<PAGE> 1
CHAIRMAN'S LETTER
DEAR SHAREHOLDER:
During the six months ended May 31, 1995--the first half of the fiscal year for
Vanguard State Tax-Free Portfolios--a fairly substantial decline in long-term
interest rates resulted in higher prices for long-term tax-exempt bonds. These
price increases pushed the six-month total returns (capital change plus income)
of all our Insured Longer-Term Portfolios well into double-digit territory.
While long rates declined during the past six months, shorter-term interest
rates actually increased marginally. In this environment, the yields of our
Money Market Portfolios increased nicely and remained comfortably ahead of the
yields offered by comparable funds.
THE STATE INSURED LONG-TERM PORTFOLIOS
In the wake of repeated interest rate increases by the Federal Reserve during
1994, long-term municipal bond yields peaked in November 1994 at 7.1%. As these
rate hikes seemed to slow the economy's growth, concerns about future inflation
were allayed, and rates began to decline. By the end of May, municipal bond
yields had fallen to 5.8%, a decline of 130 basis points.
In this environment, longer-term municipal bond funds enjoyed
outstanding returns. Indeed, each of Vanguard's Insured Long-Term Portfolios
provided six-month total returns (capital change plus income) in the area of
+14%. This sharp price rally overwhelmed the negative returns of the prior six
months, bringing our total returns for the twelve months strongly into positive
territory. Although fluctuating net asset values are part and parcel of bond
fund investing, the recent swings in market value demonstrate the benefit of
remaining committed to a long-term investment strategy.
The table opposite shows the Longer-Term Portfolios' twelve-month
returns, reflecting a full year's income. To provide some perspective on how
fluctuating interest rates have impacted our Insured Longer-Term Portfolios
over this period, the table breaks down our Portfolios' total returns into
their income and capital components. I would emphasize that the table conceals
the fact that the full period was composed of two vastly different six-month
sub-periods, one in which returns were sharply negative, the other strongly
positive.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Investment Returns
Twelve Months Ended
May 31,1995
--------------------------
Insured Longer-Term Portfolio Income Capital Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA INTERMEDIATE-TERM +5.2% +2.2% +7.4%
CALIFORNIA LONG-TERM +6.1 +3.8 +9.9
NEW YORK LONG-TERM +6.0 +3.0 +9.0
PENNSYLVANIA LONG-TERM +6.2 +2.1 +8.3
NEW JERSEY LONG-TERM +6.0 +3.5 +9.5
OHIO LONG-TERM +5.9 +3.2 +9.1
FLORIDA LONG-TERM +5.8 +3.6 +9.4
- --------------------------------------------------------------------------------
</TABLE>
The current tax-exempt yields on our Insured Longer-Term Portfolios are
presently in the area of 5.2%, compared with 6.3% six months ago. The yield for
each Portfolio is presented in the table on page 3 of this report, which also
includes per share net asset values, dividends, and total returns over the past
six and twelve months.
THE STATE MONEY MARKET PORTFOLIOS
As noted earlier, the Federal Reserve Board has remained relatively
tight-fisted in its monetary policy during the past six months, bringing some
stability to money market yields. This stability is a stark contrast to fiscal
1994, when the Board raised the Fed funds rate (at which banks borrow from one
another) on fully six separate occasions. It would appear that the Fed's tough
policy is bearing fruit: inflation so far remains quite subdued, and business
activity has slowed to a more normal growth rate.
While rates have been stable in recent months, the table below shows
the impact of the dramatic surge in short-term rates on our annualized yields
over the past year and one-half. You will note that, during this period, the
yields on our Money Market Portfolios have risen by more than 60%.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Seven-Day Annualized Yield
---------------------------------------
Money Market May 31, Nov. 30, May 31, Nov. 30,
Portfolio 1995 1994 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA 3.8% 3.4% 2.6% 2.3%
PENNSYLVANIA 3.8 3.5 2.6 2.3
NEW JERSEY 3.7 3.3 2.5 2.2
OHIO 3.9 3.5 2.6 2.4
- ---------------------------------------------------------------------------------
</TABLE>
(continued)
1
<PAGE> 2
Regardless of future interest rate movements, the yield advantage of our
Vanguard State Money Market Portfolios is virtually certain to remain
attractive relative to other comparable money market funds. The principal
reason for this advantage, as you know, is that our operating expenses are so
much lower than industry norms. Our Portfolios, for example, operate at an
annual expense ratio of about 0.2%, compared with 0.6% for our average
competitor. This advantage of 0.4% carries directly to the bottom line: the
yield you receive. Thus, in a market in which gross yields are, say, 4.0%, our
Portfolios should provide a net yield of 3.8%, compared with 3.4% for other
comparable money market portfolios.
I want to underscore that our higher yields do not arise from the
ownership of lower quality money market instruments. The quality of our
Portfolios is, we believe, as high as any tax-exempt money market fund in the
field. Funds which stinted on quality last year ran the risk that their net
asset values might fall below the $1.00 value that investors have come to take
for granted. Our focus on quality--along with, we acknowledge, some good
luck--spared us the consequences of this risk, and we owned no direct
obligations of Orange County, California, the most troubled credit of the
period. Each of our Money Market Portfolios' net asset values remained at $1.00
per share, which as you know, is our objective, but is not guaranteed.
IN SUMMARY
The recent swings in total returns we have witnessed help to demonstrate that
"staying the course"--even in the face of turbulent markets--will more often
than not lead to a successful long-term investment program. In contrast,
attempting to jump into and out of mutual funds in hopes of timing the
movements of the market is almost certain to result in failure.
Whether rates remain volatile or not, the benefits of investing in
Vanguard State Tax-Free Portfolios endure: high quality, low cost, and
professional management. Along with these advantages, the Portfolios distribute
income that is 100% exempt from both Federal and state income taxes. Together,
these factors should ensure our ability to provide shareholders with efficient
and effective Portfolios in the years to come.
I look forward to reporting to you on our results for the full year in
our 1995 Annual Report six months hence.
Sincerely,
/s/ JOHN C. BOGLE
- ---------------------
John C. Bogle
Chairman of the Board
June 9, 1995
Note: Mutual fund data from Lipper Analytical Services, Inc.
2
<PAGE> 3
A FEW WORDS ABOUT POSSIBLE CHANGES IN THE TAX LAW
The uncertainties related to a variety of new tax proposals seem to have
unnerved some participants in the tax-exempt bond market. Of the options which
have been considered, perhaps the most significant to municipal bond investors
is the "flat tax." Indeed, under one proposed version, municipal bond yields
would have no advantage over taxable yields. Because of this uncertainty, the
rise in municipal bond prices has been significantly less than the rise in U.S.
Treasury bond prices over the past few months.
As a result, the yield on high-quality long-term municipal bonds is at
94% of the yield on taxable U.S. Treasuries giving municipal bonds their
largest after-tax yield advantage in recent years. What this means is that an
investor in the highest marginal tax bracket (40%) would currently earn an
after-tax yield of about 3.8% on a U.S. Treasury bond (60% of 6.4%). A
high-grade municipal bond, on the other hand, would provide a tax-exempt yield
of 6.0%--fully 58% higher. Thus, it would appear that tax uncertainty has
created unusual yield opportunity.
In any event, the flat tax option is no longer high on the legislative
agenda, and neither of the tax bills adopted by the Senate or the House of
Representatives would disturb the existing tax-exempt status of municipal bond
interest. Until the details of any tax law changes become clearer, we would
caution municipal bond investors to give careful consideration before making
any shifts in their holdings of municipal bonds. In the meantime, we will keep
you abreast of our views on the possible effects of any proposed legislation
that could materially impact the tax status of your municipal bond fund
holdings.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
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, 1995 Maturity Quality* 1994 1995 Months Months Months Months Yield**
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET
CALIFORNIA . . . . $1,114 24 days MIG 1 $ 1.00 $ 1.00 $.019 $.033 + 1.9% +3.3% 3.80%
PENNSYLVANIA . . . 1,148 26 days MIG 1 1.00 1.00 .018 .033 + 1.9 +3.3 3.80
NEW JERSEY . . . . 818 51 days MIG 1 1.00 1.00 .018 .032 + 1.8 +3.2 3.71
OHIO . . . . . . . 166 60 days MIG 1 1.00 1.00 .019 .033 + 1.9 +3.4 3.92
- ----------------------------------------------------------------------------------------------------------------------------------
INSURED LONG-TERM
CALIFORNIA
INTERMEDIATE-TERM $ 171 6.6 years Aaa $ 9.64 $10.26 $.253 $.499 + 9.2% +7.4% 4.86%
CALIFORNIA . . . . 936 12.7 years Aaa 9.92 11.06 .301 .606 +14.7 +9.9 5.29
NEW YORK . . . . . 799 11.1 years Aaa 9.70 10.80 .293 .587 +14.5 +9.0 5.18
PENNSYLVANIA . . . 1,482 12.8 years Aaa 10.07 11.08 .308 .625 +13.2 +8.3 5.28
NEW JERSEY . . . . 742 10.5 years Aaa 10.40 11.57 .316 .628 +14.4 +9.5 5.12
OHIO . . . . . . . 175 9.5 years Aaa 10.28 11.43 .307 .611 +14.3 +9.1 5.22
FLORIDA . . . . . . 362 13.1 years Aaa 9.61 10.75 .281 .562 +14.9 +9.4 5.27
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* MIG 1 and Aaa are Moody's highest ratings for short-term and long-term
municipal bonds, respectively.
** Money Market Portfolios' yields are 7-day annualized yields; others are
30-day SEC yields.
Note: The shares of each of the Vanguard "single-state" Portfolios are
available for purchase solely by residents of the designated states.
3
<PAGE> 4
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, 1995) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
SINCE INCEPTION
-------------------------------
INCEPTION TOTAL INCOME CAPITAL
DATE 1 YEAR 5 YEARS RETURN RETURN RETURN
---- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
CALIFORNIA INSURED INTERMEDIATE-TERM 3/4/94 +6.72% -- +5.61% +4.96% +0.65%
CALIFORNIA INSURED LONG-TERM 4/7/86 +8.14 +8.33% +7.75 +6.55 +1.20
CALIFORNIA MONEY MARKET 6/1/87 +3.09 +3.47 +4.18 +4.18 0.00
NEW YORK INSURED TAX-FREE 4/7/86 +7.84 +8.72 +7.30 +6.54 +0.76
PENNSYLVANIA INSURED LONG-TERM 4/7/86 +7.54 +8.73 +8.04 +6.75 +1.29
PENNSYLVANIA MONEY MARKET 6/13/88 +3.04 +3.52 +4.19 +4.19 0.00
NEW JERSEY INSURED LONG-TERM 2/3/88 +8.06 +8.69 +8.57 +6.55 +2.02
NEW JERSEY MONEY MARKET 2/3/88 +2.96 +3.48 +4.17 +4.17 0.00
OHIO INSURED LONG-TERM 6/18/90 +7.57 -- +8.80 +6.08 +2.72
OHIO MONEY MARKET 6/18/90 +3.08 -- +3.44 +3.44 0.00
FLORIDA INSURED TAX-FREE 9/1/92 +8.74 -- +7.68 +5.44 +2.24
</TABLE>
ALL OF 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 THE MONEY MARKET
PORTFOLIOS OF 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.
4
<PAGE> 5
REPORT FROM THE INVESTMENT ADVISER
Two significant events occurred during the first six months of the fiscal year.
The first was the stunning market rally that drove long-term municipal yields
approximately -1.1 percentage points lower. The second was the turmoil
surrounding the bankruptcy of Orange County, California.
MONEY MARKETS
The aggressive tightening of monetary policy by the Federal Reserve Board in
1994 slowed down dramatically in the first half of fiscal year 1995. The only
intervention occurred on February 1, 1995, when the Federal Reserve Board
increased the discount and Federal funds rates 0.5%. Participants in the
short-term municipal market reacted favorably to this relative stability in
interest rates and 1-year notes rallied roughly +1%. While yields on 1-year
notes declined, yields on shorter-term variable rate instruments moved in the
opposite direction, resulting in what is known as a flattening of the
short-term municipal yield curve. The average weighted maturities of the
Portfolios were positioned at the lower end of their maturity spectrum, and
consequently benefited from this flattening. During the fiscal half, the
average monthly yield on all non-institutional state-specific money funds rose
+0.78%.
In the upcoming months, increased supply of short-term municipal
issuance should present an opportunity for our Money Market Portfolios to
extend their average maturities, but not at the expense of sacrificing quality.
BOND MARKETS
For the first half of the fiscal year, investors pushed long-term interest
rates lower as economic indices pointed increasingly to slower domestic
economic growth. Investors viewed the slowing as beneficially affecting
inflation. Long-term interest rates declined for virtually the entire six
months. For example, the benchmark 30-year U.S. Treasury bond began the fiscal
year yielding 8.0%, and by the end of May, the yield had fallen -1.4% to 6.6%.
Long-term tax-exempt bond yields followed suit, however, not in quite the same
magnitude as the taxable market. The Bond Buyer 20 Municipal Bond Index yield
declined -1.1% (from 6.9% to 5.8%) over the same period.
The Florida, New Jersey, New York, Ohio, California, and Pennsylvania
Insured Long-Term Portfolios performed well over the six-month period. The
Portfolios benefited from an extension in their average weighted maturity that
began in the fourth quarter of the last fiscal year. Additionally, the
Portfolios' structure, with superior protection from early calls, aided in
maintaining the price responsiveness of the Portfolios during the market rally.
Looking ahead there are three main strategies that we expect to pursue
regarding the management of the money invested in the Florida, New Jersey, New
York, Ohio, California, and Pennsylvania Insured Long-Term Portfolios. The
first is a continued focus on improvements in call protection to enhance the
durability of dividends; second is investing to minimize taxable capital gains
distributions when it does not interfere with superior total return potential;
and third is a focus on higher coupon bonds that would position the Portfolios
more defensively should interest rates reverse direction and move higher.
ORANGE COUNTY
During the afternoon of December 1, 1994, reports began to appear in the media
that Orange County, California, had experienced massive losses from its
investment pool in the range of $1.5 billion. Several days later, a news
conference convened by county officials confirmed the losses. On December 6,
acting to prevent creditors from forcing the county to become insolvent, the
officials filed for bankruptcy protection under Chapter 9 of the Federal
Bankruptcy Code. This was the first municipal bankruptcy filing by a major
government since the Great Depression. So far, there have been no major
defaults on bonds by the county or the other 187 government pool participants
(mainly from Orange County). However, if plans for a financial rescue of the
County are not completed before the end of June 1995, a series of defaults
could occur which would rival the $2.5 billion default by the Washington Public
Power Supply System in 1984. Importantly, Vanguard has no direct exposure to
losses stemming from Orange County.
How this debacle happened is still being discussed and investigated.
The County Treasurer used reverse repurchase agreements to leverage the
5
<PAGE> 6
portfolio to roughly three times the value of the underlying investments. He
then invested about a quarter of the pool in exotic derivative securities which
had coupons that reset inversely to changes in interest rates. As rates rose
rapidly during 1994, the portfolio suffered massive unrealized market value
losses. Orange County was not the only jurisdiction to have experienced massive
investment losses in 1994. Highly publicized, but less serious problems
occurred in the investments of the State of Wisconsin, Cuyahoga County (Ohio),
and Odessa (Texas) Junior College District. As a result, state and local
government investments, investment policies, and investment oversight will be
more carefully scrutinized in the future.
Nevertheless, the aftershock of the bankruptcy extended well beyond
the boundaries of California, and consequently, all municipal money market
funds experienced its effects. The immediate reaction in the short-term
municipal market resulted in a rise in yields of +0.75 percentage points on all
general market notes. Orange County Tax and Revenue Anticipation Notes, and any
related credits, faced a much more severe crisis with virtually no bid for
these securities. Since then, liquidity for general market notes has returned,
and yields have rallied through their December levels. However, illiquidity
persists for Orange County investors as bondholders negotiate payment on the
notes that are due in July.
The Orange County bankruptcy underscores the benefit of the additional
layer of credit protection provided by the AAA-rated insurance policies
attached to the bonds that are owned by the State Insured Long-Term Portfolios.
As the bankruptcy story unfolded, most uninsured Orange County investment pool
related bonds were illiquid. In contrast, while insured Orange County related
bonds underperformed other insured bonds by three points, the insured market
was liquid. By late December, much of that underperformance had disappeared,
and at the end of the fiscal half, insured Orange County related bonds were
trading at prices just slightly lower than other insured bonds.
CONCLUSION
The Orange County bankruptcy has reinforced our commitment to rigorous credit
evaluation of the municipal securities in which we invest. This conservative
approach to assessing credit quality combined with Vanguard's low expenses
provides a high-quality investment that is exempt from both Federal and state
income taxes.
Respectfully,
Ian A. MacKinnon
Senior Vice President
Jerome J. Jacobs
Vice President
Pamela W. Tynan
Vice President
David E. Hamlin
Assistant Vice President
Reid O. Smith
Assistant Vice President
Danine A. Mueller
Portfolio Manager
Vanguard Fixed Income Group
June 14, 1995
6
<PAGE> 7
Financial Statements
(unaudited)
May 31, 1995
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (98.3%)
- ----------------------------------------------------------------------------
ISSUER INSURED (77.8%)
Albany County GO
5.00%, 10/1/05 (3) $ 2,000 $ 1,998
5.00%, 10/1/06 (3) 3,150 3,120
5.00%, 10/1/12 (3) 4,400 4,128
7.00%, 1/15/05 (2) 1,250 1,387
Albany Municipal Water
Finance Auth.
7.50%, 12/1/17 (1) 2,080 2,305
Broome County Public Safety
Facility Project
5.25%, 4/1/15 (1) 3,000 2,851
Buffalo General Improvement
6.75%, 3/1/06 (1) 1,815 2,004
6.75%, 3/1/07 (1) 390 429
6.75%, 3/1/09 (1) 410 448
6.75%, 3/1/10 (1) 380 415
6.75%, 3/1/11 (1) 385 419
Buffalo Municipal Water
Finance Auth.
5.75%, 7/1/19 (4) 7,450 7,411
Buffalo Sewer Auth. System Rev.
5.00%, 7/1/12 (3) 2,400 2,258
5.25%, 7/1/08 (3) 3,500 3,487
Duchess County Resource Recovery
7.50%, 1/1/09 (3) 2,000 2,234
Erie County GO
6.10%, 1/15/06 (3) 1,865 2,016
6.125%, 1/15/07 (3) 1,660 1,793
6.125%, 1/15/09 (3) 735 790
6.125%, 1/15/10 (3) 735 788
6.125%, 1/15/11 (3) 735 787
6.125%, 1/15/12 (3) 735 785
Erie County Water Auth.
VRDO 3.40%, 6/7/95 (2) 5,800 5,800
0.00%, 12/1/05 (2) 3,000 1,772
0.00%, 12/1/06 (2) 6,915 3,845
5.00%, 12/1/04 (2) 5,920 5,902
6.00%, 12/1/08 (2) 1,600 1,688
Huntington GO
5.50%, 4/1/13 (3) 3,400 3,415
6.70%, 2/1/10 (3) 375 424
6.70%, 2/1/11 (3) 310 351
City of Jamestown GO
7.50%, 5/15/02 (2) 110 128
7.50%, 5/15/06 (2) 250 301
Metropolitan Transit Auth.
of New York
(Commuter Facilities Rev.)
5.50%, 7/1/17 (1) 2,500 2,456
6.10%, 7/1/09 (1) 6,035 6,448
6.25%, 7/1/22 (1) 3,000 3,103
(Transportation Facilities Rev.)
5.40%, 7/1/07 (3) 17,330 17,622
6.00%, 7/1/11 (2) 2,000 2,032
7.00%, 7/1/09 (2) 13,650 15,872
Monroe County GO
(Rochester Water Dist.)
5.60%, 6/1/04 (3) 1,235 1,298
5.70%, 6/1/05 (3) 1,350 1,424
5.80%, 6/1/06 (3) 1,340 1,418
5.90%, 2/1/07 (3) 550 583
Montgomery, Ostego,
Scholoharie Counties Solid Waste
5.25%, 1/1/14 (1) 1,640 1,581
Mount Sinai Union Free School Dist.
6.20%, 2/15/14 (2) 1,050 1,138
6.20%, 2/15/15 (2) 540 586
Nassau County GO
5.50%, 7/15/07 (1) 1,270 1,291
5.50%, 7/15/08 (1) 1,300 1,311
5.50%, 7/15/09 (1) 1,325 1,346
5.50%, 7/15/10 (1) 1,345 1,355
5.50%, 7/15/11 (1) 1,370 1,374
5.70%, 8/1/11 (3) 2,000 2,042
5.75%, 2/1/11 (1) 1,100 1,124
Nassau County Combined
Sewer Dist. GO
4.70%, 10/1/04 (3) 1,805 1,761
4.80%, 10/1/05 (3) 1,760 1,718
4.90%, 10/1/06 (3) 1,740 1,704
5.00%, 10/1/07 (3) 1,715 1,682
5.00%, 10/1/08 (3) 1,695 1,645
5.00%, 5/1/09 (3) 3,210 3,082
5.00%, 5/1/10 (3) 2,875 2,724
5.00%, 5/1/11 (3) 1,770 1,670
5.00%, 5/1/12 (3) 1,760 1,653
5.35%, 7/1/08 (1) 4,730 4,747
5.35%, 1/15/09 (1) 3,505 3,485
5.35%, 7/1/09 (1) 4,635 4,608
5.875%, 8/1/12 (3) 825 844
6.20%, 5/15/07 (1) 840 892
6.20%, 5/15/08 (1) 835 884
6.25%, 5/15/09 (1) 825 875
6.25%, 5/15/10 (1) 820 865
New York City GO
5.75%, 8/1/09 (3) 4,250 4,316
6.625%, 8/1/13 (1) 675 723
6.95%, 8/15/12 (1) 1,460 1,643
7.10%, 2/1/09 (1) 5,000 5,600
New York City Cultural Resources
(Museum of Modern Art)
5.40%, 1/1/06 (2) 805 822
5.40%, 1/1/12 (2) 1,400 1,380
5.50%, 1/1/07 (2) 840 858
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------------------
<S> <C> <C>
New York City Health &
Hosp. Corp.
5.625%, 2/15/13 (2) $23,400 $ 23,203
New York City Industrial
Development Auth.
(USTA Proj.)
6.375%, 11/15/14 (2) 2,000 2,099
New York City Municipal Water
Finance Auth. Water & Sewer
System Rev.
VRDO 4.00%, 6/2/95 (3) 2,100 2,100
VRDO 4.10%, 6/2/95 (3) 21,600 21,600
5.875%, 6/15/12 (2) 20,000 20,576
5.875%, 6/15/13 (2) 20,000 20,527
New York State Dormitory Auth.
(City Univ. of New York)
5.75%, 7/1/11 (3) 5,950 6,082
6.25%, 7/1/19 (1) 4,485 4,651
7.00%, 7/1/14 (3) 20,700 22,909
(Colgate Univ.)
6.50%, 7/1/21 (1) 1,350 1,432
(Fashion Institute Student
Housing Corp.)
7.10%, 7/1/03 (1) 590 618
7.20%, 7/1/05 (1) 1,705 1,787
7.20%, 7/1/06 (1) 1,855 1,944
(Fordham Univ.)
5.50%, 7/1/23 (2) 10,150 9,936
7.20%, 7/1/15 (2) 710 792
(Foundling Charities Corp.)
6.50%, 7/1/12 (1) 6,530 6,871
(Iona College)
7.625%, 7/1/09 (1) 5,000 5,519
(Ithaca College)
6.25%, 7/1/21 (1) 10,000 10,332
(Mt. Sinai School of Medicine)
6.75%, 7/1/15 (1) 7,245 7,847
8.375%, 7/1/95 (3) (Prere.) 650 665
(New York Public Library)
0.00%, 7/1/06 (1) 910 509
0.00%, 7/1/07 (1) 1,000 525
0.00%, 7/1/08 (1) 910 448
0.00%, 7/1/09 (1) 910 419
0.00%, 7/1/10 (1) 500 216
0.00%, 7/1/11 (1) 500 202
(New York Univ.)
6.00%, 7/1/15 (3) 32,165 32,698
6.70%, 7/1/96 (1) (Prere.) 1,250 1,311
(Rensselaer Polytech. Inst.)
6.50%, 7/1/06 (3) 3,000 3,263
(Siena College)
6.00%, 7/1/11 (1) 1,500 1,544
(Special Act)
6.00%, 7/1/15 (3) 2,675 2,705
(Union College)
5.75%, 7/1/10 (3) 1,800 1,829
New York State Energy Research &
Development Auth. PCR
(Niagara Mohawk)
6.625%, 10/1/13 (3) 10,000 10,769
New York State Medical
Care Facility Finance Agency
(Mental Health Services)
5.50%, 8/15/21 (3) 8,000 7,741
6.00%, 8/15/95 (1) 15,000 15,340
6.375%, 8/15/10 (3) 6,100 6,465
7.40%, 8/15/07 (1) 890 987
(St. Mary's Hosp.)
8.375%, 11/1/95 (2)(Prere.) 2,200 2,285
(Sisters of Charity--Buffalo)
6.625%, 11/1/18 (2) 5,500 5,882
New York State Thruway Auth.
(Highway & Bridge Trust Fund)
5.80%, 4/1/10 (2) 14,215 14,523
6.00%, 4/1/09 (3) 5,000 5,193
(GO Rev.)
5.50%, 1/1/23 (3) 6,800 6,575
6.00%, 1/1/15 (3) 2,350 2,399
6.00%, 1/1/25 (3) 10,000 10,192
New York State Urban
Development Corp.
5.375%, 1/1/12 (1) 14,000 13,706
Niagara Falls Bridge Comm.
5.25%, 10/1/15 (3) 5,000 4,800
6.25%, 10/1/20 (3) 8,685 9,468
6.25%, 10/1/21 (3) 9,230 10,077
North Hempstead GO
6.30%, 4/1/08 (3) 2,055 2,263
6.40%, 4/1/10 (3) 1,500 1,655
6.40%, 4/1/11 (3) 2,075 2,284
North Hempstead Solid
Waste Auth.
5.00%, 2/1/12 (1) 3,370 3,166
Oyster Bay Public Improvement
5.40%, 2/15/03 (1) 1,475 1,531
5.60%, 2/15/05 (1) 1,000 1,053
5.70%, 2/15/07 (1) 805 846
5.70%, 2/15/09 (1) 980 1,012
5.70%, 2/15/11 (1) 300 309
Rochester GO
5.70%, 8/15/03 (2) 2,330 2,493
5.70%, 8/15/04 (2) 2,180 2,333
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------------------
<S> <C> <C>
Smithtown
5.25%, 4/1/06 (1) $ 1,000 $ 1,011
5.45%, 4/1/08 (1) 400 404
Suffolk County GO
5.00%, 4/1/06 (1) 2,255 2,234
5.00%, 7/15/06 (3) 1,000 991
5.10%, 7/15/07 (3) 1,280 1,267
5.20%, 7/15/08 (3) 1,100 1,089
Suffolk County Southwest
Sewer Dist. GO
6.40%, 2/1/03 (3) 1,190 1,230
Suffolk County Water Auth.
5.10%, 6/1/07 (1) 7,110 7,041
5.25%, 6/1/02 (2) (Prere.) 21,305 22,078
5.25%, 6/1/10 (2) (ETM) 3,790 3,713
5.25%, 6/1/11 (2) (ETM) 2,380 2,315
5.25%, 6/1/12 (2) (ETM) 4,290 4,163
5.25%, 6/1/17 (2) 1,695 1,627
5.75%, 6/1/02 (2) (Prere.) 1,100 1,188
5.75%, 6/1/13 (2) 7,340 7,422
Triborough Bridge & Tunnel Auth.
5.50%, 1/1/17 (2) 18,485 18,197
OUTSIDE NEW YORK:
Puerto Rico Public Building Auth.
0.00%, 7/1/03 (3) 4,000 2,681
---------
GROUP TOTAL 622,221
---------
- ----------------------------------------------------------------------------
PORTFOLIO INSURED (1.1%)
New York State Dormitory Auth.
(Cornell Univ.)
6.875%, 7/1/14 6,825 7,107
New York State Energy
Research & Development
(Niagara Mohawk Power Corp.)
8.875%, 11/1/25 1,100 1,142
Port Auth. of New York &
New Jersey
8.70%, 7/15/20 750 780
---------
GROUP TOTAL 9,029
---------
- ----------------------------------------------------------------------------
SECONDARY MARKET INSURED (7.9%)
Municipal Assistance Corp. for
New York City
6.00%, 7/1/08 (3) 22,350 23,141
New York City Municipal Water
Finance Auth. Water & Sewer
System Rev.
5.00%, 6/15/17 (3) 4,000 3,660
New York State Dormitory Auth.
(City Univ. of New York)
5.75%, 7/1/09 (3) 3,750 3,874
(Cornell Univ.)
7.25%, 7/1/12 (1) 1,175 1,304
(State Univ.)
6.00%, 5/15/17 (2) 5,600 5,655
Port Auth. of New York &
New Jersey
6.50%, 1/15/26 (1) 1,500 1,580
Triborough Bridge &
Tunnel Auth.
5.00%, 1/1/17 (2) 105 97
5.00%, 1/1/17 (3) 395 366
5.50%, 1/1/19 (2) 4,000 3,922
6.00%, 1/1/12 (1) 7,805 8,191
6.75%, 1/1/09 (2) 3,000 3,386
6.875%, 1/1/15 (3) 7,000 7,642
---------
GROUP TOTAL 62,818
---------
- ----------------------------------------------------------------------------
NON-INSURED (11.5%)
Erie County BAN
4.75%, 8/15/95 7,000 7,011
Metropolitan Transit Auth.
of New York
(Transit Auth. Rev.)
8.375%, 7/1/96 (Prere.) 2,590 2,757
New York City GO VRDO
3.90%, 6/7/95 (LOC) 4,800 4,800
4.02%, 6/7/95 (LOC) 7,100 7,100
4.05%, 6/2/95 (LOC) 11,800 11,800
4.10%, 6/2/95 (LOC) 10,000 10,000
New York Environmental
Facilities PCR
5.20%, 5/15/14 1,500 1,388
New York Local Govt.
Assistance Corp. VRDO
3.30%, 6/7/95 (LOC) 3,100 3,100
New York State Dormitory Auth.
(Columbia Univ.)
5.75%, 7/1/15 11,965 11,964
New York State Energy Research
& Development Auth. PCR
(Long Island Lighting Co.)
4.70%, 3/1/96 (LOC)* 5,000 5,029
New York State Power Auth.
7.00%, 1/1/09 6,000 6,419
Onondaga County Public
Improvements
5.875%, 2/15/06 1,580 1,668
5.875%, 2/15/08 2,475 2,607
Triborough Bridge & Tunnel Auth.
TOB VRDO
4.00%, 6/8/95 3,200 3,200
</TABLE>
9
<PAGE> 10
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- ----------------------------------------------------------------------------
<S> <C> <C>
Westchester County GO
6.70%, 11/1/08 $ 3,250 $ 3,734
6.70%, 11/1/09 3,645 4,175
OUTSIDE NEW YORK:
Puerto Rico Govt. Development
Bank VRDO
3.45%, 6/7/95 (LOC) 5,000 5,000
----------
GROUP TOTAL 91,752
----------
- ----------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $743,576) 785,820
- ----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.7%)
- ----------------------------------------------------------------------------
Other Assets--Note B 15,645
Liabilities (2,037)
----------
13,608
- ----------------------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------------------
Applicable to 74,028,652 outstanding
shares of beneficial interest
(unlimited authorization--no par value) $799,428
- ----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.80
============================================================================
</TABLE>
+See Note A to Financial Statements.
- ----------------------------------------------------------------------------
AT MAY 31, 1995, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Per
(000) Share
--------- ---------
<S> <C> <C>
Paid in Capital $753,366 $10.17
Undistributed Net
Investment Income -- --
Accumulated Net
Realized Gains 4,155 .06
Unrealized Appreciation
of Investments--Note D 41,907 .57
- ----------------------------------------------------------------------------
NET ASSETS $799,428 $10.80
- ----------------------------------------------------------------------------
</TABLE>
BAN=Bond Anticipation Note
COP=Certificate of Participation
CP=Commercial Paper
GO=General Obligation
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.
Scheduled principal and interest payments are guaranteed by:
(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)
The insurance does not guarantee the market value of the
municipal bonds.
(LOC)=Scheduled principal and interest payments are guaranteed by
bank letter of credit.
10
<PAGE> 11
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended
May 31, 1995
(000)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,890
- ------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,890
- ------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services . . . . . . . . . . . . . . . . . . . . . $ 47
Management and Administrative . . . . . . . . . . . . . . . . . . . . 669
Marketing and Distribution . . . . . . . . . . . . . . . . . . . . . . 82 798
------
Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Auditing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shareholders' Reports . . . . . . . . . . . . . . . . . . . . . . . . . 19
Annual Meeting and Proxy Costs . . . . . . . . . . . . . . . . . . . . . 2
Trustees' Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 1
- ------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 837
- ------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . 21,053
- ------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN
Investment Securities Sold . . . . . . . . . . . . . . . . . . . . . . . 2,531
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
- ------------------------------------------------------------------------------------------------------------------
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . 2,654
- ------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . 74,595
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,599
- ------------------------------------------------------------------------------------------------------------------
Change in Unrealized
Appreciation (Depreciation) . . . . . . . . . . . . . . . . . . 76,194
- ------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . . . . . . . . . . . . . . . . $99,901
==================================================================================================================
</TABLE>
11
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED Year Ended
MAY 31, November 30,
1995 1994
(000) (000)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,053 $ 43,141
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,654 1,995
Change in Unrealized Appreciation (Depreciation) . . . . . . . . . . . . . 76,194 (95,745)
- ------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations . . . 99,901 (50,609)
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . (21,053) (43,141)
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (855)
- ------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . (21,053) (43,996)
- ------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,279 144,207
--In Lieu of Cash Distributions . . . . . . . . . . . . . . . . 15,408 32,859
--Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,616 49,547
Redeemed --Regular . . . . . . . . . . . . . . . . . . . . . . . . . . . (44,653) (129,929)
--Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . (45,997) (114,519)
- ------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from Capital Share Transactions . . . . . . . 25,653 (17,835)
- ------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) . . . . . . . . . . . . . . . . . . . . . 104,501 (112,440)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 694,927 807,367
- ------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $799,428 $ 694,927
==================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . $.293 $.588
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . -- $.012
- ------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,767 18,358
Issued in Lieu of Cash Distributions . . . . . . . . . . . . . . . . . 1,480 3,139
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,893) (23,433)
- ------------------------------------------------------------------------------------------------------------------
2,354 (1,936)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended November 30,
SIX MONTHS ENDED -----------------------------------------------
For a Share Outstanding Throughout Each Period MAY 31, 1995 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . $9.70 $10.97 $10.45 $10.04 $9.66 $9.73
----- ------ ------ ------ ----- -----
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . .293 .588 .594 .631 .639 .629
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . . . . 1.100 (1.258) .665 .410 .380 (.070)
----- ------ ------ ------ ----- -----
TOTAL FROM INVESTMENT OPERATIONS . . . . . . 1.393 (.670) 1.259 1.041 1.019 .559
- --------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . (.293) (.588) (.594) (.631) (.639) (.629)
Distributions from Realized Capital Gains . . . . . -- (.012) (.145) -- -- --
----- ------ ------ ------ ----- -----
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . (.293) (.600) (.739) (.631) (.639) (.629)
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . $10.80 $9.70 $10.97 $10.45 $10.04 $9.66
====================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . +14.51% -6.37% +12.42% +10.63% +10.87% +5.99%
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . $799 $695 $807 $574 $408 $241
Ratio of Expenses to Average Net Assets . . . . . . . .23%* .22% .19% .23%+ .27%+ .31%+
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . . 5.68%* 5.60% 5.47% 6.11% 6.48% 6.60%
Portfolio Turnover Rate . . . . . . . . . . . . . . . 15%* 20% 10% 28% 19% 17%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
+Insurance expense represents .01%, .01%, and .02%.
*Annualized.
13
<PAGE> 14
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 Municipal Bond Index, U.S. Treasury Bond, and
U.S. Treasury Note futures contracts to a limited extent, with the
objectives of enhancing returns, managing interest rate risk, maintaining
liquidity, diversifying credit risk and minimizing transaction costs. The
Fund may purchase futures contracts instead of municipal bonds when futures
contracts are believed to be priced more attractively than municipal bonds.
The Fund may also seek to take advantage of price differences among bond
market sectors by simultaneously buying futures (or bonds) of one market
sector and selling futures (or bonds) of another sector. Futures contracts
may also be used to simulate a fully invested position in the underlying
bonds while maintaining a cash balance for liquidity.
The primary risks associated with the use of futures contracts are imperfect
correlation between changes in market values of bonds held by the Fund and
the price of futures contracts, and the possibility of an illiquid market.
Futures contracts are valued based upon their quoted daily settlement
prices. Fluctuations in the values 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. At May 31, 1995, the Fund had contributed capital of $108,000 to
Vanguard (included in Other Assets), representing .5% of Vanguard's
capitalization. The Fund's officers and trustees are also officers and
directors of Vanguard.
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (continued)
The Fund's investment adviser may direct certain new issue portfolio trades,
subject to obtaining the best price and execution, to underwriters who have
agreed to rebate or credit to the Fund a portion of the underwriting fees
generated. Such rebates or credits are used solely to reduce the Fund's
administrative expenses. For the six months ended May 31, 1995, directed
brokerage arrangements reduced the Fund's expenses by $46,000 (an annual rate
of .01 of 1% of average net assets.)
C. During the six months ended May 31, 1995, the Fund made purchases of
$52,984,000 and sales of $58,940,000 of investment securities other than
temporary cash investments.
At November 30, 1994, the Fund had available a capital loss carryforward of
$435,000 to offset future net capital gains through November 30, 2002.
D. At May 31, 1995, unrealized appreciation of investment securities for
financial reporting and Federal income tax purposes aggregated $42,244,000 of
which $43,689,000 related to appreciated securities and $1,445,000 related to
depreciated securities.
At May 31, 1995, the aggregate settlement value of short positions in Municipal
Bond Index futures contracts expiring in June 1995, the related unrealized
depreciation, and the market value of securities deposited as an initial margin
for open futures contracts were $8,116,000, $337,000, and $5,902,000,
respectively.
15
<PAGE> 16
THE VANGUARD FAMILY OF FUNDS
FIXED INCOME FUNDS
MONEY MARKET FUNDS
Vanguard Admiral Funds
U.S. Treasury Money
Market Portfolio
Vanguard Money Market Reserves
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund
Money Market Portfolio
Vanguard State Tax-Free Funds
Money Market Portfolios
(CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
Insured Longer-Term Portfolios
(CA, FL, NJ, NY, OH, PA)
INCOME FUNDS
Vanguard Admiral Funds
Vanguard Fixed Income Securities Fund
Vanguard Preferred Stock Fund
EQUITY AND BALANCED FUNDS
GROWTH AND INCOME FUNDS
Vanguard Convertible
Securities Fund
Vanguard Equity Income Fund
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund
U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard LifeStrategy Funds
Income Portfolio
Conservative Growth Portfolio
Moderate Growth Portfolio
Growth Portfolio
Vanguard STAR Portfolio
Vanguard/Wellesley Income Fund
Vanguard/Wellington Fund
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
Growth Portfolio
Vanguard/Trustees' Equity Fund
International Portfolio
INDEX FUNDS
Vanguard Index Trust
Total Stock Market Portfolio
500 Portfolio
Extended Market Portfolio
Growth Portfolio
Value Portfolio
Small Capitalization Stock Portfolio
Vanguard International Equity
Index Fund
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
Vanguard Bond Index Fund
Vanguard Tax-Managed Fund
Vanguard Balanced Index Fund
[THE VANGUARD GROUP LOGO]
<TABLE>
<S> <C>
Vanguard Financial Center Valley Forge, Pennsylvania 19482
New Account Information: Shareholder Account Services:
1-(800) 662-7447 1-(800) 662-2739
</TABLE>
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.
Q762-5/95
VANGUARD
NEW YORK
INSURED
TAX-FREE FUND
SEMI-ANNUAL REPORT
MAY 31, 1995
