<PAGE> 1
CHAIRMAN'S LETTER
DEAR SHAREHOLDER:
The six months ended May 31, the first half of the 1994 fiscal year
for the eleven Portfolios of the Vanguard State Tax- Free Funds, witnessed
something that we have not seen much of since 1987: rising interest rates. As a
result, the prices of long- term municipal bonds declined during the period,
while the income from money market instruments received a nice boost.
This environment, of course, negatively impacted the net asset values
of each of our Insured Long-Term Portfolios, as reflected in the table on page
2. (The net asset values of our Money Market Portfolios, as you would expect,
remained constant, at $1.00 per share.) While fluctuating asset values are part
and parcel of bond investing, our Long-Term Portfolios exceeded the total
returns (capital change plus income) achieved by competitive state tax-free
bond funds. What is more, all of our Portfolios remain virtually peerless in
the mutual fund field with respect to their investment quality, as shown in the
third column of the table on page 2. In summary form, here are the Portfolio
highlights over the past twelve months:
* THE STATE MONEY MARKET PORTFOLIOS--provided total returns ranging from
+2.2% to +2.3% . . . current yields are in the area of 2.6%, about the same
as they were twelve months ago but nicely above their level at the outset
of the fiscal half year . . . net asset values remained at $1.00 per share.
* THE STATE INSURED LONG-TERM PORTFOLIOS--reflecting the rebound in interest
rates, turned in modest total returns ranging from +1.9% to +3.3% . . .
current income yields are running about 5.4%, some 40 basis points (0.40%)
higher than they were twelve months ago.
The detailed results for each of our State Tax-Free
Portfolios--including per share net asset values, dividends, and capital gains
distributions, as well as current yields--are presented on the following page.
To provide some perspective on how our Insured Long-Term Portfolios fared in
the face of rising interest rates, the table that follows summarizes the income
returns and the capital returns for each Portfolio:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------
Investment Returns
Twelve Months Ended
May 31, 1994
Insured Long-Term ----------------------------------------------
Portfolio* Income Capital Total
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA +5.4% -3.5% +1.9%
NEW YORK +5.4 -3.2 +2.2
PENNSYLVANIA +5.6 -2.3 +3.3
NEW JERSEY +5.3 -3.4 +1.9
OHIO +5.2 -2.8 +2.4
FLORIDA +5.1 -2.2 +2.9
- - ----------------------------------------------------------------------------
</TABLE>
* On March 4, 1994, the California Insured Intermediate-Term Portfolio was
introduced. Since its inception, the Portfolio has achieved an income return
of +1.0%, a capital return of +0.4%, and a total return of +1.4%.
* FIXED-INCOME MARKET REVIEW
The basic benchmark for the bond market is the long-term U.S. Treasury bond.
During the past six months, its yield rose from 6.3% at the start of the period
to 7.4% at its conclusion. This yield change engendered a decline of about -13%
in the Treasury bond's price. I am happy to report that the tax-exempt bond
market fared a good bit better, with the yield on long-term high-grade
municipal bonds rising from 5.5% to 6.1%, resulting in a price decline of some
- - -8%. However painful this decline may be for investors in long-term bonds, it
is worth noting that interest rates had been dropping steadily for some seven
years, and the retracement during the past six months has merely returned rates
to the level prevailing at the end of 1992.
A primary cause of the interest rate rise was investor fears about a
resurgence of inflation. So far, at least, there is little evidence of it. The
U.S. Consumer Price Index has risen just 2.3% over the past twelve months,
although more sensitive indicators--such as commodity prices--have been rising
at a much higher rate. In an effort to quell these inflationary fears, the
Federal Reserve acted to "tighten" the money supply and slow economic growth
and potential future inflation, raising the
1
<PAGE> 2
Federal funds rate (at which banks borrow from one another) four times--in
February, March, April, and again in May--from 3.00% to 4.25%.
These increases in short-term rates are often seen by market participants
as a restraint on potential inflation, and thus cause long-term rates to fall.
This time around, quite the reverse has been true. In any event, proving that
"it is an ill wind (indeed) that blows no good," the rate increase has added to
the income received by investors in our Money Market Portfolios. And, because
of the "lag" from the date interest rates rise until they are fully manifested
in money market fund yields, further dividend increases in our Money Market
Portfolios likely lie in prospect.
* IN SUMMARY
In my Chairman's letter to you one year ago, I noted that "it is hard to
imagine that the steady trend toward ever-lower interest rates can go much
further." I went on to caution that if rates did reverse their decline in
response to a strengthening economy, the capital rewards enjoyed by our
longer-term Portfolios would turn to capital penalties. While I do not presume
any forecasting ability whatsoever, these observations have proved prescient.
Nonetheless, provided that you own the Vanguard Portfolio (or combination of
Portfolios) that meets your long-term risk-reward objectives, I would urge you
to "stay the course" and avoid the temptation to make precipitate changes in
your fund holdings.
I look forward to reporting on our results for the full 1994 fiscal year
six months hence.
Sincerely,
/s/JOHN C. BOGLE
- - ----------------
John C. Bogle
Chairman of the Board
June 17, 1994
<TABLE>
<CAPTION>
Net Asset Value
Total Per Share Dividends Total Return
Net Assets ------------------ ----------------- ---------------
(millions) Average Average Nov. 30, May 31, Six Twelve Six Twelve Current
Portfolio May 31, 1994 Maturity Quality* 1993 1994 Months Months Months Months Yield**
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET
CALIFORNIA . . . . . $1,126 35 DAYS MIG 1 $ 1.00 $ 1.00 $ .011 $.023 +1.1% +2.3% 2.55%
PENNSYLVANIA . . . . 1,041 37 DAYS MIG 1 1.00 1.00 .011 .023 +1.1 +2.3 2.60
NEW JERSEY . . . . . 803 41 DAYS MIG 1 1.00 1.00 .011 .022 +1.1 +2.2 2.46
OHIO . . . . . . . . 139 47 DAYS MIG 1 1.00 1.00 .011 .023 +1.2 +2.3 2.57
- - ------------------------------------------------------------------------------------------------------------------------------------
INSURED LONG-TERM
CALIFORNIA . . . . . $ 929 12.9 YEARS Aaa $ 11.30 $ 10.66 $ .451+ $.753+ -1.8% +1.9% 5.58%
CALIFORNIA INTERMEDIATE-
TERM . . . . . . . 57 5.3 YEARS Aaa -- 10.04 .101++ -- +1.4++ -- 4.82
NEW YORK . . . . . . 760 11.8 YEARS Aaa 10.97 10.49 .306+ .602+ -1.6 +2.2 5.41
PENNSYLVANIA . . . . 1,430 11.7 YEARS Aaa 11.36 10.85 .388+ .703+ -1.1 +3.3 5.47
NEW JERSEY . . . . . 700 11.5 YEARS Aaa 11.77 11.18 .374+ .690+ -1.9 +1.9 5.41
OHIO . . . . . . . . 162 9.7 YEARS Aaa 11.61 11.08 .327+ .630+ -1.8 +2.4 5.48
FLORIDA . . . . . . . 292 12.1 YEARS Aaa 10.86 10.38 .339+ .611+ -1.3 +2.9 5.39
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* MIG 1 and Aaa are Moody's highest ratings for, respectively, short-term
and long-term municipal bonds.
** Money Market Portfolios' yields are 7-day annualized yields; others are
30-day SEC yields.
+ Include capital gains distributions of $.152 for California, $.012 for New
York, $.079 for Pennsylvania, $.063 for New Jersey, $.032 for Ohio, and
$.070 for Florida.
++ Since inception, March 4, 1994.
The shares of each of the Vanguard "single state" Portfolios are available
for purchase solely by residents of the designated states.
2
<PAGE> 3
AVERAGE ANNUAL TOTAL RETURNS
THE CURRENT YIELDS NOTED IN THE CHAIRMAN'S LETTER ARE CALCULATED IN ACCORDANCE
WITH SEC GUIDELINES. THE AVERAGE ANNUAL TOTAL RETURNS FOR THE PORTFOLIOS
(PERIODS ENDED MARCH 31, 1994) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
INCEPTION SINCE
PORTFOLIO DATE 1 YEAR 5 YEARS INCEPTION
- - ------------------------------------ --------- ------ ------- ---------
<S> <C> <C> <C> <C>
CALIFORNIA INSURED LONG-TERM 4/7/86 +1.77% +8.56% +7.70%
CALIFORNIA INSURED INTERMEDIATE-TERM 3/4/94 -- -- -0.64
CALIFORNIA MONEY MARKET 6/1/87 +2.34 +4.05 +4.34
NEW YORK INSURED TAX-FREE 4/7/86 +2.37 +8.97 +7.23
PENNSYLVANIA INSURED LONG-TERM 4/7/86 +3.14 +9.22 +8.11
PENNSYLVANIA MONEY MARKET 6/13/88 +2.31 +4.15 +4.39
NEW JERSEY INSURED LONG-TERM 2/3/88 +2.44 +8.87 +8.65
NEW JERSEY MONEY MARKET 2/3/88 +2.24 +4.12 +4.37
OHIO INSURED LONG-TERM 6/18/90 +2.70 -- +9.12
OHIO MONEY MARKET 6/18/90 +2.31 -- +3.54
FLORIDA INSURED TAX-FREE 9/1/92 +2.56 -- +7.01
</TABLE>
THESE DATA REPRESENT PAST PERFORMANCE. THE INVESTMENT RETURN AND PRINCIPAL
VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
PLEASE NOTE THAT AN INVESTMENT IN A MONEY MARKET FUND, SUCH AS A MONEY MARKET
PORTFOLIO OF THE VANGUARD STATE TAX-FREE FUNDS, IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE FUND WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
3
<PAGE> 4
REPORT FROM THE INVESTMENT ADVISER
STATE INSURED
LONG-TERM PORTFOLIOS
Over the past six months, the pace of domestic economic activity accelerated
sharply. Strong improvements in the rate of growth in Gross Domestic Product
(GDP), and a host of related statistics such as home sales, automobile sales,
and consumer confidence, provided ample evidence of renewed vigor. Bond markets
seldom react well to strong economic signals and this period was no exception.
The yield on the 30-year Treasury bond rose 1.1 percentage points (from 6.3% to
7.4%). During the same period, municipal bonds performed slightly better, with
the yield on long-term high-grades rising 0.6% (from 5.5% to 6.1%), producing
an 8.3% loss of value.
As one would expect, the sharp rise in interest rates negatively impacted
the share price of the State Insured Long-Term Portfolios. To be sure, a
decline of this nature can be disconcerting to even the most resolute long-term
investor. However, following more than a decade of exceptional returns of
longer-term fixed-income assets, the poor six-month period represents only a
partial "give back" of previous prosperity. Looking beyond the short-term share
price volatility, a shareholder of the State Insured Long-Term Portfolios can
expect to receive an attractive, consistent, and durable stream of tax-exempt
dividend income.
* SUCCESSFUL STRATEGIES . . .
For the recent period, two of several core strategies stand out for enhancing
the relative returns of the State Insured Long-Term Portfolios. First, a
reduction in average maturity over the past year improved relative market
performance and moderated some of the "sting" of a bear market. Some of this
was accomplished by focusing on municipals maturing in 15 to 20 years, rather
than the slightly higher yielding but more volatile 30-year maturities. This
modest reduction in average maturity effectively "locked-in" a portion of the
gains in share price achieved in the previous bull market.
Second, the prudent maintenance of reserve positions of about 10% of fund
assets added to our relative stability. What is more, these reserves provided a
liquidity cushion to meet shareholder redemptions. In good times, reserves
(which normally yield less than longer-term assets) forego a small amount of
yield potential. In difficult market conditions, such as prevailed during the
past six months, the additional reserves allow the portfolio to meet redemption
requests without the inopportune (and sometimes "distressed") sale of
securities.
* LOOKING FORWARD . . .
The issuance of new municipal bonds has fallen dramatically. Issuance for the
first six months in fiscal 1994 was 26% below the pace of a year earlier. Early
indications show forward supply even lower compared to the "mad dash" of 1993.
Municipalities appear to have completed the process of refinancing older,
higher coupon debt of the 1980's and early 1990's. At the same time, a record
number of previously mentioned high coupon bonds are approaching their call
dates, and a huge amount of principal will be returned to owners of individual
bonds. All things being equal, this should continue to provide more attractive
returns for municipal bonds than their taxable brethren.
In conclusion, it would be reassuring to believe that the recent increase
in interest rates is sufficient to "rein in" the rapidly expanding U.S. economy
and dampen any inflationary expectations. Yet, that observation might be
premature. If history serves as any guide, the process may take longer than the
recent six months of "pain." If so, there could be more share price
unpleasantness ahead before the markets resume their positive return pattern of
the past decade. However, attempting to "time" the turnaround--getting out at
the highs and then getting back in at the lows--tends to be equally futile for
the institutional and individual investor alike. The best advice we know is to
endure the swings and allow the powerful tax exempt compounding of interest to
continue.
4
<PAGE> 5
STATE MONEY MARKET PORTFOLIOS
The past six months ushered in a change in the Federal Reserve Board's
previously accommodative monetary policy. Since February 4, 1994, market
participants watched anxiously as the Federal Reserve Board, in four separate
instances, pushed the Federal funds rate up 125 basis points (1.25%) to 4.25%
and tightened the discount rate 50 basis points (0.50%) to 3.50%. This series
of moves by the Fed has signaled the end of stimulative policy (maintained
throughout 1993) and the initiation of a policy of "neutrality."
The effect of the tightening on the short-term municipal market was
surprisingly mild. While yields on "first tier" taxable money market funds rose
approximately 70 basis points over the six-month period, yields on
state-specific and general purpose tax- free money funds rose a mere 35 basis
points. The primary contributor to the unresponsive municipal market was the
scarcity of new issue supply. Supply of short-term municipal securities is
quite cyclical, and depends on an issuer's fiscal year, which generally runs
from July 1 to June 30. As a result, supply typically remains light in the
months leading up to June and dramatically increases in the summer months, as
issuers prepare to fund their upcoming budgetary needs in the new fiscal year.
This lack of supply experienced during a period of rising rates in the broader
taxable markets enabled short-term municipal yields to maintain relative
stability. As technical supply factors temporarily have been depressing yields
on short-term municipal securities, we have been targeting a low average
weighted maturity for the tax-exempt money funds of 45 to 60 days. Our
Portfolios should be commensurately more responsive when new issue supply
surges and interest rates rise. We expect the shift from scarcity to abundance
will occur within weeks.
While the market focused on an accelerating economy and the rise in
interest rates, the Securities and Exchange Commission quietly launched its own
initiative to ensure the net asset value safety of tax-exempt money funds,
consistent with those already applicable to taxable money funds. In fact, the
SEC has proposed regulations that coincide with (or in some cases are less
restrictive than) our conservative approach to managing money market funds.
Thus, they will have little impact on the Vanguard Money Market Portfolios. We
believe that the Commission's proposals, if adopted, will be a positive force
in elevating industrywide portfolio standards.
In conclusion, the upcoming months could potentially bring about
significant regulatory and economic changes in our market. While keeping a
watchful eye on the actions of the Federal Reserve Board and maintaining our
conservative investment approach, we look forward to capitalizing on any
opportunities that may result.
Sincerely,
Ian A. MacKinnon
Senior Vice President
Jerome J. Jacobs
Vice President
Pamela E. Wisehaupt
Vice President
David E. Hamlin
Assistant Vice President
Reid O. Smith
Assistant Vice President
Danine A. Mueller
Portfolio Manager
Vanguard Fixed Income Group
June 13, 1994
5
<PAGE> 6
STATEMENT OF NET ASSETS
FINANCIAL STATEMENTS (unaudited)
May 31, 1994
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - -------------------------------------------------------------------------------------
MUNICIPAL BONDS (97.7%)
- - -------------------------------------------------------------------------------------
<S> <C> <C>
ISSUER INSURED (80.6%)
Albany County Civic Center GO
6.60%, 6/1/96 (3) (Prere.) $ 630 $ 669
Albany County GO
7.00%, 1/15/05 (2) 1,250 1,385
5.00%, 10/1/05 (3) 2,000 1,952
5.00%, 10/1/06 (3) 3,150 3,035
5.00%, 10/1/12 (3) 4,400 3,955
Albany Municipal Water Finance Auth.
7.50%, 12/1/17 (1) 2,080 2,296
5.50%, 12/1/22 (3) 4,500 4,103
Babylon Waste Water Facilities GO
9.00%, 8/1/08 (3) 4,900 6,468
9.00%, 8/1/09 (3) 2,800 3,719
9.00%, 8/1/10 (3) 4,900 6,555
Broome County Public Safety
Facility Project
5.25%, 4/1/15 (1) 3,000 2,685
Buffalo General Improvement
6.75%, 3/1/06 (1) 1,815 1,963
6.75%, 3/1/07 (1) 390 420
6.75%, 3/1/09 (1) 410 438
6.75%, 3/1/10 (1) 380 405
6.75%, 3/1/11 (1) 385 408
Buffalo GO
3.25%, 4/1/95 (1) 2,750 2,742
Buffalo Municipal Water
Finance Auth.
5.75%, 7/1/19 (4) 7,450 7,071
Buffalo Sewer System Rev.
7.625%, 7/1/96 (2) (Prere.) 1,000 1,091
5.25%, 7/1/08 (3) 3,500 3,316
5.00%, 7/1/12 (3) 2,400 2,135
Clifton Park Water Auth.
6.375%, 10/1/02 (3) (Prere.) 3,500 3,821
Duchess County Resource Recovery
7.50%, 1/1/09 (3) 2,000 2,236
Erie County GO
10.00%, 2/1/95 (3) 4,445 4,629
6.10%, 1/15/06 (3) 1,865 1,957
6.125%, 1/15/07 (3) 1,660 1,734
6.125%, 1/15/09 (3) 735 763
6.125%, 1/15/10 (3) 735 759
6.125%, 1/15/11 (3) 735 756
6.125%, 1/15/12 (3) 735 756
Erie County Water Auth.
5.00%, 12/1/04 (2) 5,920 5,872
0.00%, 12/1/05 (2) 3,000 1,598
0.00%, 12/1/06 (2) 6,915 3,327
6.00%, 12/1/08 (2) 1,600 1,636
Huntington GO
6.70%, 2/1/10 (3) 375 408
6.70%, 2/1/11 (3) 310 337
5.50%, 4/1/13 (3) 3,400 3,187
City of Jamestown GO
7.50%, 5/15/02 (2) 110 127
7.50%, 5/15/06 (2) 250 293
Metropolitan Transit Auth.
of New York
(Commuter Facilities Rev.)
6.10%, 7/1/09 (1) 6,035 6,203
5.50%, 7/1/17 (1) 2,500 2,298
(Transportation Facilities Rev.)
5.40%, 7/1/07 (3) 17,330 17,042
7.00%, 7/1/09 (2) 5,650 6,289
6.375%, 7/1/10 (3) 6,100 6,327
6.00%, 7/1/11 (2) 2,000 2,001
Monroe County GO
(Rochester Water Dist.)
5.60%, 6/1/04 (3) 1,235 1,262
5.70%, 6/1/05 (3) 1,350 1,382
5.80%, 6/1/06 (3) 1,340 1,374
5.90%, 2/1/07 (3) 550 564
Montgomery, Ostego, Scholoharie
Counties Solid Waste
5.25%, 1/1/14 (1) 1,640 1,480
Mount Sinai Union Free
School Dist.
6.20%, 2/15/14 (2) 1,050 1,095
6.20%, 2/15/15 (2) 540 562
Nassau County Combined
Sewer Dist. GO
4.70%, 10/1/04 (3) 1,805 1,696
4.80%, 10/1/05 (3) 1,760 1,656
4.90%, 10/1/06 (3) 1,740 1,638
6.20%, 5/15/07 (1) 840 880
5.00%, 10/1/07 (3) 1,715 1,618
6.20%, 5/15/08 (1) 835 874
5.35%, 7/1/08 (1) 4,730 4,575
5.00%, 10/1/08 (3) 1,695 1,589
5.35%, 1/15/09 (1) 3,505 3,364
6.25%, 5/15/09 (1) 825 863
5.35%, 7/1/09 (1) 4,635 4,454
6.25%, 5/15/10 (1) 820 856
Nassau County GO
TOB VRDO 2.8%, 6/15/94 (1) 205 205
TOB VRDO 2.8%, 7/1/94 (1) 2,720 2,720
5.50%, 7/15/07 (1) 1,270 1,261
5.50%, 7/15/08 (1) 1,300 1,276
5.00%, 5/1/09 (3) 3,210 2,959
5.50%, 7/15/09 (1) 1,325 1,290
5.00%, 5/1/10 (3) 2,875 2,630
5.75%, 5/15/10 (3) 670 667
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ------------------------------------------------------------------------------------
<S> <C> <C>
5.50%, 7/15/10 (1) $ 1,345 $ 1,302
5.75%, 8/1/10 (3) 845 845
5.75%, 2/1/11 (1) 1,100 1,092
5.00%, 5/1/11 (3) 1,770 1,599
5.50%, 7/15/11 (1) 1,370 1,313
5.00%, 5/1/12 (3) 1,760 1,577
5.875%, 8/1/12 (3) 825 820
New York City Cultural Resources
(Museum of Modern Art)
5.40%, 1/1/06 (2) 805 799
5.50%, 1/1/07 (2) 840 834
5.40%, 1/1/12 (2) 1,400 1,315
New York City GO
5.75%, 8/1/09 (3) 4,250 4,190
6.625%, 8/1/13 (1) 13,500 14,734
New York City Health &
Hosp. Corp.
5.625%, 2/15/13 (2) 23,400 22,168
New York City Water &
Sewer Auth.
VRDO 2.9%, 6/1/94 (3) 7,900 7,900
6.75%, 6/15/99 (3) (Prere.) 3,385 3,689
5.875%, 6/15/12 (2) 20,000 19,639
5.875%, 6/15/13 (2) 20,000 19,519
6.75%, 6/15/14 (3) 1,615 1,676
6.00%, 6/15/16 (3) 4,000 3,933
5.375%, 6/15/19 (2) 5,250 4,684
New York State Dormitory Auth.
(City Univ. of New York)
6.50%, 7/1/08 (3) 5,545 5,931
5.75%, 7/1/11 (3) 5,950 5,798
7.00%, 7/1/14 (3) 20,700 22,194
(Colgate Univ.)
6.50%, 7/1/21 (1) 1,350 1,385
(Fashion Institute Student
Housing Corp.)
7.10%, 7/1/03 (1) 590 630
7.20%, 7/1/05 (1) 1,705 1,816
7.20%, 7/1/06 (1) 1,855 1,975
(Fordham Univ.)
7.20%, 7/1/15 (2) 4,500 4,958
(Foundling Charities Corp.)
6.50%, 7/1/12 (1) 6,530 6,712
(Iona College)
7.625%, 7/1/09 (1) 5,000 5,506
(Ithaca College)
6.25%, 7/1/21 (1) 7,500 7,572
(Mt. Sinai School of Medicine)
8.375%, 7/1/95 (3) (Prere.) 650 693
5.00%, 7/1/15 (1) 3,000 2,602
6.75%, 7/1/15 (1) 7,245 7,585
(New York Public Library)
0.00%, 7/1/06 (1) 910 449
0.00%, 7/1/07 (1) 1,000 458
0.00%, 7/1/08 (1) 910 386
0.00%, 7/1/09 (1) 910 357
0.00%, 7/1/10 (1) 500 184
0.00%, 7/1/11 (1) 500 172
(New York Univ.)
6.70%, 7/1/96 (1) (Prere.) 1,250 1,331
6.00%, 7/1/15 (3) 32,165 31,897
(Rensselaer Polytech. Inst.)
6.50%, 7/1/06 (3) 3,000 3,194
(Siena College)
6.00%, 7/1/11 (1) 1,500 1,504
(Special Act)
6.00%, 7/1/15 (3) 2,675 2,653
(Union College)
5.75%, 7/1/10 (3) 1,800 1,792
New York State Energy
Research & Development
Auth. PCR
(Niagara Mohawk)
6.625%, 10/1/13 (3) 10,000 10,426
New York State Medical Care Facility
Finance Agency
(Beth Israel Medical Center)
5.00%, 11/1/13 (1) 4,750 4,180
(Columbia Presbyterian Hosp.)
9.75%, 1/15/95 (8) (Prere.) 8,400 8,948
(Mental Health Services)
7.40%, 2/15/99 (1) (Prere.) 1,660 1,852
7.40%, 8/15/07 (1) 890 974
5.50%, 8/15/21 (3) 8,000 7,287
(St. Mary's Hosp.)
8.375%, 11/1/14 (2) (Prere.) 2,200 2,375
(Sisters of Charity--Buffalo)
6.625%, 11/1/18 (2) 5,500 5,694
New York State Power Auth.
7.30%, 1/1/96 (3) (Prere.) 3,405 3,636
New York State Thruway Auth.
3.40%, 1/1/95 (3) 2,000 1,997
3.40%, 3/1/95 (3) 4,000 3,993
5.00%, 1/1/14 (1) 3,000 2,635
5.50%, 1/1/23 (3) 6,800 6,191
New York State Urban
Development Corp.
5.375%, 1/1/12 (1) 14,000 13,057
Niagara Falls Bridge Comm.
5.25%, 10/1/15 (3) 5,000 4,513
6.25%, 10/1/20 (3) 8,685 9,100
6.25%, 10/1/21 (3) 9,230 9,678
North Hempstead GO
6.30%, 4/1/08 (3) 2,055 2,187
6.40%, 4/1/10 (3) 1,500 1,586
6.40%, 4/1/11 (3) 2,075 2,189
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ------------------------------------------------------------------------------------
<S> <C> <C>
North Hempstead Solid Waste Auth.
5.00%, 2/1/12 (1) $ 3,370 $ 3,002
Oyster Bay Public Improvement
5.40%, 2/15/03 (1) 1,475 1,495
5.60%, 2/15/05 (1) 1,000 1,023
5.70%, 2/15/07 (1) 805 819
5.70%, 2/15/09 (1) 980 979
5.70%, 2/15/11 (1) 300 295
Rochester GO
5.70%, 8/15/02 (2) 2,340 2,460
5.70%, 8/15/03 (2) 2,330 2,442
5.70%, 8/15/04 (2) 2,180 2,274
Town of Smithtown
5.25%, 4/1/06 (1) 1,000 996
5.45%, 4/1/08 (1) 400 394
Suffolk County GO
5.00%, 4/1/06 (1) 2,255 2,192
5.00%, 7/15/06 (3) 1,000 968
5.10%, 7/15/07 (3) 1,280 1,230
5.20%, 7/15/08 (3) 1,100 1,056
Suffolk County Southwest
Sewer Dist. GO
6.40%, 2/1/03 (3) 1,190 1,239
6.00%, 2/1/07 (3) 5,000 5,115
6.00%, 2/1/08 (3) 5,000 5,093
Suffolk County Water Auth.
5.75%, 6/1/02 (2) (Prere.) 1,100 1,157
5.10%, 6/1/07 (1) 7,110 6,785
5.25%, 6/1/10 (2) (ETM) 3,790 3,620
5.25%, 6/1/11 (2) (ETM) 2,380 2,254
5.25%, 6/1/12 (2) (ETM) 4,290 4,047
5.75%, 6/1/13 (2) 7,340 7,150
5.25%, 6/1/17 (2) (Prere.) 21,305 21,060
5.25%, 6/1/17 (2) 1,695 1,539
Triborough Bridge & Tunnel Auth.
5.50%, 1/1/17 (2) 18,485 17,049
OUTSIDE NEW YORK:
Puerto Rico Public Building Auth.
0.00%, 7/1/03 (3) 4,000 2,439
--------
GROUP TOTAL 611,989
--------
- - ------------------------------------------------------------------------------------
PORTFOLIO INSURED (1.2%)
New York State Dormitory Auth.
(Cornell Univ.)
6.875%, 7/1/14 6,825 7,220
New York State Energy
Resources Auth.
(Niagara Mohawk Power Corp.)
8.875%, 11/1/25 1,100 1,184
Port Auth. of New York & New Jersey
8.70%, 7/15/20 750 804
--------
GROUP TOTAL 9,208
--------
- - ------------------------------------------------------------------------------------
SECONDARY MARKET INSURED (7.2%)
Municipal Assistance Corp. for
New York City
6.00%, 7/1/08 (3) 22,350 22,592
New York City Water & Sewer
Auth. Rev.
5.00%, 6/15/17 (3) 4,000 3,340
New York State Dormitory Auth.
(City Univ. of New York)
5.75%, 7/1/09 (3) 5,000 4,970
(Cornell Univ.)
7.25%, 7/1/12 (1) 1,175 1,290
(State Univ.)
7.25%, 5/15/00 (2) (Prere.) 500 566
6.00%, 5/15/17 (2) 5,600 5,586
Port Auth. of New York &
New Jersey
6.50%, 1/15/26 (1) 1,500 1,540
Triborough Bridge & Tunnel Auth.
6.75%, 1/1/09 (2) 3,000 3,272
6.875%, 1/1/15 (3) 7,000 7,377
5.00%, 1/1/17 (2) 105 90
5.00%, 1/1/17 (3) 395 338
5.50%, 1/1/19 (2) 4,000 3,644
--------
GROUP TOTAL 54,605
--------
- - ------------------------------------------------------------------------------------
NON-INSURED (8.7%)
Municipal Assistance Corp.
for New York City
9.00%, 7/1/95 (Prere.) 2,350 2,522
New York City Trust for Cultural
Resources VRDO
(Carnegie Hall)
3.10%, 6/1/94 600 600
New York Environmental
Facilities PCR
5.20%, 5/15/14 1,500 1,323
New York State Dormitory Auth.
(City Univ.)
10.00%, 7/1/95 (Prere.) 5,570 6,033
(Columbia Univ.)
4.75%, 7/1/12 4,000 3,394
5.75%, 7/1/15 11,965 11,540
New York State Energy Research
& Development Auth. PCR
(New York State Electric & Gas)
2.80%, 12/1/94 500 499
New York State Power Auth.
7.00%, 1/1/09 6,000 6,450
Onondaga County Public
Improvements
5.875%, 2/15/06 1,580 1,610
5.875%, 2/15/08 2,475 2,504
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- - ------------------------------------------------------------------------------------
<S> <C> <C>
Port Auth. of New York &
New Jersey Rev. VRDO
3.00%, 6/1/94 $ 6,500 $ 6,500
Triborough Bridge & Tunnel Auth.
TOB VRDO 2.9%, 7/1/94 3,200 3,200
7.00%, 7/1/95 (Prere.) 2,000 2,065
6.00%, 1/1/12 7,805 7,796
Westchester County GO
6.70%, 11/1/08 3,250 3,573
6.70%, 11/1/09 3,645 3,980
OUTSIDE NEW YORK:
Puerto Rico Govt.
Development Bank VRDO
2.60%, 6/1/94 2,600 2,600
--------
GROUP TOTAL 66,189
--------
- - ------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (Cost $728,216) 741,991
- - ------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (2.3%)
- - ------------------------------------------------------------------------------------
Other Assets--Note B 19,525
Liabilities (1,771)
--------
17,754
- - ------------------------------------------------------------------------------------
NET ASSETS (100%)
- - ------------------------------------------------------------------------------------
Applicable to 72,435,647 outstanding
shares of beneficial interest
(unlimited authorization--no par value) $759,745
- - ------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.49
====================================================================================
</TABLE>
+ See Note A to Financial Statements.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------
AT MAY 31, 1994, NET ASSETS CONSISTED OF:
- - ------------------------------------------------------------------------------------
Amount Per
(000) Share
-------- ------
<S> <C> <C>
Paid in Capital $734,212 $10.14
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains 7,136 .10
Unrealized Appreciation of Investments--
Note D 18,397 .25
- - ------------------------------------------------------------------------------------
NET ASSETS $759,745 $10.49
- - ------------------------------------------------------------------------------------
</TABLE>
(1) MBIA (Municipal Bond Insurance Association)
(2) AMBAC (AMBAC Indemnity Corporation)
(3) FGIC (Financial Guaranty Insurance Company)
(4) FSA (Financial Security Assurance)
(5) CGI (Capital Guaranty Insurance)
(6) BIGI (Bond Investors Guaranty Insurance)
(7) Connie Lee Inc.
(8) FHA (Federal Housing Authority)
BAN--Bond Anticipation Note
COP--Certificate of Participation
CP--Commercial Paper
GO--General Obligation
IDR--Industrial Development Revenue
PCR--Pollution Control Revenue
RAN--Revenue Anticipation Note
TAN--Tax Anticipation Note
TOB--Tender Option Bond
TRAN--Tax Revenue Anticipation Note
VRDO--Variable Rate Demand Obligation
(ETM)--Escrowed to Maturity
(Prere.)--Prerefunded
*Put Option Obligation.
9
<PAGE> 10
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended
May 31, 1994
(000)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME
- - -------------------------------------------------------------------------------------------------------------------------
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,580
- - -------------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,580
- - -------------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note b
Investment Advisory Services . . . . . . . . . . . . . . . . . . . . . . $ 43
Management and Administrative . . . . . . . . . . . . . . . . . . . . . . 703
Marketing and Distribution . . . . . . . . . . . . . . . . . . . . . . . 95 841
-----
Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Auditing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shareholders' Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Annual Meeting and Proxy Costs . . . . . . . . . . . . . . . . . . . . . . 3
Trustees' Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 2
- - -------------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 883
- - -------------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . 21,697
- - -------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN
Investment Securities Sold . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,131
- - -------------------------------------------------------------------------------------------------------------------------
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . 7,631
- - -------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,398)
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,337
- - -------------------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation (Depreciation) . . . . . . . . . (43,061)
- - -------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations . . . . . . . $(13,733)
=========================================================================================================================
</TABLE>
10
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED Year Ended
MAY 31, 1994 November 30, 1993
(000) (000)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . $ 21,697 $ 39,451
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . 7,631 1,421
Change in Unrealized Appreciation (Depreciation) . . . . . . . . . (43,061) 38,487
- - -------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations . . . . . . . . . . . . . . . . . . . . . (13,733) 79,359
- - -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . (21,697) (39,451)
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . (856) (8,055)
- - -------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . . . (22,553) (47,506)
- - -------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular . . . . . . . . . . . . . . . . . . . . . . 84,396 270,638
-- In Lieu of Cash Distributions . . . . . . . . . . . 17,008 36,903
-- Exchange . . . . . . . . . . . . . . . . . . . . . 27,705 65,532
Redeemed -- Regular . . . . . . . . . . . . . . . . . . . . . . (74,466) (96,649)
-- Exchange . . . . . . . . . . . . . . . . . . . . . (65,979) (74,611)
- - -------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from Capital Share Transactions . (11,336) 201,813
- - -------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) . . . . . . . . . . . . . . . (47,622) 233,666
- - -------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . 807,367 573,701
- - -------------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . $759,745 $807,367
=========================================================================================================================
(1) Distributions Per Share Net Investment Income . . . . . . $.294 $.594
Realized Net Gain . . . . . . . . . . . . . . . . . . . . $.012 $.145
- - -------------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed Issued . . . . . . . . . . . . 10,366 31,063
Issued in Lieu of Cash Distributions . . . . . . . . . . 1,583 3,424
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . (13,125) (15,771)
- - -------------------------------------------------------------------------------------------------------------------------
(1,176) 18,716
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION> Year Ended November 30,
SIX MONTHS ENDED ----------------------------------------------
For a Share Outstanding Throughout Each Period MAY 31, 1994 1993 1992 1991 1990 1989
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . $10.97 $10.45 $10.04 $9.66 $9.73 $9.26
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . .294 .594 .631 .639 .629 .635
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . . (.468) .665 .410 .380 (.070) .470
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . (.174) 1.259 1.041 1.019 .559 1.105
- - -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . (.294) (.594) (.631) (.639) (.629) (.635)
Distributions from Realized Capital Gains . . . . . . (.012) (.145) -- -- -- --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . . (.306) (.739) (.631) (.639) (.629) (.635)
- - -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . $10.49 $10.97 $10.45 $10.04 $9.66 $9.73
=========================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . -1.62% +12.42% +10.63% +10.87% +5.99% +12.25%
- - -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- - ------------------------
Net Assets, End of Period (Millions) . . . . . . . . . . . $760 $807 $574 $408 $241 $167
Ratio of Expenses to Average Net Assets . . . . . . . . . . .22%* .19% .23%+ .27%+ .31%+ .34%+
Ratio of Net Investment Income to Average Net Assets . . . 5.48%* 5.47% 6.11% 6.48% 6.60% 6.64%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 20%* 10% 28% 19% 17% 10%
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
+Insurance expenses represent .01%, .01%, .02%, and .04%.
*Annualized.
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
Vanguard New York Insured Tax-Free Fund is registered under the Investment
Company Act of 1940 as an open-end investment company. The Fund invests in
securities of municipal issuers whose ability to meet their obligations may be
affected by economic and political developments in the State of New York.
* A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such
policies are consistently followed by the Fund in the preparation of financial
statements.
1. SECURITY VALUATION: Municipal bonds are valued utilizing primarily the
latest bid prices or, if bid prices are not available, on the basis of
valuations based on a matrix system (which considers such factors as
security prices, yields, maturities, and ratings), both as furnished by an
independent pricing service.
2. FEDERAL INCOME TAXES: The Fund intends to continue to qualify as a
regulated investment company and distribute all of its income.
Accordingly, no provision for Federal income taxes is required in the
financial statements.
3. FUTURES: The Fund utilizes futures contracts to a limited extent. The
primary risks associated with the use of futures contracts are imperfect
correlation between the change in market value of the bonds held by the
Fund and the prices of futures contracts, and the possibility of an
illiquid market. Futures contracts are valued based upon their quoted
daily settlement prices. Fluctuations in the value of futures contracts
are recorded as unrealized appreciation (depreciation) until terminated at
which time realized gains (losses) are recognized. Unrealized appreciation
(depreciation) related to open futures contracts is required to be treated
as realized gain (loss) for Federal income tax purposes.
4. DISTRIBUTIONS: Distributions from net investment income are declared on a
daily basis payable on the first business day of the following month.
Annual distributions from realized gains, if any, are recorded on the
ex-dividend date. Capital gain distributions are determined on a tax
basis and may differ from realized capital gains for financial reporting
purposes due to differences in the timing of realization of gains.
5. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Costs used in determining realized gains and losses
on the sale of investment securities are those of specific securities
sold. Premiums and original issue discounts are amortized and accreted,
respectively, to interest income over the lives of the respective
securities.
* B. The Vanguard Group, Inc. furnishes at cost investment advisory, corporate
management, administrative, marketing, and distribution services. The costs of
such services are allocated to the Fund under methods approved by the Board of
Trustees. The Fund has contributed capital of $120,000 to Vanguard (included in
Other Assets), representing .6% of Vanguard's capitalization. The Fund's
officers and trustees are also officers and directors of Vanguard.
* C. During the six months ended May 31, 1994, the Fund made purchases of
$75,750,000 and sales of $73,932,000 of investment securities other than
temporary cash investments.
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (continued)
* D. At May 31, 1994, unrealized appreciation of investment securities for
financial reporting and Federal income tax purposes aggregated $13,775,000 of
which $25,556,000 related to appreciated securities and $11,781,000 related to
depreciated securities.
At May 31, 1994, the Fund had long positions in Municipal Bond Index futures
contracts expiring in June 1994, with an aggregate settlement value and net
unrealized appreciation of $19,659,000 and $106,000, respectively. The
aggregate settlement value and net unrealized appreciation related to short
positions in U.S. Treasury Bond futures contracts expiring through September
1994, were $89,164,000 and $4,516,000, respectively. The market value of
securities deposited as initial margin for open futures contracts was
$2,029,000.
14
<PAGE> 15
TRUSTEES AND OFFICERS
JOHN C. BOGLE, Chairman and Chief Executive Officer
Chairman and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
JOHN J. BRENNAN, President
President and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
ROBERT E. CAWTHORN, Chairman and Chief Executive Officer of Rhone-Poulenc Rorer
Inc.; Director of Sun Company, Inc. and Immune Response Corporation; Trustee of
the Universal Health Realty Income Trust.
BARBARA BARNES HAUPTFUHRER, Director of The Great Atlantic and Pacific Tea
Company, Alco Standard Corp., Raytheon Company, Knight- Ridder, Inc., and
Massachusetts Mutual Life Insurance Co.
BURTON G. MALKIEL, Chemical Bank Chairman's Professor of Economics, Princeton
University; Director of Prudential Insurance Co. of America, Amdahl
Corporation, Baker Fentress & Co., and The Southern New England Telephone
Company.
ALFRED M. RANKIN, JR., President and Chief Executive Officer of NACCO
Industries, Inc.; Director of NACCO Industries, The BFGoodrich Company, and The
Standard Products Company.
JOHN C. SAWHILL, President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Company
and NACCO Industries.
JAMES O. WELCH, JR., Retired Chairman of Nabisco Brands, Inc.; retired Vice
Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc.
J. LAWRENCE WILSON, Chairman and Chief Executive Officer of Rohm & Haas
Company; Director of Cummins Engine Company; Trustee of Vanderbilt University
and the Culver Educational Foundation.
OTHER FUND OFFICERS
RICHARD F. HYLAND, Treasurer; Treasurer of The Vanguard Group, Inc., and of
each of the investment companies in The Vanguard Group.
RAYMOND J. KLAPINSKY, Secretary; Senior Vice President and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in The
Vanguard Group.
KAREN E. WEST, Controller; Vice President of The Vanguard Group, Inc.;
Controller of each of the investment companies in The Vanguard Group.
OTHER VANGUARD GROUP OFFICERS
JEREMY G. DUFFIELD
Senior Vice President
Planning & Development
JAMES H. GATELY
Senior Vice President
Institutional
IAN A. MACKINNON
Senior Vice President
Fixed Income Group
VINCENT S. MCCORMACK
Senior Vice President
Operations
RALPH K. PACKARD
Senior Vice President
Chief Financial Officer
15
<PAGE> 16
THE VANGUARD FAMILY OF FUNDS
MONEY MARKET FUNDS
Vanguard Money Market Reserves
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund-Money Market Portfolio
Vanguard State Tax-Free Funds (CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds (CA, FL, NJ, NY, OH, PA)
FIXED INCOME FUNDS
Vanguard Admiral Funds
Vanguard Bond Index Fund
Vanguard Fixed Income Securities Fund
Vanguard Preferred Stock Fund
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard Balanced Index Fund
Vanguard STAR Fund
Vanguard/Wellesley Income Fund
Vanguard/Wellington Fund
EQUITY FUNDS
GROWTH AND INCOME FUNDS
Vanguard Convertible Securities Fund
Vanguard Equity Income Fund
Vanguard Index Trust
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund-U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
GROWTH FUNDS
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Specialized Portfolios
INTERNATIONAL FUNDS
Vanguard International Equity Index Fund
Vanguard International Growth Portfolio
Vanguard/Trustees' Equity Fund-International Portfolio
The Vanguard Group * Vanguard Financial Center
Valley Forge, PA 19482
New Account Information: 1-(800) 662-7447
Shareholder Account Services: 1-(800) 662-2739
This Report has been prepared for shareholders and
may be distributed to others only if preceded or
accompanied by a current prospectus. All Funds in the
Vanguard Family are offered by prospectus only.
Q762-05/94
VANGUARD
NEW YORK INSURED
TAX FREE FUND
[PHOTO -- SEE EDGAR APPENDIX]
SEMI-ANNUAL REPORT
MAY 31, 1994
<PAGE> 17
EDGAR APPENDIX
The back cover of the printed version of this report features the flags of
the United States of America and Vanguard flying from a halyard.
