after the payment to (or
reservation of assets for payment to) all creditors of the Fund. No further
requests for redemptions of shares will be honored after the Effective Date of
the Fund's Plan of Liquidation. All contracts entered with respect to the Fund
will terminate upon consummation of the transactions contemplated by the Fund's
Plan of Liquidation. As soon as practicable after the Effective Date of the Plan
of Liquidation, and in any event within 14 days thereafter, the Fund will mail
to each shareholder a liquidating distribution equal to the shareholder's
proportionate interest in the remaining net assets of the Fund and any pertinent
or necessary information concerning the sources of the liquidating distribution
that a shareholder may need for his or her personal income tax returns.

After the distribution of assets to shareholders, the Fund will be
terminated in accordance with its Plan of Liquidation and applicable provisions
under Vermont law. The Plan of Liquidation provides that the Board of Directors
may authorize such variations from, or amendments to, the provisions of the Plan
of Liquidation as may be necessary or appropriate to effect the complete
liquidation and termination of the Fund in accordance with the purposes to be
accomplished by the Plan of Liquidation.

FEDERAL INCOME TAX CONSEQUENCES

Payment by the Fund of liquidating distributions to shareholders will be a
taxable event. Because the income tax consequences for a particular shareholder
may vary depending on individual circumstances, each shareholder is urged to
consult his or her own tax advisor concerning the federal, state and local tax
consequences of receipt of a liquidating distribution.

The Fund currently qualifies, and intends to continue to qualify through
the end of the liquidation period, for treatment as a regulated investment
company under the Internal Revenue Code of 1986 so that it will be relieved of
federal income tax on any investment company taxable income or net capital gain
(the excess of net long-term capital gains over net short-term capital losses)
from the sale of its assets. The payment of liquidation distributions will be a
taxable event to shareholders. Each shareholder will be viewed as having sold
his or her Fund shares for an amount equal to the liquidation distribution he or
she receives. Each shareholder will recognize gain or loss in an amount equal to
the difference between (a) the shareholder's adjusted basis in the Fund shares,
and (b) such liquidation distribution. The gain or loss will be capital gain or
loss to the shareholder if the Fund shares were capital assets in the
shareholder's hands and generally will be long-term if the Fund shares were held
for more than one year before the liquidation distribution is received.

Immediately prior to declaring the liquidating distribution, the Fund will
declare a final dividend of all current but undistributed income, if any. This
dividend will be paid at the same time as the liquidating distribution, and the
shareholders will be notified of the portion of the total distribution that
constitutes the final dividend. The balance of the liquidating distribution will
be treated as an amount realized from the sale of Fund shares, as discussed
above.

The Fund generally will be required to withhold tax at the rate of 30.5%
with respect to any liquidation distribution paid to individuals and certain
other non-corporate shareholders who have failed to certify to the Fund that
their social security number or taxpayer identification number provided to the
Fund is correct and that the shareholder is not subject to backup withholding.

The foregoing summary is generally limited to the material federal income
tax consequences to shareholders who are individual United States citizens and
who hold shares as capital assets. It does not address the federal income tax
consequences to shareholders who are corporations, trusts, estates, tax-exempt
organizations or non-resident aliens. Shareholders are urged to consult their
own tax advisors to determine the extent of the federal income tax liability
they would incur as a result of receiving a liquidation distribution, as well as
any tax consequences under any applicable state, local or foreign laws.

VOTING REQUIREMENT

If a quorum (more than 50% of the Fund's outstanding shares) is represented
at the Meeting, the vote of a majority of the outstanding shares of the Fund is
required for approval of the Plan of Liquidation. The vote of a majority of the
outstanding shares, for purposes of the Proposal, means the vote of the lesser
of (1) 67% or more of the shares present or represented by proxy at the meeting,
if the holders of more than 50% of the outstanding shares are present or
represented by proxy, or (2) more than 50% of the outstanding shares.

THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PLAN OF
LIQUIDATION PROVIDING FOR THE LIQUIDATION AND TERMINATION OF THE FUND.

SHAREHOLDER PROPOSALS

The Fund has not received any shareholder proposals to be considered for
presentation at the Meeting. Under the proxy rules of the Securities and
Exchange Commission, shareholder proposals may under certain conditions be
included in the Fund's proxy statement and proxy for a particular meeting. Under
these rules, proposals submitted for inclusion in the Fund's proxy material must
be received by the Fund a reasonable time before the solicitation is made. The
fact that the Fund receives a shareholder proposal in a timely manner does not
insure its inclusion in its proxy material because there are other requirements
in the proxy rules relating to such inclusion.

OTHER MATTERS

Management knows of no other matters to be brought before the Meeting.
However, if any other matters come before the Meeting, the persons named in the
enclosed Proxy will vote proxies that do not contain specific restrictions in
accordance with their best judgment on such matters.

By Order of the Board of Directors,

/s/ Marvin Elliott

Marvin Elliott
Secretary

Dated: August 31, 2001

IF YOU CANNOT ATTEND THE MEETING, YOU ARE URGED TO FILL IN, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE. AN ADDRESSED
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.

Exhibit A
---------

PLAN OF LIQUIDATION

This PLAN OF LIQUIDATION (the "Plan") concerns the Tax Free Fund of
Vermont, Inc. (the "Fund"), a corporation organized and existing under the laws
of the State of Vermont. The Fund is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act").
This Plan is intended to accomplish the complete liquidation of the Fund in
conformity with the provisions of Vermont law and the Fund's Articles of
Incorporation.

WHEREAS, the Fund's Board of Directors has determined that it is in the
best interests of the Fund and its shareholders to liquidate the Fund; and

WHEREAS, the Board of Directors has considered and adopted this Plan as the
method of liquidating the Fund and directed that this Plan be submitted to
shareholders of the Fund for approval;

NOW, THEREFORE, the liquidation of the Fund shall be carried out in the
manner hereinafter set forth:

1. EFFECTIVE DATE OF PLAN. The Plan shall be and become effective only
upon the adoption and approval of the Plan at a meeting of
shareholders called for the purpose of voting upon the Plan, by the
affirmative vote of the holders of a "majority of the outstanding
voting securities" of the Fund, as defined in the 1940 Act. The day of
such adoption and approval by shareholders is hereinafter called the
"Effective Date."

2. TERMINATION OF THE FUND. Following the liquidating distribution
referred to in Section 7 of the Plan, consistent with the provisions
of the Plan, the Fund shall be terminated.

3. CESSATION OF BUSINESS. After the Effective Date of the Plan, the Fund
shall cease its business as a registered investment company and shall
not engage in any business activities except for the purposes of
winding up its business and affairs, marshalling and preserving the
value of its assets, and distributing its assets to shareholders in
accordance with the provisions of the Plan after the payment to (or
reservation of assets for payment to) all creditors of the Fund.

4. RESTRICTION OF TRANSFER OF SHARES. Following the Effective Date,
unless the Plan cannot be carried into effect under the laws of the
State of Vermont or otherwise, shares of the Fund shall not be
transferable.

5. LIQUIDATION OF ASSETS. As soon as is reasonable and practicable, all
portfolio securities of the Fund shall be converted to cash or cash
equivalents, including floating rate instruments. 6. Payment of Debts.
As of August 20, 2001 the Fund shall determine and pay, or set aside
in cash equivalents, the amount of all known or reasonably
ascertainable liabilities of the Fund incurred or expected to be
incurred prior to the date of the liquidating distribution provided
for in Section 7, below. The Fund shall bear all expenses incurred in
carrying out this Plan, including, but not limited to, all printing,
postage, legal, accounting, and other expenses associated with the
meeting of shareholders.

7. LIQUIDATING DISTRIBUTION. As soon as possible after the Effective
Date, and in any event within 14 days thereafter, the Fund shall
provide the following to each shareholder of record on the Effective
Date: (1) a liquidating distribution equal to the shareholder's
proportionate interest in the net assets of the Fund based on the
number of shares of the Fund held by the shareholder and recorded on
the books of the Fund, determined immediately after the close of
business on the date of such liquidating distribution; and (2)
information concerning the sources of the liquidating distribution.

8. POWER OF BOARD OF TRUSTEES. The Board, and subject to the direction of
the Directors, the officers, shall have authority to do or authorize
any and all acts and things as provided for in the Plan and any all
such further acts and things as they may consider necessary or
desirable to carry out the purposes of the Plan, including the
execution and filing of all certificates, documents, information
returns and other papers which may be necessary or appropriate to
implement the Plan. The death, resignation or disability of any
Director or any officer of the Fund shall not impair the authority of
the surviving or remaining Directors or officers to exercise any of
the powers provided for in the Plan.

9. AMENDMENT OF PLAN. The Board shall have the authority to authorize
such variations from or amendments to the provisions of the Plan as
may be necessary or appropriate to effect the complete liquidation and
termination of the existence of the Fund and the distribution of its
net assets to shareholders in accordance with the laws of the State of
Vermont and the purposes to be accomplished by the Plan.

This PLAN OF LIQUIDATION has been approved by the Board of Directors as of
this 17 day of August, 2001.

TAX FREE FUND OF VERMONT, INC.

By:___________________________
President