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Vanguard Closes Two Funds

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March 4, 2004 — Two of Vanguard Group’s top performing funds last year were closed to new investors today to keep them from getting too big to be manageable.

In addition to closing the $23-billion Vanguard PRIMECAP (VPMCX) and the $7-billion Vanguard Capital Opportunity/Inv (VHCOX), Vanguard limited purchases by the funds’ current shareholders to $25,000 per year.

The Primecap fund returned 37.8% last year, versus 28.2% for the average large-cap growth fund. Vanguard Capital Opportunity posted a total return of 49.6% in 2003, compared to 35.8% by its mid-cap growth fund peers. Both funds are run for Vanguard by Primecap Management Co. of Pasadena, Calif.

“While the funds’ asset levels and cash flows are currently manageable, the likelihood for rising cash flows is clearly high given the funds’ strong performance,” Vanguard chairman John J. Brennan said in a prepared statement.

Vanguard previously closed the Capital Opportunity fund in 2000. The Primecap fund was closed in 1995 and again in 1998.