<PAGE> 1
A MESSAGE TO SHAREHOLDERS
DEAR SHAREHOLDER:
The declining interest rate environment that prevailed for most of
fiscal 1995 reversed course during the first six months of our current fiscal
year. Short-term tax-exempt yields, after falling through late February,
stabilized and then abruptly rose to end the six-month period slightly higher
than where they began. Long-term tax-exempt yields also moved lower at the
outset of the period, before creeping higher to end above their starting point.
This overall increase in interest rates resulted in lower prices for municipal
bonds.
During the past twelve months, the net asset values of our Insured
Longer-Term Portfolios were negatively impacted by rising rates, but each
Portfolio's income component more than compensated for any decrease in
principal. Our Money Market Portfolios all gave good accounts of themselves,
providing returns that fully reflect the current level of interest rates. The
table on page 3 of this Report provides detailed results for each of our State
Tax-Free Portfolios, including per share net asset values, dividend and capital
gains distributions, and total returns over the past six and twelve months, as
well as current yields. In summary form, here are the Portfolio highlights:
THE STATE MONEY MARKET PORTFOLIOS--provided total returns ranging from +3.4% to
+3.6% for the past year. As expected, net asset values remained at $1.00 per
share. As the following table illustrates, current yields are in the area of
3.4%, moderately lower than they were twelve months ago:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
SEVEN-DAY
ANNUALIZED YIELD
-----------------------------------
MONEY MARKET MAY 31, NOV. 30, MAY 31,
PORTFOLIO 1996 1995 1995
- -----------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA 3.39% 3.61% 3.80%
PENNSYLVANIA 3.44 3.64 3.80
NEW JERSEY 3.30 3.57 3.71
OHIO 3.43 3.71 3.92
- -----------------------------------------------------------------
</TABLE>
THE STATE INSURED LONGER-TERM PORTFOLIOS--earned sufficient income to offset
the modest decrease in long-term municipal bond prices, providing total returns
(capital change plus reinvested dividends) ranging from +3.4% to +5.0% for the
twelve months. Despite the swings in interest rates during the period, the
current yields on the Insured Longer-Term Portfolios (roughly 5.2%) are nearly
identical to their levels of twelve months ago.
To provide some perspective on how our Insured Longer-Term Portfolios
performed during the past year, the table below breaks out the two components
of total return--income return and capital return. As you can see, the positive
contribution of each Portfolio's income return was marginally reduced by its
negative capital return.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
INVESTMENT RETURNS
----------------------------------
TWELVE MONTHS ENDED
MAY 31, 1996
----------------------------------
INSURED LONGER-TERM
PORTFOLIO INCOME CAPITAL TOTAL
- ----------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA
INTERMEDIATE-TERM +5.1% -0.1% +5.0%
CALIFORNIA LONG-TERM +5.5 -1.7 +3.8
NEW YORK +5.4 -1.6 +3.8
PENNSYLVANIA +5.6 -1.3 +4.3
NEW JERSEY +5.3 -1.9 +3.4
OHIO +5.4 -1.6 +3.8
FLORIDA +5.2 -1.4 +3.8
- ---------------------------------------------------------------
</TABLE>
FIXED-INCOME MARKET REVIEW
Although the Federal Reserve lowered short-term interest rates in December and
January, the bond market fretted over the apparent strength of the U.S. economy
and the possibility of an increase in inflation. During the past six months,
the yield on the long-term U.S. Treasury bond, the benchmark for the bond
market, rose from 6.1% to 6.9%, engendering a price decline of approximately
- -10% (excluding interest income).
The long-term municipal bond market fared much better. On balance for
the six-month period, yields on high-grade municipal bonds increased less
dramatically (5.5% to 5.9%), resulting in a price
1
<PAGE> 2
decline of only -6%. Yields on top-grade (MIG 1) municipal notes remained
essentially unchanged on balance at 3.7%.
Although the future direction of interest rate movements is virtually
impossible to predict with any level of accuracy and consistency, the relative
performance of bond funds with comparable quality and maturity guidelines is
surprisingly predictable. That is to say, bond funds holding similar types of
securities--say, high-quality, long-term municipal bonds--should, on average,
earn roughly equivalent gross returns. What that absolute return will be,
however, is anyone's guess. On the other hand, what can be predicted with some
semblance of accuracy is the relative performance differential due to the
expense ratios of the funds. The average Vanguard Insured Longer-Term
Portfolio, for example, operates with an annual expense ratio of 0.2%, compared
to 0.9% for our average competitor. Therefore, holding all other factors equal,
a typical Vanguard Insured Longer-Term Portfolio begins with an annual income
advantage of +0.7% over a comparable municipal bond fund.
IN SUMMARY
As you may know, one of the benefits of Vanguard's Insured Longer-Term
Portfolios is their municipal bond insurance, which guarantees the timely
payment of principal and interest. These insurance provisions provide
protection against deteriorating creditworthiness within the various
municipalities and add an important level of enhanced safety.
There are, of course, "costs" associated with insuring our Portfolios
against potential default. First, bonds that are issued with insurance
typically offer slightly lower yields than non-insured bonds. A second cost is
the explicit expense of purchasing insurance on non-insured bonds. Despite
these costs, however, our top-quality Portfolios continue to benefit from our
expense ratio advantage and provide yields that are fully competitive with
those of uninsured municipal bond portfolios.
Over time, given our high-quality, low-cost advantage, Vanguard State
Tax-Free Portfolios should remain attractive relative to our competitors'
funds. We look forward to reporting to you in further detail in our 1996 Annual
Report six months hence.
Sincerely,
/s/ JOHN C. BOGLE
- -----------------
John C. Bogle
Chairman of the Board
/s/ JOHN J. BRENNAN
- -------------------
John J. Brennan
President
June 8, 1996
Note: Mutual fund data from Lipper Analytical Services, Inc.
2
<PAGE> 3
PORTFOLIO STATISTICS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE INCOME
TOTAL PER SHARE DIVIDENDS TOTAL RETURN
NET ASSETS ------------------- ------------------ -----------------
(MILLIONS) AVERAGE AVERAGE NOV. 30, MAY 31, SIX TWELVE SIX TWELVE CURRENT
PORTFOLIO MAY 31, 1996 MATURITY QUALITY* 1995 1996 MONTHS MONTHS MONTHS MONTHS YIELD**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET
CALIFORNIA ....... $1,276 42 DAYS MIG 1 $ 1.00 $ 1.00 $.017 $.034 +1.7% +3.5% 3.39%
PENNSYLVANIA ..... 1,306 32 DAYS MIG 1 1.00 1.00 .017 .035 +1.7 +3.5 3.44
NEW JERSEY ....... 888 57 DAYS MIG 1 1.00 1.00 .016 .033 +1.6 +3.4 3.30
OHIO ............. 199 60 DAYS MIG 1 1.00 1.00 .017 .035 +1.7 +3.6 3.43
- -----------------------------------------------------------------------------------------------------------------------------------
INSURED INTERMEDIATE-TERM
CALIFORNIA ....... $ 264 7.4 YEARS Aaa $10.44 $10.25 $.254 $.512 +0.6% +5.0% 4.77%
INSURED LONG-TERM
CALIFORNIA ....... 978 14.1 YEARS Aaa 11.27 10.87 .299 .600 -0.9 +3.8 5.33
NEW YORK ......... 879 11.7 YEARS Aaa 11.01 10.57 .286 .574 -0.8+ +3.8+ 5.23
PENNSYLVANIA ..... 1,565 11.4 YEARS Aaa 11.28 10.90 .304 .608 -0.4+ +4.3+ 5.28
NEW JERSEY ....... 796 11.9 YEARS Aaa 11.78 11.29 .310 .617 -1.1+ +3.4+ 5.23
OHIO ............. 203 10.9 YEARS Aaa 11.63 11.25 .302 .605 -0.7 +3.8 5.29
FLORIDA .......... 453 14.2 YEARS Aaa 10.94 10.60 .275 .554 -0.6 +3.8 5.22
- -----------------------------------------------------------------------------------------------------------------------------------
</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.
+ Includes capital gains distributions of $.065 for New York, $.037 for
Pennsylvania, and $.058 for New Jersey.
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 QUOTED IN THE MESSAGE TO SHAREHOLDERS ARE CALCULATED IN
ACCORDANCE WITH SEC GUIDELINES. THE AVERAGE ANNUAL TOTAL RETURNS FOR THE
PORTFOLIOS (PERIODS ENDED MARCH 31, 1996) 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 +7.60% -- +6.56% +5.08% +1.48%
CALIFORNIA INSURED LONG-TERM 4/7/86 +7.73 +8.17% +7.75 +6.47 +1.28
CALIFORNIA MONEY MARKET 6/1/87 +3.57 +3.12 +4.11 +4.11 0.00
NEW YORK INSURED TAX-FREE 4/7/86 +7.50 +8.37 +7.32 +6.44 +0.88
PENNSYLVANIA INSURED LONG-TERM 4/7/86 +7.15 +8.41 +7.95 +6.64 +1.31
PENNSYLVANIA MONEY MARKET 6/13/88 +3.62 +3.12 +4.11 +4.11 0.00
NEW JERSEY INSURED LONG-TERM 2/3/88 +7.13 +8.10 +8.39 +6.43 +1.96
NEW JERSEY MONEY MARKET 2/3/88 +3.50 +3.08 +4.09 +4.09 0.00
OHIO INSURED LONG-TERM 6/18/90 +7.13 +8.08 +8.50 +5.97 +2.53
OHIO MONEY MARKET 6/18/90 +3.72 +3.17 +3.49 +3.49 0.00
FLORIDA INSURED TAX-FREE 9/1/92 +7.50 -- +7.62 +5.43 +2.19
</TABLE>
ALL OF THESE DATA REPRESENT PAST PERFORMANCE. THE INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT INVESTORS' 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
The two major factors affecting the Longer-Term Insured Portfolios over the
last six months were the sharp rise in interest rates and the relatively better
performance of municipal bonds versus their taxable counterparts. The yield on
the 30-year U.S. Treasury bond increased 0.8 percentage points (from 6.1% to
6.9%). This was a decidedly unpleasant turn of events for bondholders and their
total returns. The increase in interest rates was prompted by signs of an
improving economy and investor concerns about inflation. During the same
period, the yield on high-grade, long-term municipal bonds rose 0.4 percentage
points (from 5.5% to 5.9%). The question of tax reform first raised by Senator
Armey (R-TX) and later championed by Steve Forbes in the Republican
Presidential primaries seemed to have been, at least in part, answered. The
reduced intensity of the rhetoric around the question of tax reform was a
contributing factor in explaining why the municipal market performed better
than the Treasury market.
The Federal Reserve Board's last action on January 31, 1996, was to
reduce the Federal funds rate and the discount rate by 0.25 percentage points.
At that time, the economy appeared to be struggling, a situation further
exacerbated by the severity of the winter. Unfortunately for bond investors,
the release of February's economic statistics showed a much stronger than
anticipated economy. Concurrently, an increase in the prices of oil, gasoline,
wheat, and corn prodded some investors to become concerned about the specter of
higher inflation. The combined effects caused the yield on the 30-year U.S.
Treasury bond to increase sharply. The beginning of the Presidential primary
season added an extra degree of uncertainty to the market.
While bear markets are never pleasant, they often offer investment
opportunities that can be exploited to the shareholders' eventual benefit.
First, the Portfolios' dividend distribution can be positively impacted by
swapping bonds with lower yields to maturity for bonds with higher yields to
maturity. Second, capital gains distributions can usually be reduced by
realizing offsetting capital losses. Finally, bear markets are generally the
best time to buy bonds that have superior protection from early redemption. As
interest rates rise, bonds which are noncallable or have long periods before
they are callable are often available at close to the same price as bonds with
less desirable characteristics. When the time comes for interest rates to
reverse course and fall, these bonds will furnish excellent capital returns
while providing a more stable dividend.
The past six months have been a very volatile period of time. The
future remains unknown, but the State Insured Longer-Term Portfolios will
continue to focus on their objectives. It is through this commitment to
high-quality Federal and state tax-exempt municipal bonds and low-cost, prudent
management that superior and durable investment results can be achieved.
MONEY MARKETS
The volatility experienced in the Treasury market over the past six months has
had little impact on yields in the short-term municipal bond market. Yields on
one-year municipal notes ended the period very close to where they began,
despite a 0.3% rise in yields on one-year Treasury bills. Nevertheless, there
were two issues which had a substantial impact on the short-term market.
First, seasonal supply constraints that typically plague the short-term
municipal market in the spring dampened the average weighted maturities of
money market funds. Second, and most notably, the Securities and Exchange
Commission (SEC) announced changes in the regulations governing money market
funds which became effective June 3, 1996.
In April, the SEC adopted amendments to rule 2a-7 under the Investment
Company Act of 1940. Section 2a-7 contains regulations that protect the quality
and safety of money market funds. For the most part, the changes emphasize
higher quality and increased diversification. The new guidelines were designed
to tighten the regulations imposed on tax-exempt money market funds and improve
the likelihood that the funds maintain a stable net asset value. Compliance
with the amendments may prove challenging for the industry. Many of our
competitors operate under somewhat lower quality standards and, as a result,
may be forced to significantly restructure their funds in order to meet the
standards. In contrast, our Money Market Portfolios have
5
<PAGE> 6
always been managed quite conservatively with credit quality our most important
consideration. Consequently, we expect the impact of the changes on Vanguard's
State Tax-Free Money Market Portfolios to be minimal.
The scarcity of new issue supply in the short-term municipal market
contributed to the relative stability in yields over the period. The supply of
short-term municipals tends to be quite seasonal, the timing of which depends
upon an issuer's fiscal year. The vast majority of issuers have fiscal years
beginning July 1 and ending June 30, causing new issue supply to decline in the
months leading up to June and increase dramatically in July. Looking forward,
the glut of new issue supply should provide ample opportunities for us to
extend our average maturities, increase our diversification, and further
enhance our overall quality.
In conclusion, the months ahead should be challenging for the
industry, with tighter regulations governing tax-free money market funds coming
at a time when short-term issuance is at its peak. Hopefully, the new
amendments adopted by the SEC will "level the playing field," bringing
competitors closer to Vanguard's already conservative style of management,
thereby further enhancing the performance advantage that arises from our "rock
bottom" expense ratios.
Sincerely,
Ian A. MacKinnon David E. Hamlin
Senior Vice President Principal
Pamela W. Tynan Danine A. Mueller
Principal Principal
Reid O. Smith Jerome J. Jacobs
Principal Principal
Vanguard Fixed Income Group
June 18, 1996
6
<PAGE> 7
STATEMENT OF NET ASSETS
FINANCIAL STATEMENTS (unaudited)
May 31, 1996
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (98.3%)
- --------------------------------------------------------------------------------
ISSUER INSURED (80.9%)
Albany County NY GO
5.00%, 10/1/05 (3) $ 2,000 $ 1,981
5.00%, 10/1/06 (3) 3,150 3,105
5.00%, 10/1/12 (3) 4,400 4,040
7.00%, 1/15/05 (2) 1,250 1,351
Albany NY Municipal Water
Finance Auth.
7.50%, 12/1/17 (1) 2,080 2,254
Broome County NY Public Safety
Facility Project
5.25%, 4/1/15 (1) 3,000 2,764
Buffalo & Erie NY Toll Bridge Auth.
6.00%, 1/1/15 (1) 4,500 4,510
Buffalo NY General Improvement
6.75%, 3/1/06 (1) 1,815 1,953
6.75%, 3/1/07 (1) 390 419
6.75%, 3/1/09 (1) 410 439
6.75%, 3/1/10 (1) 380 407
6.75%, 3/1/11 (1) 385 413
Buffalo NY Municipal Water
Finance Auth.
5.75%, 7/1/19 (4) 8,500 8,184
Buffalo NY Sewer Auth. System Rev.
5.00%, 7/1/12 (3) 2,400 2,161
5.25%, 7/1/08 (3) 3,500 3,445
Duchess County NY Resource
Recovery Solid Waste System
7.50%, 1/1/09 (3) 2,000 2,172
Erie County NY GO
6.10%, 1/15/06 (3) 1,865 1,991
6.125%, 1/15/07 (3) 1,660 1,773
6.125%, 1/15/09 (3) 735 780
6.125%, 1/15/10 (3) 735 777
6.125%, 1/15/11 (3) 735 775
6.125%, 1/15/12 (3) 735 773
Erie County NY Water Auth. Rev.
0.00%, 12/1/05 (2) 3,000 1,877
0.00%, 12/1/06 (2) 6,915 4,059
VRDO 3.35%, 6/5/96 (2) 700 700
5.00%, 12/1/04 (2) 5,920 5,896
6.00%, 12/1/08 (2) 1,600 1,683
Town of Hempstead NY GO
5.375%, 8/1/96 (3) 1,131 1,134
5.50%, 8/1/11 (3) 2,450 2,413
5.625%, 2/1/11 (3) 890 888
5.625%, 2/1/12 (3) 1,490 1,478
5.625%, 2/1/13 (3) 1,170 1,154
Huntington NY GO
5.50%, 4/1/13 (3) 3,400 3,327
6.70%, 2/1/10 (3) 375 417
6.70%, 2/1/11 (3) 310 345
City of Jamestown NY GO
7.50%, 5/15/02 (2) 110 125
7.50%, 5/15/06 (2) 250 295
Metropolitan Transit Auth.
of New York
(Commuter Facilities Rev.)
5.50%, 7/1/17 (1) 2,500 2,357
5.625%, 7/1/15 (4) 5,000 4,844
6.10%, 7/1/09 (1) 6,035 6,364
6.25%, 7/1/22 (1) 3,000 3,053
(Transportation Facilities Rev.)
5.40%, 7/1/07 (3) 12,000 12,079
6.00%, 7/1/11 (2) 2,000 2,017
7.00%, 7/1/09 (2) 19,050 21,728
Monroe County NY GO
(Rochester Water Dist.)
5.60%, 6/1/04 (3) 1,235 1,283
5.70%, 6/1/05 (3) 1,350 1,408
5.80%, 6/1/06 (3) 1,340 1,402
5.90%, 2/1/07 (3) 550 577
Montgomery, Ostego, Scholoharie
Counties NY Solid Waste
5.25%, 1/1/14 (1) 1,640 1,516
Mount Sinai NY Union Free
School Dist.
6.20%, 2/15/14 (2) 1,050 1,104
6.20%, 2/15/15 (2) 540 566
Nassau County NY Combined
Sewer Dist. GO
4.70%, 10/1/04 (3) 1,805 1,759
4.80%, 10/1/05 (3) 1,760 1,711
4.90%, 10/1/06 (3) 1,740 1,694
5.00%, 10/1/07 (3) 1,715 1,664
5.00%, 10/1/08 (3) 1,695 1,626
5.00%, 5/1/09 (3) 3,210 3,046
5.00%, 5/1/10 (3) 2,875 2,699
5.00%, 5/1/11 (3) 1,770 1,648
5.00%, 5/1/12 (3) 1,760 1,622
5.35%, 7/1/08 (1) 4,730 4,715
5.35%, 1/15/09 (1) 3,505 3,462
5.35%, 7/1/09 (1) 4,635 4,576
5.875%, 8/1/12 (3) 825 836
6.20%, 5/15/07 (1) 840 884
6.20%, 5/15/08 (1) 835 880
6.25%, 5/15/09 (1) 825 867
6.25%, 5/15/10 (1) 820 853
Nassau County NY GO
5.00%, 11/1/97 (3) 7,825 7,951
5.125%, 3/1/13 (2) 5,860 5,428
5.125%, 3/1/14 (2) 5,900 5,420
5.50%, 7/15/07 (1) 1,270 1,286
5.50%, 7/15/08 (1) 1,300 1,306
5.50%, 7/15/09 (1) 1,325 1,321
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
5.50%, 7/15/10 (1) $ 1,345 $ 1,332
5.50%, 7/15/11 (1) 1,370 1,349
5.70%, 8/1/11 (3) 2,000 2,000
5.75%, 2/1/11 (1) 1,100 1,104
New York City Cultural Resources
(Museum of Modern Art)
5.40%, 1/1/06 (2) 805 815
5.40%, 1/1/12 (2) 1,400 1,357
5.50%, 1/1/07 (2) 840 850
New York City GO
VRDO 3.65%, 6/4/96 (1) 200 200
5.75%, 8/1/09 (3) 4,250 4,294
6.625%, 8/1/13 (1) 675 720
6.95%, 8/15/12 (1) 1,460 1,590
7.10%, 2/1/09 (1) 5,000 5,519
New York City Health & Hosp. Corp.
5.625%, 2/15/13 (2) 23,400 22,744
New York City IDA
(USTA Project)
6.375%, 11/15/14 (4) 2,000 2,078
New York City Municipal Water
Finance Auth. Water & Sewer
System Rev.
VRDO 3.60%, 6/4/96 (3) 12,800 12,800
VRDO 3.70%, 6/4/96 (3) 3,300 3,300
5.35%, 6/15/13 (1) 5,300 4,979
5.875%, 6/15/12 (2) 20,000 20,385
5.875%, 6/15/13 (2) 20,000 20,290
8.75%, 6/15/97 (6) (Prere.) 2,500 2,676
New York State Dormitory Auth.
(City Univ. of New York)
6.25%, 7/1/19 (1) 4,485 4,561
7.00%, 7/1/14 (3) 20,700 22,381
(Colgate Univ.)
6.50%, 7/1/01 (1) (Prere.) 1,350 1,476
(Fashion Institute Student
Housing Corp.)
7.10%, 7/1/96 (1) (Prere.) 590 603
7.20%, 7/1/96 (1) (Prere.) 3,560 3,640
(Fordham Univ.)
5.50%, 7/1/23 (3) 10,150 9,500
5.75%, 7/1/15 (3) 1,500 1,473
7.20%, 7/1/15 (2) 710 777
(Foundling Charities Corp.)
6.50%, 7/1/12 (1) 6,530 6,707
(Iona College)
5.25%, 7/1/08 (1) 1,000 978
5.35%, 7/1/09 (1) 1,000 976
7.625%, 7/1/09 (1) 5,000 5,378
(Ithaca College)
6.25%, 7/1/21 (1) 10,000 10,159
(Mt. Sinai School of Medicine)
6.75%, 7/1/15 (1) 7,245 7,738
(New York Public Library)
0.00%, 7/1/06 (1) 910 530
0.00%, 7/1/07 (1) 1,000 545
0.00%, 7/1/08 (1) 910 464
0.00%, 7/1/09 (1) 910 432
0.00%, 7/1/10 (1) 500 221
0.00%, 7/1/11 (1) 500 207
(New York Univ.)
6.00%, 7/1/15 (3) 32,165 32,091
6.70%, 7/1/96 (1) (Prere.) 1,250 1,278
(Rensselaer Polytech. Institute)
6.50%, 7/1/06 (3) 3,000 3,227
(School Dist.)
6.00%, 7/1/15 (3) 2,675 2,669
(Siena College)
6.00%, 7/1/11 (1) 1,500 1,520
(State Univ.)
5.25%, 7/1/14 (2) 1,000 932
5.30%, 7/1/24 (2) 3,380 3,052
5.75%, 7/1/07 (2) 2,250 2,319
5.75%, 7/1/08 (2) 3,335 3,414
6.00%, 7/1/09 (2) 1,590 1,654
(Union College)
5.75%, 7/1/10 (3) 1,800 1,810
New York State Energy Research &
Development Auth. PCR
(Niagara Mohawk)
6.625%, 10/1/13 (3) 10,000 10,692
New York State Medical
Care Facility Finance Agency
8.00%, 8/15/97 (8) (Prere.) 5,000 5,338
(Mental Health Services)
5.50%, 8/15/21 (3) 8,000 7,414
6.00%, 8/15/15 (1) 15,000 15,034
6.375%, 8/15/10 (3) 6,100 6,380
7.40%, 8/15/07 (1) 890 958
(Sisters of Charity-Buffalo)
6.625%, 11/1/18 (2) 5,500 5,824
New York State Thruway Auth. Rev.
5.00%, 1/1/20 (1) 3,740 3,263
5.50%, 1/1/23 (3) 6,800 6,334
6.00%, 1/1/15 (3) 2,350 2,345
6.00%, 1/1/25 (3) 9,250 9,100
(Highway & Bridge Trust Fund)
5.30%, 4/1/10 (1) 3,775 3,634
5.50%, 4/1/15 (1) 12,480 11,916
5.80%, 4/1/10 (2) 14,215 14,377
5.80%, 4/1/11 (2) 8,635 8,701
6.00%, 4/1/09 (3) 5,000 5,161
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
New York State Urban
Development Corp.
5.375%, 1/1/12 (1) $ 21,375 $ 20,492
Niagara Falls NY Bridge Comm.
5.25%, 10/1/15 (3) 5,000 4,682
6.25%, 10/1/20 (3) 8,685 9,132
6.25%, 10/1/21 (3) 9,230 9,714
North Hempstead NY GO
6.30%, 4/1/08 (3) 2,055 2,222
6.40%, 4/1/10 (3) 1,500 1,626
6.40%, 4/1/11 (3) 2,075 2,247
North Hempstead NY Solid
Waste Auth.
5.00%, 2/1/12 (1) 3,370 3,066
Oyster Bay Public Improvement
5.40%, 2/15/03 (1) 1,475 1,518
5.60%, 2/15/05 (1) 1,000 1,036
5.70%, 2/15/07 (1) 805 832
5.70%, 2/15/09 (1) 980 1,000
5.70%, 2/15/11 (1) 300 303
Rochester NY GO
4.25%, 9/15/97 (2) 6,730 6,774
5.70%, 8/15/03 (2) 2,330 2,456
5.70%, 8/15/04 (2) 2,180 2,297
Smithtown NY GO
5.25%, 4/1/06 (1) 1,000 1,000
5.45%, 4/1/08 (1) 400 400
Suffolk County NY GO
4.50%, 8/1/97 (2) 1,390 1,402
5.00%, 4/1/06 (1) 2,255 2,215
5.00%, 7/15/06 (3) 1,000 982
5.10%, 7/15/07 (3) 1,280 1,254
5.20%, 7/15/08 (3) 1,100 1,076
Suffolk County NY Water Auth.
5.10%, 6/1/07 (1) 7,110 6,986
5.25%, 6/1/04 (2) (Prere.) 21,305 21,443
5.25%, 6/1/10 (2) (ETM) 3,790 3,738
5.25%, 6/1/11 (2) (ETM) 2,380 2,334
5.25%, 6/1/12 (2) (ETM) 4,290 4,181
5.25%, 6/1/17 (2) 1,695 1,587
5.75%, 6/1/02 (2) (Prere.) 1,100 1,170
5.75%, 6/1/13 (2) 7,340 7,316
Triborough Bridge & Tunnel Auth.
5.50%, 1/1/17 (2) 18,485 17,442
City of Yonkers NY School Dist. GO
5.375%, 8/1/96 (3) 695 697
5.375%, 8/1/97 (3) 685 698
5.60%, 8/1/09 (3) 565 566
5.70%, 8/1/10 (3) 545 547
5.75%, 8/1/11 (3) 500 502
5.80%, 8/1/12 (3) 500 502
OUTSIDE NEW YORK:
Puerto Rico Electric Power
Auth. Rev.
6.50%, 7/1/06 (1) 10,000 11,068
Puerto Rico Public Building Auth.
0.00%, 7/1/03 (3) 4,000 2,853
--------
GROUP TOTAL 710,731
--------
- --------------------------------------------------------------------------------
PORTFOLIO INSURED (.9%)
New York State Dormitory Auth.
(Cornell Univ.)
6.875%, 7/1/14 6,825 6,974
New York State Energy
Research & Development
(Niagara Mohawk Power Corp.)
8.875%, 11/1/25 1,100 1,128
--------
GROUP TOTAL 8,102
--------
- --------------------------------------------------------------------------------
SECONDARY MARKET INSURED (8.2%)
Municipal Assistance Corp. for
New York City
6.00%, 7/1/08 (3) 22,350 22,928
New York City Municipal Water
Finance Auth. Water & Sewer
System Rev.
5.00%, 6/15/17 (3) 4,000 3,521
New York State Dormitory Auth.
(City Univ.)
5.75%, 7/1/09 (3) 3,750 3,826
5.75%, 7/1/11 (3) 5,950 6,010
(Cornell Univ.)
7.25%, 7/1/12 (1) 1,175 1,286
(State Univ.)
6.00%, 5/15/17 (2) 5,600 5,554
New York State Medical
Care Facilities
5.375%, 2/15/14 (1) 5,000 4,682
Port Auth. of New York &
New Jersey
6.50%, 1/15/26 (1) 1,500 1,550
Triborough Bridge & Tunnel Auth.
5.00%, 1/1/17 (2) 105 93
5.00%, 1/1/17 (3) 395 349
5.50%, 1/1/19 (2) 4,000 3,745
6.00%, 1/1/12 (1) 7,805 8,110
6.75%, 1/1/09 (2) 3,000 3,337
6.875%, 1/1/15 (3) 7,000 7,482
--------
GROUP TOTAL 72,473
--------
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
NON-INSURED (8.3%)
Half Hollow Hills NY Central
School Dist. TAN
4.25%, 6/28/96 $ 3,000 $ 3,001
Manhasset NY Union Free School
Dist. TAN
4.50%, 6/27/96 5,800 5,803
Metropolitan Transit Auth.
of New York
8.375%, 7/1/96 (Prere.) 2,590 2,652
New York City Cultural
Resources VRDO
(Carnegie Hall)
3.35%, 6/5/96 LOC 600 600
New York City GO VRDO
3.60%, 6/5/96 LOC 15,600 15,600
3.75%, 6/4/96 LOC 700 700
3.80%, 6/5/96 LOC 6,100 6,100
New York Environmental
Facilities Water PCR
5.20%, 5/15/14 1,500 1,432
New York Local Govt.
Assistance Corp. VRDO
3.45%, 6/5/96 LOC 5,200 5,200
New York State Dormitory Auth.
(Columbia Univ.)
5.75%, 7/1/15 11,965 11,707
New York State Power Auth.
7.00%, 1/1/09 6,000 6,332
Onondaga County NY Public
Improvements
5.875%, 2/15/06 1,580 1,651
5.875%, 2/15/08 2,475 2,558
Westchester County NY GO
6.70%, 11/1/08 3,250 3,650
6.70%, 11/1/09 3,645 4,085
OUTSIDE NEW YORK:
Puerto Rico Govt. Development Bank
VRDO 3.25%, 6/5/96 LOC 1,500 1,500
--------
GROUP TOTAL 72,571
--------
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $836,945) 863,877
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.7%)
- --------------------------------------------------------------------------------
Other Assets--Note B 17,731
Liabilities (3,095)
--------
14,636
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 83,130,905 outstanding
shares of beneficial interest
(unlimited authorization--no par value) $878,513
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $10.57
================================================================================
</TABLE>
+ See Note A to Financial Statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AT MAY 31, 1996, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
Amount Per
(000) Share
-------- -------
<S> <C> <C>
PAID IN CAPITAL $852,055 $10.25
Undistributed Net
Investment Income -- --
Accumulated Net
Realized Gains 30 --
Unrealized Appreciation
(Depreciation)--Note E
Investment Securities 26,932 .33
Futures Contracts (504) (.01)
- --------------------------------------------------------------------------------
NET ASSETS $878,513 $10.57
- --------------------------------------------------------------------------------
</TABLE>
BAN=Bond Anticipation Note
COP=Certificate of Participation
CP=Commercial Paper
GO=General Obligation
IDA=Industrial Development Authority Bond
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
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, 1996
(000)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,033
- ---------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,033
- ---------------------------------------------------------------------------------------------------------------
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Vanguard Group--Note B
Investment Advisory Services . . . . . . . . . . . . . . . . . . . . . $ 51
Management and Administrative . . . . . . . . . . . . . . . . . . . . 731
Marketing and Distribution . . . . . . . . . . . . . . . . . . . . . . 101 883
----
Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Custodian Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Auditing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shareholders' Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Annual Meeting and Proxy Costs . . . . . . . . . . . . . . . . . . . . . 4
Trustees' Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 1
- ---------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 933
Expenses Paid Indirectly--Note C . . . . . . . . . . . . . . . . . (10)
- ---------------------------------------------------------------------------------------------------------------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 923
- ---------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . 23,110
- ---------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN
Investment Securities Sold . . . . . . . . . . . . . . . . . . . . . . . 537
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380
- ---------------------------------------------------------------------------------------------------------------
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . 917
- ---------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . (31,516)
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . (670)
- ---------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation (Depreciation) . . . . . . . . (32,186)
- ---------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations . . . . . . $ (8,159)
===============================================================================================================
</TABLE>
11
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED Year Ended
MAY 31, 1996 November 30, 1995
(000) (000)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . $ 23,110 $ 42,840
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . 917 2,683
Change in Unrealized Appreciation (Depreciation) . . . . . . (32,186) 92,901
- ----------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations . . . . . . . . . . . . . . (8,159) 138,424
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . (23,110) (42,840)
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . (5,071) -
- ----------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . . (28,181) (42,840)
- ----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (1)
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,866 192,402
Issued in Lieu of Cash Distributions . . . . . . . . . . . . . 21,052 31,309
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (78,382) (154,905)
- ----------------------------------------------------------------------------------------------------------
Net Increase from Capital Share Transactions . . . . . . 55,536 68,806
- ----------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . . . . . . . . 19,196 164,390
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . . . . . . . 859,317 694,927
- ----------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . . . . . . . . . . . . . $878,513 $ 859,317
==========================================================================================================
(1)Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . 10,427 18,283
Issued in Lieu of Cash Distributions . . . . . . . . . . . 1,941 2,958
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . (7,274) (14,879)
- ----------------------------------------------------------------------------------------------------------
5,094 6,362
- ----------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended November 30,
SIX MONTHS ENDED ----------------------------------------------
For A Share Outstanding Throughout Each Period May 31, 1996 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . $11.01 $ 9.70 $10.97 $10.45 $10.04 $ 9.66
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . .286 .581 .588 .594 .631 .639
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . . . . . . (.375) 1.310 (1.258) .665 .410 .380
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . . (.089) 1.891 (.670) 1.259 1.041 1.019
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . . . . (.286) (.581) (.588) (.594) (.631) (.639)
Distributions from Realized Capital Gains . . . . . . . (.065) -- (.012) (.145) -- --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . . (.351) (.581) (.600) (.739) (.631) (.639)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . $10.57 $11.01 $ 9.70 $10.97 $10.45 $10.04
=========================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . -0.85% +19.90% -6.37% +12.42% +10.63% +10.87%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . . . . $879 $859 $695 $807 $574 $408
Ratio of Total Expenses to Average Net Assets . . . . . . . .21%* .22% .22% .19% .23%+ .27%+
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . . . . . 5.27%* 5.51% 5.60% 5.47% 6.11% 6.48%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 3%* 10% 20% 10% 28% 19%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
+Insurance expense represents .01% and .01%.
*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 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, 1996, the Fund had contributed capital of $92,000 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
C. The Fund's custodian bank has agreed to reduce its fees when the Fund
maintains cash on deposit in the non-interest bearing custody account. For the
six months ended May 31, 1996, custodian fee offset arrangements reduced the
Fund's expenses by $10,000.
D. During the six months ended May 31, 1996, the Fund made purchases of
$57,930,000 and sales of $11,876,000 of investment securities other than
temporary cash investments.
E. At May 31, 1996, unrealized appreciation of investment securities for
financial reporting and Federal income tax purposes aggregated $26,932,000 of
which $32,005,000 related to appreciated securities and $5,073,000 related to
depreciated securities.
At May 31, 1996, the Fund had a long position in U.S. Treasury Bond futures
contracts expiring in September 1996 with an aggregate settlement value and net
unrealized depreciation of $32,582,000 and $504,000, respectively. The market
value of securities deposited as initial margin for open futures contracts was
$5,653,000.
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 Selected Value Portfolio
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 Horizon Fund
Global Equity Portfolio
Global Asset Allocation Portfolio
Capital Opportunity Portfolio
Aggressive Growth Portfolio
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]
Vanguard Financial Center Valley Forge, Pennsylvania 19482
New Account Information: Shareholder Account Services:
1 (800) 662-7447 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.
Q762-5/96
VANGUARD
NEW YORK
INSURED
TAX-FREE FUND
SEMI-ANNUAL REPORT
MAY 31, 1996
