The Value Line Mutual Fund Survey

Model Portfolio Asset Class-Gold & Resources

Precious Metals funds, up an average of 6.1% for the three months ended March 31, 2008, outperformed all the other fund categories we follow. They also outpaced all fund categories for the past twelve months ended March 31st, showing a 31.1% gain for that period. Energy/ Natural Resource funds recorded the second-best gain of 26.1% for the same twelve month period, although they declined –4.3% for the three months ended March 31, 2008. Investors find comfort in natural resources and precious metals, like gold, during periods of economic and political uncertainty. They also provide an alternative to the declining value of the U.S. dollar. The demand for energy and metals has also grown as demand from India and China is outpacing supply for the past five or more years. We recommend that Gold & Resources funds be small part of most investor’s portfolios, except for moderate and aggressive investors with a long time horizon. This month, we will examine several Gold & Resources funds that we follow in the Mutual Fund Survey.

Vanguard Precious Metals & Mining Fund (VGPMX) is best suited for higher-risk investors. The primary objective of the fund is capital appreciation. Management attempts to achieve this goal by investing at least 80% of the portfolio’s assets in the common stock of foreign and domestic companies engaged in either the precious metals or mining industries. For defensive purposes, up to 20% of the fund’s total net assets may be invested directly in gold, silver, or other precious metal bullion and coins. Management seeks to invest in companies that have strong management and sizable reserves.

The fund’s total return was 14.48% for the three months ended February 29, 2008, greatly outperforming the S & P 500 and some of its objective group. Its long-term performance is outstanding, outpacing both its objective group and S & P 500 Index over the trailing one-, three, five-, 15-, and 20-year periods as of February 29, 2008. To obtain more information on this fund, call (877) 662-7447, or visit the Web site at www.vanguard.com.

Investors with slightly less risk tolerance may want to look at Putnam Global Natural Resources A (EBERX). The fund seeks long-term capital appreciation through investments in a number of industries in the energy/natural resources sector. Management has a large-cap bias and takes a value-investing approach to stock selection. The portfolio will generally have a sizable investment in securities of foreign issuers. Under normal conditions, currency hedging is not used.

The fund’s total return was 1.06% for the three-months ended February 29, 2008, greatly outperforming the S & P 500 Index. Its long-term performance is excellent, outpacing both much of its objective group and the S & P 500 Index over the trailing one-, three, five-, ten-, 15-, and 20-year periods as of February 29, 2008. To obtain more information on this fund, call (800) 225-1581, or visit the Web site at www.putnam.com.

Investors with lower risk tolerance may want to look at T. Rowe Price New Era Fund (PRNEX). The fund is primarily a natural resources fund, investing at least 65% of its assets in stocks of companies in industries such as oil and gas, precious and diversified metals, paper and forest products, and chemicals. Management looks closely at supply and demand conditions for commodities in order to provide a basic framework for the portfolio’s investments. It believes that rising commodity prices will improve the earnings potential of most companies held in the fund.

The fund’s total return was 2.81% for the three months ended February 29, 2008, greatly outperforming the S & P 500 Index and about half its objective group. Its longterm performance is outstanding, outperforming the S & P 500 Index over the trailing one-, three-, five-, ten-, 15-, and 20-year periods as of February 29, 2008, while outperforming about half of its objective group during those same timeframes. To obtain more information on this fund, call (800) 225-5132, or visit the Web site at www.troweprice.com.