The Pennsylvania Partnership for Economic EducationHarrisburg, PennsylvaniaJanuary 31, 2000

IT'S A THRILL both to be in the capital of this great Commonwealth and to address this distinguished group of business and government leaders. I'll focus this evening on Vanguard's role in the mutual fund world, especially our focus on the elemental principles of investing and economics.

In the 1999 annual reports of the Vanguard mutual funds, I began my message with one of my favorite passages, a quotation from the evocative poetry of Robert Frost:

Two roads diverged in a wood, and I—I took the one less traveled by, and that has made all the difference.

Those few words tell, far better than I could, the story of Vanguard's founding more than 25 years ago. Indeed, we took, not merely a road less traveled by, but a road that no firm in this industry had ever taken before. The well-traveled road—then as now—was one on which mutual funds were managed by an external management company, in the business to make a profit for itself by charging a fee for its services. But the Vanguard funds—there were only 11 of them then—would be controlled by their own shareholders and operate solely in their financial interests. The outcome of our unprecedented decision was by no means certain. We described it then as “The Vanguard Experiment.”

Well, I guess it's fair to say it's an experiment no more. During the past 25 years, the assets we hold in stewardship for investors have ...

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