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Vanguard Closes Precious Metals Fund

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June 28, 2002 — The Vanguard Group closed the Vanguard Precious Metals Fund (VGPMX) to new and current investors today to keep it from getting too big to be manageable.

Vanguard said the fund attracted $124 million in investments in the first five months of this year, bringing its assets to $628 million. By comparison, the fund took in only $400,000 in 2001, the company said.

At the same time its assets have been swelling, the fund’s potential investments have been limited by consolidation in the industries it invests in Vanguard said. The fund currently holds only 28 stocks and its ten largest holdings account for 74% of its assets, Vanguard said.

“The fund’s strong performance against the backdrop of weak stock market returns has attracted substantial cash inflows, which has raised our concerns about investor time horizons and expectations,” Vanguard chairman John J. Brennan said in a statement.

The fund was up 50.7% this year through May while the Standard & Poor’s 500 Index was off 6%. Vanguard Precious Metals returned 18.3% last year, compared to a loss of 11.9% by the index.

The closing also applies to shareholders in employer-sponsored retirement accounts.