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VANGUARD
NEW YORK INSURED
TAX-FREE FUND
Fund Profile
July 29, 1997
[LOGO]
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1 OBJECTIVE
Vanguard New York Insured Tax-Free Fund seeks to provide current income that is
exempt from federal and New York personal income taxes. The Fund, which is
available to New York residents only, may not meet this objective.
2 INVESTMENT STRATEGY
The Fund invests primarily in long-term, high-quality* municipal bonds with an
average maturity of 15 to 25 years. These bonds are issued by state and local
government agencies in New York. The Fund may also invest up to 20% of its
assets in futures and options contracts.
At least 80% of the Fund's municipal bonds are insured for scheduled payments of
interest and principal by a private (that is, nongovernment) insurance company.
This insurance feature does not mean that the value of the bonds or the value of
the Fund's shares are guaranteed.
3 RISKS
The Fund's total return will fluctuate, so an investor could lose money over
short or even extended periods. More specifically, investors in the Fund are
exposed to:
- - A HIGH degree of INTEREST RATE RISK (the possibility that bond prices will
fall as interest rates rise--and vice versa). For instance, a 2% increase in
interest rates would cause a 20-year bond to drop approximately 20% in value,
while a 2% decrease in rates would cause the same bond to rise about 22% in
value.
- - A LOW degree of INCOME RISK (the possibility that income from bonds will fall
when interest rates decline).
- - A LOW degree of CREDIT RISK (the possibility that a bond's issuer will fail
to repay interest and principal) because of the high quality of the Fund's
securities.
4 APPROPRIATENESS
This Fund may be suitable for New York residents who . . .
- - Are seeking tax-exempt income.
- - Want to balance their stock holdings with a tax-exempt
income investment.
- - Plan to invest for at least five years.
*Average rating of Aaa (as of June 30, 1997) by Moody's Investors Service, Inc.
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The Fund is not suitable for investors who . . .
- - Cannot tolerate fluctuating share prices.
- - Are in a low tax bracket.
5 FEES AND EXPENSES
Vanguard New York Insured Tax-Free Fund--like all
Vanguard funds--is offered on a pure no-load basis (that is, the Fund has no
12b-1 fees or charges to buy or sell shares).
The Fund's operating expenses are deducted from its total assets before daily
share prices and income distributions are calculated. The Fund's expense ratio
for fiscal year 1996 was 0.20% of assets.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------
<S> <C>
Investment Advisory Fees................... 0.01%
Distribution Costs......................... 0.02
Other Expenses............................. 0.17
-----
TOTAL OPERATING EXPENSES .................. 0.20%
=====
</TABLE>
The following example illustrates the expenses that you would incur on a $1,000
investment over various periods, assuming (1) a 5% annual rate of return and (2)
redemption at the end of each period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------
<S> <C> <C> <C>
$2 $6 $11 $26
</TABLE>
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be higher or lower than those
shown.
6 PAST PERFORMANCE
PERFORMANCE
ANNUAL RETURNS [%] 1987-1996
<TABLE>
<CAPTION>
VANGUARD LIPPER NY
NEW YORK INSURED
INSURED MUNICIPAL DEBT
TAX-FREE FUND FUNDS AVERAGE**
------------- ---------------
<S> <C> <C>
1987 -3.4 -2.0
1988 11.7 10.6
1989 10.4 9.2
1990 6.2 5.3
1991 12.8 12.6
1992 9.8 9.0
1993 13.1 12.3
1994 -5.6 -6.3
1995 17.7 17.1
1996 4.1 2.9
</TABLE>
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Performance Summary
(Periods ended June 30, 1997)
<TABLE>
<CAPTION>
Average Annual Total Return
----------------------------------
NY Insured Lipper NY Insured
Tax-Free Fund Municipal Debt**
------------- ----------------
<S> <C> <C>
1 Year 8.0% 7.0%
5 Years 7.0% 6.2%
10 Years 8.2% 7.5%
</TABLE>
Note: In evaluating past performance, it is important to consider that returns
from bonds were close to their highest levels in history during the past ten
years. Past performance is not indicative of future performance.
Performance figures include the reinvestment of all dividends and any capital
gains distributions. All returns are net of expenses. The performance data
quoted 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.
Annualized tax-free current yield for the
30-day period ended June 30, 1997:
4.99%
For the latest yield, call Vanguard at
1-800-662-7447
The annualized current yield is calculated using the standardized yield
formula adopted for mutual funds by the U.S. Securities and Exchange
Commission.
**Lipper NY Insured Municipal Debt Funds Average is an industry benchmark of
average New York insured municipal debt funds with similar investment
objectives and policies, as measured by Lipper Analytical Services, Inc.
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7 INVESTMENT ADVISER
The Fund is managed by Vanguard Fixed Income Group, which manages total assets
of more than $88 billion. Reid Smith, a Principal of Vanguard, serves as
portfolio manager. He has managed the Fund since June 1996.
8 PURCHASES
You may purchase shares by mail, wire, or exchange from another Vanguard fund.
The minimum initial investment is $3,000 ($1,000 for IRAs and custodial accounts
for minors).
9 REDEMPTIONS
You may redeem shares by writing a check ($250 minimum), sending a letter to, or
calling Vanguard. The Fund's share price is expected to fluctuate and, at
redemption, may be higher or lower than at the time of initial purchase,
resulting in a taxable gain or loss.
10 DISTRIBUTIONS
Dividends are declared each business day and are paid on the first business day
of each month. Capital gains distributions, if any, are made annually. Dividend
and capital gains distributions can be automatically reinvested or received in
cash. Dividend distributions are exempt from federal and New York income taxes;
capital gains distributions, whether reinvested in additional shares or received
in cash, are taxable for federal income tax purposes.
11 OTHER SERVICES
- - Free checkwriting.
- - Vanguard Fund Express(R)--electronic transfers between your bank account and
the Fund.
- - Vanguard Tele-Account(R)--around-the-clock access to Vanguard fund
information, account balances, and some transactions by calling
1-800-662-6273 (ON-BOARD).
- - Investor Information--toll-free access to Vanguard Associates by calling
1-800-662-7447 (SHIP).
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[THE VANGUARD GROUP LOGO]
Post Office Box 2600
Valley Forge, PA 19482
TOLL-FREE INVESTOR
INFORMATION
1-800-662-7447
World Wide Web
http://www.vanguard.com
E-mail
[email protected]
This Fund Profile contains key information about the Fund. If you would like
more information before you invest, please consult the Fund's accompanying
prospectus. For details about the Fund's holdings or recent investment
strategies, please review the Fund's most recent annual or semiannual report.
The prospectus and reports can be obtained at no cost by calling Vanguard.
(c) 1997 Vanguard Marketing Corporation, Distributor
FP - 0797-12A
