The Smithsonian ForumWashington, D.C.March 23, 1999

IN A RECENT ARTICLE, Forbes magazine raised the question of the competitive edge in the mutual fund industry, beginning with these words: “How common is it for a relatively unadvertised brand without any mass sales force to be a top name in a mass marketed industry?” Forbes’ answer: “Freakish … unusual … very unusual …maybe even unique.” So why has that very situation happened in the mutual fund industry? Again, Forbes’ answer: “Maybe that strange business called Vanguard isn't a business at all. It's a religion.”

Well, as you can imagine, these words—though far more objective observers than I will have to judge their accuracy—provide considerable reaffirmation to the faith that Vanguard's founder has had in our mission since I started the firm on September 24, 1974, just short of a quarter century ago. But the objective facts surely support Vanguard's rise to industry leadership. Beginning as an also-ran with $1 billion-plus in assets, our firm has grown to become the second largest mutual fund firm in the world. We now manage $460 billion of assets, now growing by about $6 billion per month of net cash inflow.

The 30% annual growth rate that we have enjoyed during our history is the highest of any firm in our industry, and our competitive edge has enabled us to move from a rank of #12 in our industry to #2 today. Our market share of assets among directly marketed U.S. funds (those ...

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