<PAGE> 1
VANGUARD NEW YORK
TAX-EXEMPT FUNDS
VANGUARD NEW YORK TAX-EXEMPT
MONEY MARKET FUND
VANGUARD NEW YORK INSURED LONG-TERM
TAX-EXEMPT FUND
[PHOTO]
SEMIANNUAL
REPORT
MAY 31, 1999
[THE VANGUARD GROUP LOGO]
<PAGE> 2
AT VANGUARD, WE BELIEVE THAT TRADITION MATTERS
Our 9,000 crew members embrace the traditional values on which our success is
built, including integrity, hard work, thrift, teamwork, and fair dealing on
behalf of our clients.
Our report cover pays homage to three anniversaries, each of great significance
to The Vanguard Group:
- - The 200th anniversary of the Battle of the Nile, which commenced on August 1,
1798. HMS Vanguard, the victorious British flagship at the Nile, is our
namesake. And its motto-"Leading the way"--serves as a guiding principle for
our company.
- - The 100th birthday, on July 23, 1998, of Walter L. Morgan, founder of
Wellington Fund, the oldest member of what became The Vanguard Group. Mr.
Morgan was friend and mentor to Vanguard founder John C. Bogle, and helped to
shape the standards and business principles that Mr. Bogle laid down for
Vanguard at its beginning nearly 25 years ago: a stress on balanced,
diversified investments; insistence on fair dealing and candor with clients;
and a focus on long-term investing. To our great regret, Mr. Morgan died on
September 2, 1998.
- - The 70th anniversary, on December 28, 1998, of the incorporation of Vanguard
Wellington Fund. It is the nation's oldest balanced mutual fund, and one of
only a handful of funds created in the 1920s that are still in operation.
Although Vanguard constantly tackles new challenges, adopts new technology, and
develops new services, we treasure the traditions and values that set us apart
in a crowded, competitive industry. And we salute our shareholders, whose
support and trust we strive to earn each and every day.
[PHOTO]
CONTENTS
A MESSAGE TO
OUR SHAREHOLDERS
1
THE MARKETS IN
PERSPECTIVE
4
REPORT FROM
THE ADVISER
6
FUND PROFILES
8
PERFORMANCE SUMMARIES
11
FINANCIAL STATEMENTS
12
FOR AN UPDATE ON OUR YEAR 2000 PREPAREDNESS, SEE PAGE 27.
All comparative mutual fund data
are from Lipper or Morningstar,
unless otherwise noted.
<PAGE> 3
DEAR SHAREHOLDER,
[PHOTO] [PHOTO]
John J. Brennan John C. Bogle
Chairman & CEO Senior Chairman
During the first half of the Vanguard New York Tax-Exempt Funds' 1999 fiscal
year, municipal bond prices dipped in the face of rising interest rates. These
lower prices offset most of the interest income earned by tax-exempt securities
during the six months ended May 31, 1999, and resulted in relatively modest
total returns on municipal bonds for the period.
In this environment, our Insured Long-Term Tax-Exempt Fund earned a
six-month total return (capital change plus reinvested dividends) of +0.6%, and
our Tax-Exempt Money Market Fund earned +1.4%. The adjacent table presents the
half-year returns for both funds, along with those of their average peers. As
you can see, the returns of our funds outpaced those of similar mutual funds.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
TOTAL RETURNS
SIX MONTHS ENDED
MAY 31, 1999
- ------------------------------------------------------------------------
<S> <C>
VANGUARD NEW YORK TAX-EXEMPT
MONEY MARKET FUND +1.4%
(SEC 7-Day Annualized Yield: 3.03%)
Average New York Tax-Exempt
Money Market Fund +1.2
- ------------------------------------------------------------------------
VANGUARD NEW YORK INSURED LONG-TERM
TAX-EXEMPT FUND +0.6%
Average New York Tax-Exempt Bond Fund +0.2
- ------------------------------------------------------------------------
</TABLE>
The total return of the Insured Long-Term Tax-Exempt Fund is based on a
decrease in net asset value from $11.30 per share on November 30, 1998, to
$11.01 per share on May 31, 1999, and is adjusted for dividends totaling $0.273
per share paid from net investment income and a distribution of $0.091 per share
paid from net realized capital gains. The Tax-Exempt Money Market Fund's net
asset value remained at $1.00 per share, as is expected but not guaranteed. On
May 31, the Insured Long-Term Fund's yield stood at 4.52%, and the Money Market
Fund's yield was 3.03%.
For New York residents, income earned by our funds is exempt from federal
and New York State income taxes, but may be subject to local taxes and the
Alternative Minimum Tax.
THE PERIOD IN REVIEW
The U.S. economy steamed ahead during the half-year as consumers continued
spending at a breakneck pace and the manufacturing sector showed signs of
recovering from last fall's woes. Economic growth expanded at an annual rate of
4.3% during the first three months of 1999, while both unemployment and
inflation remained low. The Wilshire 5000 Equity Index, which tracks the entire
U.S. stock market, gained +13.2% for the six months.
While the strong growth pace was regarded enthusiastically by the stock
market, it was hardly welcome news in the bond market, where investors feared
that higher inflation would result from an overheated economy. These concerns
drove interest rates higher and bond prices lower. The yield of the benchmark
30-year U.S. Treasury bond climbed from its starting point of 5.06% on November
30, 1998, to 5.83% on May 31--a significant increase of 77 basis points. At the
shorter end of the bond spectrum, the yield of 3-month Treasury bills rose by 15
basis points to close the period at 4.63%.
1
<PAGE> 4
Though yields of municipal bonds also rose, the climb was not as steep as
for Treasuries. Yields on high-grade long-term municipal bonds ended the
half-year at 5.16%, up from 4.89% when the period began. Yields on top-grade
(MIG-1) 3-month notes rose on balance to 3.15% from 2.95% six months earlier.
Municipal bonds continue to offer excellent value relative to U.S.
Treasuries, although they are not quite as attractive as they were six months
ago. On May 31, the yield of a high-grade, long-term municipal bond was equal to
about 89% of the yield of the 30-year U.S. Treasury, whose interest is subject
to federal income tax. This proportion has historically been about 84%. Early in
the period, however, it was about 97%, largely because Treasury yields had been
driven lower by heavy buying from investors who fled riskier securities.
PERFORMANCE OVERVIEW
Our Tax-Exempt Money Market Fund's six-month return of +1.4% topped the +1.2%
return of the average New York tax-exempt money market fund. Our margin over our
average peer can be explained by our much lower expenses.
The +0.6% total return achieved by the Insured Long-Term Tax-Exempt Fund
consisted of a +2.4% income return and a price decline of -1.8%, which reflected
the rise in interest rates. The fund's performance was slightly better than the
+0.2% return of the average New York municipal bond fund but slightly behind the
+0.8% return of the Lehman Municipal Bond Index. This national index, which
exists outside the "real world" of operating expenses and transaction costs, is
a tough standard for all state tax-exempt funds.
Of course, interest rate fluctuations--up and down--are to be expected.
In our letter to you six months ago, we explained that declining interest rates
gave a boost to bond prices, resulting in an excellent fiscal 1998 total return
of +7.7% for the Insured Long-Term Fund. Over time, however, the effects of rate
variations tend to be offsetting, leaving the rate of interest income as the
chief source of long-term bond returns.
A six-month period is too short to provide a complete picture of a bond
fund's return. This is because only half of the year's interest income is
accounted for, while the price changes engendered by shifts in interest rates
are fully reflected. Consequently, investors should consider a full year's
interest income as part of a semiannual review. During the twelve months ended
May 31, 1999, our Insured Long-Term Fund earned a total return of +4.5%,
consisting of an income return of +5.0% and a negative capital return of -0.5%.
Our low costs play a critical role in our success. Our funds have
annualized expense ratios (expenses as a percentage of average net assets) of
about 0.20%, compared with 1.16% charged by the average long-term New York
tax-exempt fund and 0.61% for the average New York tax-exempt money market fund.
Costs matter because they are deducted from the income earned by the fund.
Therefore, lower operating expenses mean that a higher percentage of the gross
interest income is passed along to shareholders.
Also instrumental in our long-term success is the skillful management of
Vanguard Fixed Income Group, which selects the securities for our funds. Our
Insured Long-Term Fund invests predominantly in bonds that carry private
insurance guaranteeing the payment of principal and interest in the event that a
bond issuer defaults on its debt obligations. Though these securities offer
slightly lower gross yields than noninsured bonds, our low costs historically
have made up the difference--and then some. This cost advantage has allowed our
fund to provide net returns that are fully competitive with those of
uninsured--and thus, lower-quality--municipal bond portfolios.
2
<PAGE> 5
IN SUMMARY
The swift rise in interest rates over the past several months is not an
aberration but rather a normal, if unpleasant, part of the cyclicality of the
financial markets. The variable nature of both bond and stock markets is the
reason we continuously counsel shareholders to hold balanced portfolios suitable
to their goals, time horizon for investing, and tolerance for risk. Building
such a program and then sticking with it through good times and bad is a
prudent, and ultimately rewarding, method of confronting the ever-present
volatility of the financial markets.
We look forward to reporting to you on the full 1999 fiscal year six
months hence.
/s/ JOHN C. BOGLE /s/ JOHN J. BRENNAN
John C. Bogle John J. Brennan
Senior Chairman Chairman and
Chief Executive Officer
June 14, 1999
3
<PAGE> 6
THE MARKETS IN PERSPECTIVE
SIX MONTHS ENDED MAY 31, 1999
[PHOTO]
Sentiment shifted on the world's financial markets during the six months ended
May 31, 1999. The period began amid lingering anxiety over the state of the
world economy. Japan was in recession, economic growth was only sluggish in
Europe, and many developing nations were crisis-ridden. The United States was
just about the sole bright spot.
However, as the period progressed and reports showed rapid growth in U.S.
business activity, there was an evident reduction in anxiety. Midway through the
period, leadership in the U.S. stock market shifted away from a relatively
narrow group of large growth stocks regarded as relatively recession-proof and
toward cyclical stocks that had been depressed by fears of recession and by
falling demand from overseas markets. As confidence in global economic growth
grew, interest rates rose and bond prices declined in the United States due to
expectations that the Federal Reserve Board would raise interest rates to ward
off a potential surge in inflation. Internationally, however, a growing
conviction that the worst was over led to solid gains for stock markets in Japan
and several emerging markets.
U.S. STOCK MARKETS
Stock prices climbed during the half-year, reflecting the healthy domestic
economy and investors' confidence in future growth of corporate profits. The
overall market, as measured by the Wilshire 5000 Index, rose 13.2% during the
period, while the S&P 500 Index, a barometer for large-capitalization stocks,
gained 12.6%.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
TOTAL RETURNS
PERIODS ENDED MAY 31, 1999
----------------------------------
6 MONTHS 1 YEAR 5 YEARS*
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
STOCKS
S&P 500 Index 12.6% 21.0% 25.9%
Russell 2000 Index 11.0 -2.7 13.6
Wilshire 5000 Index 13.2 17.7 23.8
MSCI EAFE Index 4.2 4.7 8.0
- ----------------------------------------------------------------------------
BONDS
Lehman Aggregate Bond Index -0.8% 4.4% 7.8%
Lehman 10 Year Municipal Bond Index 0.4 4.6 7.2
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 2.2 4.8 5.2
- ----------------------------------------------------------------------------
OTHER
Consumer Price Index 1.3% 2.1% 2.4%
- ----------------------------------------------------------------------------
</TABLE>
*Annualized.
During the early part of the semiannual period, stock investors favored
large-cap growth stocks--a group perceived as less subject to harm during an
economic downturn. In the United States, the Federal Reserve had already cut
short-term rates by a total of 0.75 percentage point in the autumn. Foreign
central banks continued cutting rates into the new year to combat sluggish
economic conditions in Europe, Asia, and Latin America. Late in the semiannual
period, U.S. investors were rewarded for their earlier optimism with a series of
surprisingly strong gains in corporate earnings--a record percentage of
companies in the S&P 500 reported earnings that beat analysts' estimates.
4
<PAGE> 7
Throughout the period, U.S. consumers provided support for the global
economy: Spending by consumers continued to set records, and American households
on average spent nearly every dollar of income they earned. The upbeat mood
stemmed from a bright employment picture (unemployment hovered near 30-year
lows) and rising incomes.
Improved prospects for global economic growth propelled several formerly
lackluster areas of the stock market, particularly commodity-related companies
and "cyclical" companies such as machinery, chemical, and paper manufacturers.
Higher oil prices, boosted by firmer demand and by agreement among oil-producing
nations to limit production, revived the "other energy" and integrated-oils
sectors, which gained about 36% and 16%, respectively. Technology stocks, up 26%
for the six months, were the market's leaders, but most of the sector's gains
came during the first three months of the period. Consumer-staples companies,
beset by tough price competition and hurt by the stronger U.S. dollar in Europe,
were the worst-performing group in the half-year, down about 7%.
U.S. BOND MARKETS
For bond investors, the powerful economic expansion evident during the half-year
was too much of a good thing. Although the inflation rate did not get out of
hand--consumer prices rose 1.3% during the six months and were up 2.1% for the
twelve months ended May 31--investors were worried that low unemployment (4.2%
of the labor force in May) would trigger an acceleration in wages and push up
prices.
Yields on U.S. Treasury bonds, which had fallen during the summer and
early fall of 1998 as investors flocked to what they regarded as a haven from
instability in other markets, rose by three-quarters of a percentage point or
more. The yield of the 30-year Treasury bond rose 77 basis points, to 5.83% on
May 31 from 5.06% on November 30, 1998. The yield of the 10-year Treasury rose
91 basis points, to 5.62% from 4.71%. Short-term rates didn't rise as far:
Yields on 3-month T-bills were up on balance by only 15 basis points, to 4.63%
on May 31. Bond prices, which move in the opposite direction from interest
rates, fell. The Lehman Aggregate Bond Index, a benchmark for investment-grade
taxable bonds, declined 0.8% on a total-return basis, as bond prices declined an
average of 3.8%, outweighing the 3.0% in interest income for the period.
Municipal bonds suffered only modest price declines and outperformed
Treasury securities during the period--a switch from the previous six months,
when Treasuries were the strongest segment of the bond market.
INTERNATIONAL STOCK MARKETS
Most overseas stock markets generated positive returns during the six months,
despite lingering economic weakness in Asia and sluggish growth in most of
Europe's developed economies. However, the strong rise in the value of the U.S.
dollar against European currencies negated most of the advances in that region
for U.S. investors. Emerging markets generally rebounded strongly, having
suffered steep losses in 1997 and 1998.
Overall, the developed markets outside the United States gained 4.2% in
U.S.-dollar terms, as measured by the Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE) Index. The biggest increases were in the
Pacific region and in emerging markets, where investors saw hopeful signs of
economic recovery. The MSCI Pacific Index rose 14.2% in U.S.-dollar terms,
despite a continuing recession in Japan. The MSCI Select Emerging Markets Free
Index climbed 19.0%. European stocks were up a scant 0.3% in dollar terms, as
gains of about 8% in local currencies were diminished by the dollar's rise
against the euro--a common currency adopted by 11 nations--and other regional
currencies.
5
<PAGE> 8
[PHOTO]
REPORT FROM THE ADVISER
During the fiscal half-year ended May 31, 1999, interest rates rose as investors
became worried that the strong growth of the U.S. economy might lead to an
acceleration in the inflation rate. As the period progressed, the U.S. economy's
growth rate slowed, but remained strong.
On the inflation front, investors' fears seemed misplaced until May, when
the Consumer Price Index came in above expectations. Soon after, the Federal
Reserve Board announced that it had adopted a bias toward a tighter monetary
policy, meaning that it was more likely to raise interest rates in the coming
months than to lower them. A decision to raise short-term interest rates would,
if taken, be aimed at slowing growth and heading off increases in inflation. The
Fed's announcement marked the first time the agency had told the public
immediately about its adoption of a policy bias, rather than releasing the
information at a later date. As we reached the midpoint of our fiscal year,
interest rates were hovering around their highest levels of the period, and
market participants were waiting to see whether inflation and growth statistics
would prompt the Fed to act on its tightening bias.
Municipal bonds outperformed U.S. Treasury bonds with equivalent
maturities during the half-year. The benchmark 30-year U.S. Treasury bond's
yield increased by 77 basis points, from 5.06% on November 30, 1998, to 5.83% on
May 31, 1999. The yield of a 30-year AAA-rated general obligation municipal bond
increased 27 basis points, from 4.89% to 5.16%, over the same period. The
municipal bond market's strong relative performance can be explained by two
factors. First, municipal bond yields at the start of the 1999 fiscal year were
very attractive compared with Treasury yields. The global forces that had
compelled investors to seek the safety of Treasuries during summer 1998 did not
carry over to the municipal market, which consequently underperformed Treasuries
last fiscal year. This set the stage for municipals' superior performance in the
ensuing six months. Second, there was a 24% decline in the issuance of municipal
bonds during the first five months of calendar year 1999 compared with the same
period a year earlier.
THE INSURED LONG-TERM TAX-EXEMPT FUND
The supply of newly issued municipals varied widely by state. In New York, new
bond issuance declined by a remarkable 55% compared with 1998. The supply of new
bonds declined for two reasons, both related to higher interest rates. First, as
rates rose, many issuers were no longer able to refinance older, higher-coupon
bonds by issuing new bonds at lower rates. Second, higher interest rates made
borrowing less attractive to bond issuers.
All in all, municipal bonds had a strong quarter compared with other
types of bonds. Even so, high-quality, long-term municipals continue to be
attractive investments, with yields as of May 31, 1999, equivalent to a
relatively high 89% of the yield on long-term U.S. Treasury bonds. Given that
interest
6
<PAGE> 9
on municipal bonds is generally exempt from federal income tax, while interest
on Treasuries and corporate bonds is not, municipals provide a better after-tax
yield than any taxable bond of similar credit quality.
Going forward, new municipal bond issuance is expected to remain low
through year-end. Also, as the outlook for growth and inflation becomes clearer,
the Fed should give more direction to the market. At the least, this should
reduce uncertainty and bring some comfort to the bond markets.
The Vanguard New York Tax-Exempt Funds' low operating costs and high
credit quality should stand our shareholders in good stead during this year's
turbulent bond markets.
THE TAX-EXEMPT MONEY MARKET FUND
The economy's strength and the resulting threat of inflation were foremost in
investors' minds throughout the first half of the fiscal year. Consequently, the
yield on 1-year U.S. Treasury bills increased 47 basis points to finish the
half-year at 4.97%. Municipal securities with similar maturities experienced a
19-basis-point increase in yields, to 3.18% as of May 31, 1999. We believe the
strength of the U.S. economy is tempered by continued economic uncertainty
abroad, so our fund remains in a neutral position in terms of its average
maturity. In addition to fundamental economic forces, cash flows had a
significant impact on short-term municipal securities.
During the second quarter of the period, the annual onset of redemptions
by shareholders paying income tax liabilities contributed to the increase in
yields on short-term tax-exempt securities. In all, holders of state-specific
money market portfolios redeemed a net total of some $2.6 billion, or 4.4% of
assets, during the tax season, according to IBC Financial Data. As mutual funds
sold securities to meet these redemptions, the temporary oversupply of
short-term securities, coupled with a general rise in short-term interest rates
during late April and May, caused rates to rise significantly. Your management
used this opportunity to position the fund to benefit from the recent economic
trends, to further diversify its holdings, and to enhance its overall credit
quality.
Ian A. MacKinnon, Managing Director
Pamela Wisehaupt Tynan, Principal
Reid O. Smith, Principal
John M. Carbone, Principal
Danine A. Mueller, Principal
Christopher M. Ryon, Principal
Kathryn Allen, Principal
Vanguard Fixed Income Group
June 11, 1999
INVESTMENT PHILOSOPHY
The adviser believes that each fund, while operating within stated maturity and
stringent quality targets, can achieve a high level of current income that is
exempt from federal and New York income taxes by investing in insured and
high-quality uninsured securities issued by New York state, county, and
municipal governments.
7
<PAGE> 10
FUND PROFILE
NEW YORK TAX-EXEMPT MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of May 31,
1999. Key elements of this Profile are defined on page 9.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
<S> <C>
Yield 3.0%
Average Maturity 43 days
Average Quality MIG-1
Expense Ratio 0.17%*
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
MIG-1/SP-1+ 69.5%
A-1/P-1 30.5
AAA/AA 0.0
A 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
8
<PAGE> 11
AVERAGE COUPON. The average interest rate paid on the securities held by a fund.
It is expressed as a percentage of face value.
AVERAGE DURATION. An estimate of how much a bond fund's share price will
fluctuate in response to a change in interest rates. To see how the price could
shift, multiply the fund's duration by the change in rates. If interest rates
rise by one percentage point, the share price of a fund with an average duration
of five years would decline by about 5%. If rates decrease by a percentage
point, the fund's share price would rise by 5%.
AVERAGE MATURITY. The average length of time until bonds held by a fund reach
maturity (or are called) and are repaid. In general, the longer the average
maturity, the more a fund's share price will fluctuate in response to changes in
market interest rates.
AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the
ratings assigned to a fund's securities holdings by credit-rating agencies. The
agencies make their judgment after appraising an issuer's ability to meet its
obligations. Quality is graded on a scale, with Aaa or AAA indicating the most
creditworthy bond issuers and A-1 or MIG-1 indicating the most creditworthy
issuers of money market securities.
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of the overall market (or appropriate market
index). The market (or index) is assigned a beta of 1.00, so a fund with a beta
of 1.20 would have seen its share price rise or fall by 12% when the overall
market rose or fell by 10%.
CASH RESERVES. The percentage of a fund's net assets invested in "cash
equivalents"--highly liquid, short-term, interest-bearing securities. This
figure does not include cash invested in futures contracts to simulate bond
investment.
DISTRIBUTION BY CREDIT QUALITY. This breakdown of a fund's securities by credit
rating can help in gauging the risk that returns could be affected by defaults
or other credit problems.
DISTRIBUTION BY MATURITY. An indicator of interest-rate risk. In general, the
higher the concentration of longer-maturity issues, the more a fund's share
price will fluctuate in response to changes in interest rates.
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
INVESTMENT FOCUS. This grid indicates the focus of a fund in terms of two
attributes: average maturity (short, medium, or long) and average credit quality
(high, medium, or low).
NUMBER OF ISSUES. An indicator of diversification. The more separate issues a
fund holds, the less susceptible it is to a price decline stemming from the
problems of a particular issue.
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the overall market (or its benchmark index). If a fund's total
return were precisely synchronized with the overall market's return, its
R-squared would be 1.00. If a fund's returns bore no relationship to the
market's returns, its R-squared would be 0.
YIELD. A snapshot of a fund's interest income. The yield, expressed as a
percentage of the fund's net asset value, is based on income earned over the
past 30 days (7 days for money market funds) and is annualized, or projected
forward for the coming year.
YIELD TO MATURITY. The rate of return an investor would receive if the
securities held by a fund were held to their maturity dates.
9
<PAGE> 12
FUND PROFILE
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of May 31,
1999, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 9.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- ----------------------------------------------------------
NEW YORK INSURED LEHMAN
LONG-TERM INDEX*
- ----------------------------------------------------------
<S> <C> <C>
Number of Issues 252 49,905
Yield 4.5% --
Yield to Maturity 4.7% --
Average Coupon 5.3% 5.5%
Average Maturity 11.3 years 13.2 years
Average Quality AAA AA+
Average Duration 7.4 years 7.2 years
Expense Ratio 0.21%** --
Cash Reserves 1.5% --
</TABLE>
*Lehman Municipal Bond Index.
**Annualized.
INVESTMENT FOCUS
- ------------------------------
[GRAPHIC]
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- ----------------------------------------------------------
NEW YORK INSURED LEHMAN
LONG-TERM INDEX*
- ----------------------------------------------------------
<S> <C> <C>
R-Squared 0.98 1.00
Beta 1.11 1.00
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
AAA 99.8%
AA 0.2
A 0.0
BBB 0.0
BB 0.0
B 0.0
- -------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -------------------------------------------------------
<S> <C>
Under 1 Year 9.6%
1-5 Years 16.1
5-10 Years 24.0
10-20 Years 27.6
20-30 Years 22.0
Over 30 Years 0.7
- -------------------------------------------------------
Total 100.0%
</TABLE>
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PERFORMANCE SUMMARIES
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the funds. Note, too, that income
returns can fluctuate widely, as can the share price of the New York Insured
Long-Term Tax-Exempt Fund. An investment in a money market fund is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
fund.
<TABLE>
<CAPTION>
NEW YORK TAX-EXEMPT MONEY MARKET FUND
TOTAL INVESTMENT RETURNS: SEPTEMBER 3, 1997-MAY 31, 1999
- ----------------------------------------------------------
NEW YORK TAX-EXEMPT AVERAGE
MONEY MARKET FUND FUND*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
1997 0.0% 0.8% 0.8% 0.8%
1998 0.0 3.3 3.3 2.9
1999** 0.0 1.4 1.4 1.2
- ----------------------------------------------------------
</TABLE>
*Average New York Tax-Exempt Money Market Fund.
**Six months ended May 31, 1999.
See Financial Highlights table on page 23 for dividend information since the
fund's inception.
SEC 7-Day Annualized Yield (5/31/1999): 3.03%
<TABLE>
<CAPTION>
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND
TOTAL INVESTMENT RETURNS: APRIL 7, 1986-MAY 31, 1999
- --------------------------------------------------------------------------------
NEW YORK INSURED
LONG-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1986 0.8% 4.3% 5.1% 5.0%
1987 -12.0 6.2 -5.8 -0.2
1988 4.4 7.2 11.6 10.6
1989 5.1 7.2 12.3 11.0
1990 -0.7 6.7 6.0 7.7
1991 3.9 7.0 10.9 10.3
1992 4.1 6.5 10.6 10.0
1993 6.4 6.0 12.4 11.1
1994 -11.5 5.1 -6.4 -5.2
1995 13.5 6.4 19.9 18.9
1996 0.4 5.4 5.8 5.9
1997 0.9 5.5 6.4 7.2
1998 2.4 5.3 7.7 7.8
1999** -1.8 2.4 0.6 0.8
- --------------------------------------------------------------------------------
</TABLE>
*Lehman Municipal Bond Index.
**Six months ended May 31, 1999.
See Financial Highlights table on page 24 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED MARCH 31, 1999*
- -----------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION --------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New York Tax-Exempt
Money Market Fund 9/3/1997 3.13% -- 0.00%** 3.22%** 3.22%**
New York Insured Long-Term
Tax-Exempt Fund 4/7/1986 6.22% 7.43% 2.18% 6.02% 8.20%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
**Since inception.
11
<PAGE> 14
[PHOTO]
FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's municipal bond holdings,
including each security's market value on the last day of the reporting period
and information on credit enhancements (insurance or letters of credit). Other
assets are added to, and liabilities are subtracted from, the value of Total
Municipal Bonds to calculate the fund's Net Assets. Finally, Net Assets are
divided by the outstanding shares of the fund to arrive at its share price, or
Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets, you will find a table
displaying the composition of the fund's net assets on both a dollar and
per-share basis. Undistributed Net Investment Income is usually zero because the
fund distributes its net income to shareholders as a dividend each day. Any
realized gains must be distributed annually, so the bulk of net assets consists
of Paid in Capital (money invested by shareholders). The balance shown for
Accumulated Net Realized Gains usually approximates the amount available to
distribute to shareholders as taxable capital gains as of the statement date,
but may differ because certain investments or transactions may be treated
differently for financial statement and tax purposes. Any Accumulated Net
Realized Losses, and any cumulative excess of distributions over net realized
gains, will appear as negative balances. Unrealized Appreciation (Depreciation)
is the difference between the value of the fund's investments and their cost,
and reflects the gains (losses) that would be realized if the fund were to sell
all of its investments at their statement-date values.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.9%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Babylon NY IDA Resource Recovery Bonds
(Ogden Martin Project) VRDO 3.00% 6/2/1999 (4) $20,000 $ 20,000
Connetquot Central School Dist. of Islip Suffolk County NY TAN 3.75% 6/29/1999 12,300 12,304
East Hampton NY Union Free School Dist. TAN 3.90% 6/29/1999 6,000 6,002
Erie County NY RAN 4.00% 10/13/1999 4,000 4,014
Erie County NY Water Auth. Rev. VRDO 3.00% 6/2/1999 (2) 11,400 11,400
Half Hollow Hills NY Central School Dist. of
Huntington & Babylon-Suffolk County TAN 3.90% 6/25/1999 2,500 2,500
Jericho NY Union Free School Dist. TAN 3.90% 6/29/1999 2,000 2,000
Long Island NY Power Auth. Electric System Rev. CP 3.10% 6/18/1999 LOC 7,000 7,000
Long Island NY Power Auth. Electric System Rev. VRDO 3.05% 6/2/1999 LOC 12,800 12,800
Long Island NY Power Auth. Electric System Rev. VRDO 3.25% 6/2/1999 LOC 6,100 6,100
Long Island NY Power Auth. Electric System Rev. VRDO 3.30% 6/2/1999 (1) 5,700 5,700
Muni. Assistance Corp. for New York City NY GO 5.00% 7/1/1999 12,000 12,016
New York City NY Cultural Resources (Museum of Modern Art) 5.00% 1/1/2000 (2) 2,000 2,023
New York City NY Cultural Resources VRDO
(Carnegie Hall Project) 3.20% 6/2/1999 LOC 15,325 15,325
New York City NY Cultural Resources VRDO
(Solomon R. Guggenheim Foundation) 3.30% 6/2/1999 LOC 12,925 12,925
New York City NY GO 7.25% 3/15/2000 (Prere.) 3,155 3,299
New York City NY GO VRDO 3.15% 6/2/1999 LOC 12,000 12,000
New York City NY GO VRDO 3.20% 6/2/1999 LOC 13,200 13,200
New York City NY GO VRDO 3.25% 6/2/1999 LOC 3,100 3,100
New York City NY GO VRDO 3.30% 6/2/1999 LOC 2,800 2,800
New York City NY GO VRDO 3.30% 6/2/1999 (1) 15,027 15,027
New York City NY Health & Hosp. Corp. Rev. VRDO (Health System) 3.05% 6/2/1999 LOC 22,985 22,985
New York City NY IDA Dev. VRDO (National Audubon Society) 3.30% 6/2/1999 LOC 13,600 13,600
New York City NY Muni. Water Finance Auth. CP 3.25% 8/19/1999 LOC 8,400 8,400
New York City NY Muni. Water Finance Auth. CP 3.30% 6/9/1999 LOC 5,000 5,000
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.30% 6/2/1999 (3) $23,185 $ 23,185
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.50% 6/2/1999 (3) 300 300
New York City NY TOB VRDO 3.34% 6/3/1999 (3) + 2,275 2,275
New York City NY Transitional Finance Auth. Future Tax Rev. PUT 2.90% 11/1/1999 LOC 7,500 7,500
New York City NY Transitional Finance Auth. Future Tax Rev. VRDO 3.25% 6/2/1999 LOC 11,900 11,900
New York City NY Transitional Finance Auth. Future Tax Rev. VRDO 3.30% 6/2/1999 1,500 1,500
New York Metro. Transp. Auth. Fac. CP 3.10% 6/11/1999 LOC 6,000 6,000
New York Metro. Transp. Auth. Fac. CP 3.15% 7/7/1999 LOC 8,700 8,700
New York Metro. Transp. Auth. Fac. CP 3.15% 8/9/1999 LOC 5,000 5,000
New York Metro. Transp. Auth. Fac. CP 3.15% 8/12/1999 LOC 12,000 12,000
New York Metro. Transp. Auth. Fac. TOB VRDO 3.32% 6/3/1999 (4) + 20,115 20,115
New York State Dormitory Auth. (State Univ.) 6.50% 5/15/2000 (Prere.) 5,000 5,155
New York State Dormitory Auth. CP (Sloan-Kettering Cancer Center) 3.35% 6/10/1999 LOC 5,000 5,000
New York State Dormitory Auth. CP (Sloan-Kettering Cancer Center) 3.50% 6/8/1999 LOC 15,000 15,000
New York State Dormitory Auth. CP (Sloan Kettering Cancer Center) 3.60% 6/9/1999 LOC 8,000 8,000
New York State Dormitory Auth. CP (Sloan Kettering Cancer Center) 3.60% 6/10/1999 LOC 4,400 4,400
New York State Dormitory Auth. Rev. TOB VRDO
(City Univ. of New York) 3.32% 6/3/1999 (1) + 4,000 4,000
New York State Dormitory Auth. Rev. VRDO (Cornell Univ.) 3.35% 6/2/1999 LOC 12,200 12,200
New York State Dormitory Auth. Rev. VRDO
(Foundling Charities Corp.) 3.15% 6/2/1999 LOC 13,120 13,120
New York State Dormitory Auth. Rev. VRDO (Rockefeller Univ.) 3.05% 6/2/1999 29,100 29,100
New York State Energy Research & Dev. Auth. PCR VRDO
(New York State Electric & Gas) 3.15% 6/2/1999 LOC 10,745 10,745
New York State Environmental Fac. Corp. (Clean Drinking Water) 3.50% 10/15/1999 2,225 2,231
New York State Environmental Fac. Corp. Sewage & Solid Waste
Disposal Rev. CP (General Electric Co. Project) 3.35% 6/7/1999 5,000 5,000
New York State Environmental Fac. Corp. Sewage & Solid Waste
Disposal Rev. CP (General Electric Co. Project) 3.35% 6/10/1999 5,000 5,000
New York State Environmental Fac. Corp.
Solid Waste Disposal Rev. CP (General Electric Co. Project) 3.65% 6/10/1999 9,800 9,800
New York State Environmental Fac. Corp. TOB VRDO
(New York City Muni. Water Financial Auth. Project) 3.32% 6/3/1999 (1) + 5,000 5,000
New York State Environmental Quality GO PUT 3.00% 12/8/1999 LOC 8,000 8,000
New York State Local Govt. Assistance Corp. TOB VRDO 3.32% 6/3/1999 (2) + 2,000 2,000
New York State Local Govt. Assistance Corp. VRDO 3.00% 6/2/1999 LOC 46,300 46,300
New York State Power Auth. CP 3.15% 6/10/1999 LOC 4,000 4,000
New York State Power Auth. CP 3.35% 6/3/1999 LOC 10,000 10,000
New York State Power Auth. CP 3.35% 6/16/1999 LOC 5,000 5,000
Niagara Falls NY Bridge Comm. TOB VRDO 3.32% 6/3/1999 (3) + 2,680 2,680
Onondaga County NY BAN 3.50% 5/20/2000 7,587 7,613
Oyster Bay New York BAN 3.50% 4/28/2000 14,712 14,760
Port Auth. of New York & New Jersey CP 3.10% 6/14/1999 LOC 3,000 3,000
Port Auth. of New York & New Jersey CP 4.00% 10/1/1999 5,000 5,018
Port Washington Union Free School Dist. Nassau County NY TAN 3.90% 6/24/1999 5,000 5,001
Putnam County NY GO TAN 3.30% 8/31/1999 7,000 7,004
Roslyn NY Union Free School Dist. TAN 3.90% 6/29/1999 3,000 3,001
St. Lawrence County NY IDA VRDO (Pollution Control) 3.35% 6/2/1999 2,140 2,140
Suffolk County NY TAN 3.50% 8/12/1999 LOC 5,000 5,005
Syosset NY Central School Dist. TAN 3.90% 6/28/1999 13,500 13,503
Triborough Bridge & Tunnel Auth. NY 7.375% 1/1/2000 (Prere.) 8,280 8,607
Westchester County NY GO 4.625% 11/15/1999 9,475 9,552
Westchester County NY Health Care Corp. CP 2.95% 7/23/1999 LOC 10,000 10,000
OUTSIDE NEW YORK:
Puerto Rico Govt. Dev. Bank VRDO 3.00% 6/2/1999 (1) LOC 2,700 2,700
Puerto Rico Highway & Transp. Auth. VRDO 3.00% 6/2/1999 LOC 1,000 1,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $639,630) 639,630
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
NEW YORK TAX-EXEMPT MONEY MARKET FUND (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS AND LIABILITIES (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B $ 13,216
Liabilities (6,407)
---------
6,809
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------------------------
Applicable to 646,434,539 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $646,439
==========================================================================================================================
NET ASSET VALUE PER SHARE $1.00
==========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
+Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 1999,
the aggregate value of these securities was $36,070,000, representing 5.6%
of net assets.
For key to abbreviations and other references, see page 20.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AT MAY 31, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $646,434 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains 5 --
Unrealized Appreciation -- --
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS $646,439 $1.00
==========================================================================================================================
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.5%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ISSUER INSURED (84.4%)
Albany County NY GO 5.00% 10/1/2005 (3) $ 2,000 $ 2,090
Albany County NY GO 5.00% 10/1/2012 (3) 4,400 4,494
Albany County NY GO 7.00% 1/15/2005 (2) 1,250 1,304
Albany NY Muni. Water Finance Auth. 7.50% 12/1/2017 (1) 2,080 2,129
Battery Park City NY Auth. 5.50% 11/1/2026 (2) 11,750 12,142
Broome County NY Public Safety Fac. Project 5.25% 4/1/2015 (1) 3,000 3,013
Buffalo & Erie County NY Toll Bridge Auth. 6.00% 1/1/2015 (1) 4,500 4,822
Buffalo NY GO 5.125% 2/1/2012 (2) 1,870 1,907
Buffalo NY GO 5.125% 2/1/2013 (2) 2,945 2,988
Buffalo NY General Improvement 6.75% 3/1/2001 (1)(Prere.) 3,380 3,620
Buffalo NY Muni. Water Finance Auth. 5.75% 7/1/2003 (4)(Prere.) 8,500 9,217
Buffalo NY Sewer Auth. System Rev. 5.00% 7/1/2012 (3) 5,675 5,689
Buffalo NY Sewer Auth. System Rev. 5.25% 7/1/2008 (3) 3,500 3,597
Duchess County NY Resource Recovery Solid Waste System 7.50% 1/1/2000 (3)(Prere.) 2,000 2,089
Erie County NY GO 6.10% 1/15/2006 (3) 1,865 2,052
Erie County NY GO 6.125% 1/15/2007 (3) 1,660 1,839
Erie County NY Water Auth. Rev. 0.00% 12/1/2005 (2) 3,000 2,266
Erie County NY Water Auth. Rev. 0.00% 12/1/2006 (2) 6,915 4,966
Erie County NY Water Auth. Rev. 6.00% 12/1/2008 (2) 1,600 1,749
Hempstead NY GO 5.50% 8/1/2011 (3) 2,450 2,571
Hempstead NY GO 5.625% 2/1/2012 (3) 1,490 1,579
Hempstead NY GO 5.625% 2/1/2013 (3) 1,170 1,238
Huntington NY GO 5.50% 4/1/2013 (3) 3,400 3,548
Huntington NY GO 6.70% 2/1/2011 (3) 310 364
Long Island NY Power Auth. Electric System Rev. 5.00% 12/1/2018 (4) 6,000 5,825
Long Island NY Power Auth. Electric System Rev. 5.125% 12/1/2022 (4) 66,675 65,292
Long Island NY Power Auth. Electric System Rev. VRDO 3.30% 6/2/1999 (1) LOC 700 700
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.00% 7/1/2014 (2) 7,770 7,745
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.00% 7/1/2015 (2) 5,500 5,458
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.00% 7/1/2017 (2) 5,000 4,906
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.125% 7/1/2013 (3) 3,000 3,037
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.30% 7/1/2022 (3) 17,475 17,583
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.50% 7/1/2017 (2) 11,585 11,937
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.625% 7/1/2015 (4) 5,000 5,203
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.70% 7/1/2017 (1) 7,000 7,380
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 6.25% 7/1/2002 (1)(Prere.) 3,000 3,264
Metro. Transit Auth. of New York (Dedicated Petroleum Tax) 5.25% 4/1/2021 (1) 7,900 7,900
Metro. Transit Auth. of New York (Dedicated Petroleum Tax) 5.25% 4/1/2026 (1) 40,560 40,384
Metro. Transit Auth. of New York (Dedicated Petroleum Tax) 6.00% 4/1/2020 (1) 25,000 27,865
Metro. Transit Auth. of New York (Transp. Fac. Rev.) 5.25% 7/1/2017 (3) 6,300 6,339
Metro. Transit Auth. of New York (Transp. Fac. Rev.) 5.70% 7/1/2017 (1) 5,500 5,798
Metro. Transit Auth. of New York (Transp. Fac. Rev.) 6.00% 7/1/2011 (2) 2,000 2,050
Metro. Transit Auth. of New York (Transp. Fac. Rev.) 7.00% 7/1/2009 (2) 19,050 22,454
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2010 (1) 1,000 1,069
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2011 (1) 1,000 1,065
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2012 (1) 1,000 1,061
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2013 (1) 1,425 1,510
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2014 (1) 1,000 1,055
Montgomery, Ostego, Scholoharie Counties NY Solid Waste 5.25% 1/1/2014 (1) 1,640 1,651
Mount Sinai NY Union Free School Dist. 6.20% 2/15/2014 (2) 1,050 1,199
Nassau County NY Combined Sewer Dist. GO 4.80% 10/1/2005 (3) 1,760 1,815
Nassau County NY Combined Sewer Dist. GO 5.00% 10/1/2007 (3) 1,715 1,781
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2009 (3) 3,210 3,309
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2010 (3) 2,875 2,941
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2011 (3) 1,770 1,802
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2012 (3) 1,760 1,787
Nassau County NY Combined Sewer Dist. GO 5.35% 7/1/2008 (1) 4,730 5,016
Nassau County NY Combined Sewer Dist. GO 5.35% 1/15/2009 (1) 3,505 3,705
Nassau County NY Combined Sewer Dist. GO 5.35% 7/1/2009 (1) 4,635 4,909
Nassau County NY Combined Sewer Dist. GO 5.875% 8/1/2012 (3) 825 887
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/2007 (1) $ 840 $ 905
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/2008 (1) 835 900
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/2009 (1) 825 890
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/2010 (1) 820 882
Nassau County NY GO 5.125% 3/1/2013 (2) 5,860 5,938
Nassau County NY GO 5.125% 3/1/2014 (2) 5,900 5,946
Nassau County NY GO 5.50% 7/15/2007 (1) 1,270 1,336
Nassau County NY GO 5.50% 7/15/2008 (1) 1,300 1,370
Nassau County NY GO 5.50% 7/15/2009 (1) 1,325 1,393
Nassau County NY GO 5.50% 7/15/2010 (1) 1,345 1,410
Nassau County NY GO 5.50% 7/15/2011 (1) 1,370 1,433
Nassau County NY GO 5.70% 8/1/2011 (3) 2,000 2,168
Nassau County NY GO 5.75% 2/1/2011 (1) 1,100 1,174
New York City NY Cultural Resources
(American Museum of Natural History) 5.60% 4/1/2018 (1) 2,635 2,740
New York City NY Cultural Resources
(American Museum of Natural History) 5.65% 4/1/2022 (1) 5,000 5,232
New York City NY Cultural Resources
(American Museum of Natural History) 5.70% 4/1/2016 (1) 12,730 13,440
New York City NY Cultural Resources (Museum of Modern Art) 5.40% 1/1/2006 (2) 720 757
New York City NY Cultural Resources (Museum of Modern Art) 5.40% 1/1/2006 (2)(ETM) 85 90
New York City NY Cultural Resources (Museum of Modern Art) 5.40% 1/1/2012 (2) 3,400 3,563
New York City NY Cultural Resources (Museum of Modern Art) 5.50% 1/1/2007 (2) 805 846
New York City NY Cultural Resources (Museum of Modern Art) 5.50% 1/1/2007 (2)(ETM) 35 37
New York City NY Cultural Resources (Museum of Modern Art) 5.50% 1/1/2016 (2) 2,000 2,069
New York City NY GO 5.75% 8/1/2002 (3)(Prere.) 1,325 1,417
New York City NY GO 5.75% 8/1/2009 (3) 2,925 3,102
New York City NY GO 6.625% 8/1/2002 (1)(Prere.) 520 570
New York City NY GO 6.625% 8/1/2013 (1) 155 168
New York City NY GO 6.95% 8/15/2004 (1)(Prere.) 1,460 1,667
New York City NY GO 7.10% 2/1/2009 (1) 600 655
New York City NY GO VRDO 3.30% 6/2/1999 (1) LOC 7,650 7,650
New York City NY Health & Hosp. Corp. 5.625% 2/15/2013 (2) 23,400 24,604
New York City NY IDA Civic Fac. Rev. (USTA Project) 6.375% 11/15/2014 (4) 2,000 2,211
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.00% 6/15/2021 (3) 5,395 5,213
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.125% 6/15/2022 (2) 11,000 10,760
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.35% 6/15/2013 (1) 5,300 5,437
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/2012 (2) 20,000 22,025
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/2013 (2) 20,000 22,070
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.30% 6/2/1999 (3) 35,840 35,840
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.50% 6/2/1999 (3) 10,100 10,100
New York City NY Transit Finance Auth. Rev. 5.00% 11/1/2008 (3) 8,000 8,292
New York State Dormitory Auth. (Barnard College) 5.25% 7/1/2026 (2) 4,370 4,351
New York State Dormitory Auth. (City Univ. of New York) 6.25% 7/1/2019 (1) 4,485 4,930
New York State Dormitory Auth. (City Univ. of New York) 7.00% 7/1/2000 (3)(Prere.) 6,140 6,501
New York State Dormitory Auth. (City Univ. of New York) 7.00% 7/1/2014 (3) 14,560 15,350
New York State Dormitory Auth. (Colgate Univ.) 6.50% 7/1/2001 (1)(Prere.) 1,350 1,451
New York State Dormitory Auth. (Columbia Presbyterian Hosp.) 5.50% 2/15/2007 (2) 3,500 3,709
New York State Dormitory Auth. (FHA Hosp. & Nursing Home) 5.00% 2/15/2025 (2) 3,410 3,262
New York State Dormitory Auth. (FHA Hosp. & Presbyterian) 5.50% 2/1/2010 (2) 6,330 6,707
New York State Dormitory Auth. (Fordham Univ.) 5.00% 7/1/2028 (1) 11,125 10,632
New York State Dormitory Auth. (Fordham Univ.) 5.50% 7/1/2023 (3) 10,150 10,389
New York State Dormitory Auth. (Fordham Univ.) 5.75% 7/1/2015 (3) 1,500 1,576
New York State Dormitory Auth. (Fordham Univ.) 7.20% 7/1/2015 (2) 710 750
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Dormitory Auth. (Hamilton College) 5.00% 7/1/2028 (1) $17,880 $ 17,088
New York State Dormitory Auth. (Iona College) 5.25% 7/1/2008 (1) 1,000 1,050
New York State Dormitory Auth. (Iona College) 5.35% 7/1/2009 (1) 1,000 1,052
New York State Dormitory Auth. (Jewish Medical Center) 5.00% 7/1/2018 (1) 10,000 9,712
New York State Dormitory Auth. (Mental Health Services) 5.00% 2/15/2023 (1) 5,000 4,812
New York State Dormitory Auth. (Montefiore Medical Center) 5.25% 2/1/2015 (2) 42,750 43,102
New York State Dormitory Auth. (Mt. Sinai School of Medicine) 6.75% 7/1/2015 (1) 7,245 7,779
New York State Dormitory Auth. (New School for Social Research) 5.625% 7/1/2016 (1) 2,260 2,373
New York State Dormitory Auth. (New School Univ.) 5.00% 7/1/2029 (1) 10,955 10,463
New York State Dormitory Auth. (New York Medical College) 5.00% 7/1/2021 (1) 21,980 21,210
New York State Dormitory Auth. (New York Univ.) 6.00% 7/1/2015 (3) 32,165 34,058
New York State Dormitory Auth. (North Shore Univ. Hosp.) 5.20% 11/1/2017 (1) 30,170 29,992
New York State Dormitory Auth. (Pace) 5.625% 7/1/2017 (1) 11,185 11,697
New York State Dormitory Auth. (Rensselaer Polytech. Institute) 6.50% 7/1/2006 (3) 3,000 3,212
New York State Dormitory Auth. (Rochester Institute of Technology) 5.25% 7/1/2022 (1) 3,000 3,000
New York State Dormitory Auth. (Rochester Institute of Technology) 5.30% 7/1/2017 (1) 6,275 6,345
New York State Dormitory Auth. (School Districts Program) 6.00% 7/1/2015 (3) 2,675 2,752
New York State Dormitory Auth. (Siena College) 6.00% 7/1/2011 (1) 1,500 1,607
New York State Dormitory Auth. (Sloan Kettering Cancer Center) 5.75% 7/1/2019 (1) 9,700 10,448
New York State Dormitory Auth. (Sloan Kettering Cancer Center) 5.75% 7/1/2020 (1) 7,500 8,125
New York State Dormitory Auth. (St. John's Univ.) 5.25% 7/1/2020 (1) 15,170 15,207
New York State Dormitory Auth. (St. John's Univ.) 5.25% 7/1/2025 (1) 10,950 10,903
New York State Dormitory Auth. (St. John's Univ.) 5.60% 7/1/2016 (1) 7,000 7,303
New York State Dormitory Auth. (St. John's Univ.) 5.70% 7/1/2026 (1) 9,230 9,705
New York State Dormitory Auth. (St. Joseph's Hosp.) 5.25% 7/1/2018 (1) 6,700 6,668
New York State Dormitory Auth. (St. Vincent Hosp. Medical Center) 5.80% 8/1/2025 (2) 4,250 4,421
New York State Dormitory Auth. (State Univ.) 5.75% 7/1/2008 (2) 3,335 3,641
New York State Dormitory Auth. (State Univ.) 6.00% 5/15/2000 (2)(Prere.) 1,825 1,872
New York State Dormitory Auth. (State Univ.) 6.00% 7/1/2009 (2) 1,590 1,767
New York State Dormitory Auth. (Union College) 5.75% 7/1/2010 (3) 1,800 1,915
New York State Dormitory Auth. (Univ. of Rochester) 5.00% 7/1/2017 (1) 2,000 1,965
New York State Dormitory Auth. (Univ. of Rochester) 5.00% 7/1/2023 (1) 6,820 6,561
New York State Dormitory Auth. (Upstate Community Colleges) 5.00% 7/1/2014 (2) 2,670 2,664
New York State Dormitory Auth. (Upstate Community Colleges) 5.00% 7/1/2015 (2) 3,000 2,980
New York State Dormitory Auth. (Upstate Community Colleges) 5.00% 7/1/2016 (2) 1,250 1,234
New York State Dormitory Auth. (Upstate Community Colleges) 5.25% 7/1/2012 (2) 6,170 6,376
New York State Dormitory Auth. (Vassar Brothers Hosp.) 5.25% 7/1/2017 (4) 8,025 8,006
New York State Dormitory Auth. (Vassar Brothers Hosp.) 5.375% 7/1/2025 (4) 7,000 7,081
New York State Energy Research & Dev. Auth. PCR
(Niagara Mohawk) 5.15% 11/1/2025 (2) 5,000 4,894
New York State Energy Research & Dev. Auth. PCR
(Niagara Mohawk) 6.625% 10/1/2013 (3) 10,000 10,742
New York State Environmental Fac. Water PCR 5.50% 6/15/2009 (1) 10,000 10,667
New York State Local Govt. Assistance Corp. Rev. 4.875% 4/1/2020 (1) 9,800 9,313
New York State Local Govt. Assistance Corp. Rev. 5.00% 4/1/2014 (3) 13,370 13,341
New York State Local Govt. Assistance Corp. Rev. 5.00% 4/1/2021 (1) 24,825 24,022
New York State Local Govt. Assistance Corp. Rev. 5.25% 4/1/2015 (2) 8,000 8,116
New York State Local Govt. Assistance Corp. Rev. 5.375% 4/1/2019 (1) 3,000 3,047
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 5.50% 8/15/2021 (3) + 8,000 8,084
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.00% 8/15/2015 (1) 15,000 16,283
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.375% 2/15/2002 (3)(Prere.) 6,000 6,493
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.375% 8/15/2010 (3) 100 108
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 7.40% 8/15/2007 (1) 460 471
New York State Medical Care Fac. Finance Agency
(Sisters of Charity-Buffalo) 6.625% 11/1/2018 (2) 5,500 5,912
New York State Thruway Auth. Rev. 5.00% 1/1/2020 (1) 5,055 4,897
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.25% 4/1/2015 (2) $10,000 $ 10,137
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.30% 4/1/2010 (1) 3,775 3,919
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.50% 4/1/2015 (1) 12,480 12,872
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.80% 4/1/2010 (2) 14,215 15,519
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.80% 4/1/2011 (2) 8,635 9,427
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 6.00% 4/1/2004 (3)(Prere.) 5,000 5,502
New York State Thruway Auth. Rev. (Service Contract) 5.75% 4/1/2004 (1)(Prere.) 4,000 4,358
New York State Urban Dev. Corp. 5.375% 1/1/2012 (1) 21,375 22,023
New York State Urban Dev. Corp. 5.50% 4/1/2016 (1) 13,350 13,735
New York State Urban Dev. Corp. Correctional Fac. Rev. 5.00% 1/1/2017 (2) 6,670 6,540
Niagara Falls NY Bridge Comm. 5.25% 10/1/2015 (3) 5,000 5,189
Niagara Falls NY Bridge Comm. 6.25% 10/1/2020 (3) 8,685 9,974
Niagara Falls NY Bridge Comm. 6.25% 10/1/2021 (3) 9,230 10,621
North Hempstead NY GO 6.30% 4/1/2008 (3) 2,055 2,322
North Hempstead NY GO 6.40% 4/1/2010 (3) 1,500 1,720
North Hempstead NY GO 6.40% 4/1/2011 (3) 2,075 2,384
North Hempstead NY Solid Waste Auth. 5.00% 2/1/2012 (1) 3,370 3,391
Smithtown NY GO 5.25% 4/1/2006 (1) 1,000 1,049
Smithtown NY GO 5.45% 4/1/2008 (1) 400 419
Suffolk County NY GO 5.00% 4/1/2006 (1) 2,255 2,319
Suffolk County NY GO 5.00% 7/15/2006 (3) 1,000 1,030
Suffolk County NY GO 5.10% 7/15/2007 (3) 1,280 1,318
Suffolk County NY GO 5.20% 7/15/2008 (3) 1,100 1,133
Suffolk County NY Water Auth. 5.25% 6/1/2010 (2)(ETM) 3,790 4,025
Suffolk County NY Water Auth. 5.25% 6/1/2011 (2)(ETM) 2,380 2,515
Suffolk County NY Water Auth. 5.25% 6/1/2012 (2)(ETM) 4,290 4,518
Suffolk County NY Water Auth. 5.25% 6/1/2017 (2) 1,695 1,749
Suffolk County NY Water Auth. 5.75% 6/1/2002 (2)(Prere.) 1,100 1,179
Suffolk County NY Water Auth. 5.75% 6/1/2013 (2) 7,340 7,784
Triborough Bridge & Tunnel Auth. Rev. NY 5.00% 1/1/2016 (4) 9,000 8,860
Triborough Bridge & Tunnel Auth. Rev. NY 5.125% 1/1/2015 (1) 6,500 6,526
Triborough Bridge & Tunnel Auth. Rev. NY 5.50% 1/1/2017 (2) 3,745 3,781
Yonkers NY School Dist. GO 5.60% 8/1/2009 (3) 535 572
Yonkers NY School Dist. GO 5.70% 8/1/2010 (3) 545 583
OUTSIDE NEW YORK:
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2015 (4) 5,000 5,122
Puerto Rico GO 5.00% 7/1/2017 (1) 11,475 11,394
Puerto Rico GO 5.00% 7/1/2018 (1) 2,650 2,624
Puerto Rico Infrastrusture Financing Auth. Rev. 5.00% 7/1/2021 (2) 16,935 16,558
-----------
1,336,090
-----------
SECONDARY MARKET INSURED (7.6%)
Muni. Assistance Corp. for New York City NY 6.00% 7/1/2008 (3) 22,350 23,803
New York City NY GO 5.25% 8/1/2021 (3) 7,855 7,844
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.00% 6/15/2017 (3) 4,000 3,921
New York State Dormitory Auth. (City Univ. of New York) 5.75% 7/1/2009 (3) 3,750 4,085
New York State Dormitory Auth. (City Univ. of New York) 5.75% 7/1/2011 (3) 5,950 6,481
New York State Dormitory Auth. (Cornell Univ.) 7.25% 7/1/2012 (1) 1,175 1,243
New York State Dormitory Auth. (State Univ.) 6.00% 5/15/2017 (2) 3,775 3,857
New York State Dormitory Auth. (Univ. System) 5.25% 7/1/2017 (1) 14,900 14,935
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 5.375% 2/15/2014 (1) 5,000 5,120
New York State Medical Care Fac. Finance Agency 5.25% 2/15/2019 (3) 16,230 16,130
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.00% 4/1/2016 (4) 7,400 7,300
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.00% 4/1/2018 (4) 5,450 5,326
Port Auth. of New York & New Jersey 6.50% 1/15/2026 (1) 1,500 1,579
Triborough Bridge & Tunnel Auth. NY 6.00% 1/1/2012 (1) 7,805 8,674
Triborough Bridge & Tunnel Auth. NY 6.75% 1/1/2009 (2) 3,000 3,475
Triborough Bridge & Tunnel Auth. NY 6.875% 1/1/2015 (3) 7,000 7,447
-----------
121,220
-----------
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NONINSURED (6.5%)
Long Island NY Power Auth. Electric System Rev. VRDO 3.25% 6/2/1999 LOC $ 1,100 $ 1,100
Long Island NY Power Auth. Electric System Rev. VRDO 3.30% 6/2/1999 LOC 300 300
New York City NY Cultural Resources VRDO
(Solomon R. Guggenheim Foundation) 3.30% 6/2/1999 LOC 300 300
New York City NY GO VRDO 3.20% 6/2/1999 LOC 500 500
New York City NY GO VRDO 3.25% 6/2/1999 LOC 4,500 4,500
New York City NY GO VRDO 3.30% 6/2/1999 LOC 11,900 11,900
New York City NY GO VRDO 3.40% 6/2/1999 LOC 200 200
New York City NY Transitional Finance Auth. Future Tax Rev. VRDO 3.25% 6/2/1999 10,800 10,800
New York City NY Transitional Finance Auth. Future Tax Rev. VRDO 3.30% 6/2/1999 1,300 1,300
New York State Dormitory Auth. (Columbia Univ.) 5.75% 7/1/2015 11,965 12,493
New York State Dormitory Auth. (Rockefeller Univ.) 5.00% 7/1/2015 1,100 1,099
New York State Dormitory Auth. (Rockefeller Univ.) 5.00% 7/1/2018 4,555 4,500
New York State Dormitory Auth. Rev. VRDO (Cornell Univ.) 3.35% 6/2/1999 2,900 2,900
New York State Energy Research & Dev. Auth. PCR VRDO
(New York State Electric & Gas) 3.15% 6/2/1999 LOC 7,520 7,520
New York State Environmental Fac. Water PCR 5.55% 7/15/2009 LOC 2,000 2,138
New York State Local Govt. Assistance Corp. VRDO 3.00% 6/2/1999 LOC 21,015 21,015
Onondaga County NY Public Improvements 5.875% 2/15/2008 2,475 2,718
Port Auth. of New York & New Jersey CP 3.40% 6/7/1999 5,000 5,000
Westchester County NY GO 6.70% 11/1/2008 3,250 3,811
Westchester County NY GO 6.70% 11/1/2009 3,645 4,316
OUTSIDE NEW YORK:
Puerto Rico Highway & Transp. Auth. VRDO 3.00% 6/2/1999 LOC 4,500 4,500
-----------
102,910
-----------
- --------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $1,504,167) 1,560,220
- --------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 27,236
Liabilities (3,730)
-----------
23,506
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------------------------
Applicable to 143,784,785 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $1,583,726
==========================================================================================================================
NET ASSET VALUE PER SHARE $11.01
==========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
+Securities with a value of $6,164,000 have been segregated as initial margin
for open futures contracts.
For key to abbreviations and other references, see page 20.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AT MAY 31, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,524,356 $10.60
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains--Note E 2,343 .01
Unrealized Appreciation--Notes E and F
Investment Securities 56,053 .39
Futures Contracts 974 .01
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,583,726 $11.01
==========================================================================================================================
</TABLE>
19
<PAGE> 22
KEY TO ABBREVIATIONS
BAN--Bond Anticipation Note.
CP--Commercial Paper.
GO--General Obligation Bond.
IDA--Industrial Development Authority Bond.
PCR--Pollution Control Revenue Bond.
PUT--Put Option Obligation.
RAN--Revenue Anticipation Note.
TAN--Tax Anticipation Note.
TOB--Tender Option Bond.
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 Assurance Corporation).
(3) FGIC (Financial Guaranty Insurance Company).
(4) FSA (Financial Security Assurance).
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.
20
<PAGE> 23
STATEMENT OF OPERATIONS
This Statement shows interest earned by each fund during the reporting period,
and details the operating expenses charged to the fund. These expenses directly
reduce the amount of investment income available to pay to shareholders as
tax-exempt income dividends. This Statement also shows any Net Gain (Loss)
realized on the sale of investments, and the increase or decrease in the
Unrealized Appreciation (Depreciation) on investments during the period. If a
fund invested in futures contracts during the period, the results of these
investments are shown separately.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
NEW YORK
NEW YORK INSURED
TAX-EXEMPT LONG-TERM
MONEY MARKET TAX-EXEMPT
FUND FUND
---------------------------------
SIX MONTHS ENDED MAY 31, 1999
---------------------------------
(000) (000)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME
Interest $8,565 $ 38,101
---------------------------------
Total Income 8,565 38,101
---------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 31 87
Management and Administrative 357 1,328
Marketing and Distribution 67 152
Insurance Expense -- 1
Custodian Fees 3 7
Auditing Fees 4 4
Shareholders' Reports 3 15
Trustees' Fees and Expenses -- 1
---------------------------------
Total Expenses 465 1,595
Expenses Paid Indirectly--Note C (3) (16)
---------------------------------
Net Expenses 462 1,579
- -----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,103 36,522
- -----------------------------------------------------------------------------------------------------
REALIZED NET GAIN
Investment Securities Sold 8 494
Futures Contracts -- 1,836
- -----------------------------------------------------------------------------------------------------
REALIZED NET GAIN 8 2,330
- -----------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities -- (32,326)
Futures Contracts -- 2,542
- -----------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) -- (29,784)
- -----------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $8,111 $ 9,068
=====================================================================================================
</TABLE>
21
<PAGE> 24
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. Because the fund distributes its income
to shareholders each day, the amounts of Distributions--Net Investment Income
generally equal the net income earned as shown under the Operations section. The
amounts of Distributions--Realized Capital Gain may not match the capital gains
shown in the Operations section, because distributions are determined on a tax
basis and may be made in a period different from the one in which the gains were
realized on the financial statements. The Capital Share Transactions section
shows the amount shareholders invested in the fund, either by purchasing shares
or by reinvesting distributions, and the amounts redeemed. The corresponding
numbers of Shares Issued and Redeemed are shown at the end of the Statement.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NEW YORK TAX-EXEMPT NEW YORK INSURED LONG-TERM
MONEY MARKET FUND TAX-EXEMPT FUND
------------------------------- -------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MAY 31, 1999 NOV. 30, 1998 MAY 31, 1999 NOV. 30, 1998
(000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income $ 8,103 $ 10,509 $ 36,522 $ 63,995
Realized Net Gain (Loss) 8 (2) 2,330 13,605
Change in Unrealized Appreciation (Depreciation) -- -- (29,784) 16,031
------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 8,111 10,507 9,068 93,631
------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (8,103) (10,509) (36,522) (63,995)
Realized Capital Gain -- -- (11,388) (1,756)
------------------------------------------------------------------
Total Distributions (8,103) (10,509) (47,910) (65,751)
------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 471,466 641,396 313,896 412,179
Issued in Lieu of Cash Distributions 7,822 10,102 36,328 48,283
Redeemed (316,321) (315,991) (133,590) (215,824)
------------------------------------------------------------------
Net Increase from Capital Share Transactions 162,967 335,507 216,634 244,638
- -------------------------------------------------------------------------------------------------------------------------
Total Increase 162,975 335,505 177,792 272,518
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 483,464 147,959 1,405,934 1,133,416
------------------------------------------------------------------
End of Period $646,439 $483,464 $1,583,726 $1,405,934
=========================================================================================================================
(1)Shares Issued (Redeemed)
Issued 471,466 641,396 28,051 36,807
Issued in Lieu of Cash Distributions 7,822 10,102 3,251 4,309
Redeemed (316,321) (315,991) (11,943) (19,284)
------------------------------------------------------------------
Net Increase in Shares Outstanding 162,967 335,507 19,359 21,832
=========================================================================================================================
</TABLE>
22
<PAGE> 25
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis. It also presents the fund's Total Return and
shows net investment income and expenses as percentages of average net assets.
These data will help you assess: the variability of the fund's net income and
total returns from year to year; the relative contributions of net income and
capital gains to the fund's total return; how much it costs to operate the
fund; and the extent to which the fund tends to distribute capital gains.
The table also shows the Portfolio Turnover Rate, a measure of trading
activity. A turnover rate of 100% means that the average security is held in
the fund for one year. Money market funds are not required to report a
Portfolio Turnover Rate.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NEW YORK TAX-EXEMPT MONEY MARKET FUND
SIX MONTHS ENDED YEAR ENDED SEP. 3* TO
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD MAY 31, 1999 NOV. 30, 1998 NOV. 30, 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .014 .032 .008
Net Realized and Unrealized Gain (Loss) on Investments -- -- --
------------------------------------------
Total from Investment Operations .014 .032 .008
------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.014) (.032) (.008)
Distributions from Realized Capital Gains -- -- --
------------------------------------------
Total Distributions (.014) (.032) (.008)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN 1.45% 3.27% 0.84%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $646 $483 $148
Ratio of Total Expenses to Average Net Assets 0.17%** 0.19% 0.20%**
Ratio of Net Investment Income to Average Net Assets 2.89%** 3.19% 3.52%**
============================================================================================================================
</TABLE>
* Inception.
** Annualized.
23
<PAGE> 26
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND
YEAR ENDED NOVEMBER 30,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED ----------------------------------------------------------
THROUGHOUT EACH PERIOD MAY 31, 1999 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.30 $11.05 $10.99 $11.01 $ 9.70 $10.97
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .273 .564 .572 .569 .581 .588
Net Realized and Unrealized Gain (Loss)
on Investments (.199) .267 .101 .045 1.310 (1.258)
------------------------------------------------------------------------
Total from Investment Operations .074 .831 .673 .614 1.891 (.670)
------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.273) (.564) (.572) (.569) (.581) (.588)
Distributions from Realized Capital Gains (.091) (.017) (.041) (.065) -- (.012)
------------------------------------------------------------------------
Total Distributions (.364) (.581) (.613) (.634) (.581) (.600)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.01 $11.30 $11.05 $10.99 $11.01 $ 9.70
======================================================================================================================
TOTAL RETURN 0.65% 7.69% 6.36% 5.84% 19.90% -6.37%
======================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,584 $1,406 $1,133 $959 $859 $695
Ratio of Total Expenses to
Average Net Assets 0.21%* 0.21% 0.20% 0.20% 0.22% 0.22%
Ratio of Net Investment Income to
Average Net Assets 4.89%* 5.03% 5.26% 5.28% 5.51% 5.60%
Portfolio Turnover Rate 1%* 17% 6% 5% 10% 20%
======================================================================================================================
</TABLE>
* Annualized.
24
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS
Vanguard New York Tax-Exempt Funds comprise the New York Tax-Exempt Money Market
and New York Insured Long-Term Tax-Exempt Funds, each of which is registered
under the Investment Company Act of 1940 as an open-end investment company, or
mutual fund. Each fund invests in debt instruments 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 conform to generally accepted
accounting principles for mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: Tax-Exempt Money Market Fund: Investment securities
are valued at amortized cost, which approximates market value. Insured Long-Term
Tax-Exempt Fund: Bonds, and temporary cash investments acquired over 60 days to
maturity, are valued using the latest bid prices or using valuations based on a
matrix system (which considers such factors as security prices, yields,
maturities, and ratings), both as furnished by independent pricing services.
Other temporary cash investments are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued by methods deemed by the Board of Trustees to
represent fair value.
2. FEDERAL INCOME TAXES: Each 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 CONTRACTS: The Insured Long-Term Tax-Exempt Fund may use Municipal
Bond Index, U.S. Treasury Bond, and U.S. Treasury Note futures contracts, with
the objectives of enhancing returns, managing interest-rate risk, maintaining
liquidity, diversifying credit risk, and minimizing transaction costs. The fund
may purchase or sell futures contracts instead of bonds to take advantage of
pricing differentials between the futures contracts and the underlying 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 prices of futures contracts, and the possibility
of an illiquid market.
Futures contracts are valued based upon their quoted daily settlement prices.
The aggregate principal amounts of the contracts are not recorded in the
financial statements. Fluctuations in the value of the contracts are recorded in
the Statement of Net Assets as an asset (liability) and in the Statement of
Operations as unrealized appreciation (depreciation) until the contracts are
closed, when they are recorded as realized futures gains (losses).
4. DISTRIBUTIONS: Distributions from net investment income are declared daily
and paid on the first business day of the following month. Annual distributions
from realized capital gains, if any, are recorded on the ex-dividend date.
5. OTHER: Security transactions are accounted for on the date securities are
bought or sold. Costs used to determine realized gains (losses) on the sale of
investment securities are those of the specific securities sold. Premiums and
original issue discounts are amortized and accreted, respectively, to interest
income over the lives of the respective securities.
25
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (continued)
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 funds under methods approved by the Board of
Trustees. Each fund has committed to provide up to 0.40% of its net assets in
capital contributions to Vanguard. At May 31, 1999, the funds had contributed
capital to Vanguard (included in Other Assets) of:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
CAPITAL CONTRIBUTED PERCENTAGE PERCENTAGE
TO VANGUARD OF FUND OF VANGUARD'S
NEW YORK TAX-EXEMPT FUND (000) NET ASSETS CAPITALIZATION
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market $ 91 0.02% 0.13%
Insured Long-Term 245 0.02 0.35
-----------------------------------------------------------------------------------------
</TABLE>
The funds' Trustees and officers are also Directors and officers of Vanguard.
C. The funds' investment adviser may direct new issue purchases, subject to
obtaining the best price and execution, to underwriters who have agreed to
rebate or credit to the funds part of the underwriting fees generated. Such
rebates or credits are used solely to reduce the funds' management and
administrative expenses. The funds' custodian bank has also agreed to reduce
its fees when the funds maintain cash on deposit in their non-interest-bearing
custody accounts. For the six months ended May 31, 1999, these arrangements
reduced expenses by:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
EXPENSE REDUCTION
(000)
--------------------------------------
MANAGEMENT AND CUSTODIAN
NEW YORK Tax-Exempt Fund ADMINISTRATIVE FEES
---------------------------------------------------------------------------------
<S> <C> <C>
Money Market -- $3
Insured Long-Term $9 7
---------------------------------------------------------------------------------
</TABLE>
D. During the six months ended May 31, 1999, the Insured Long-Term Tax-Exempt
Fund purchased $154,675,000 of investment securities and sold $5,100,000 of
investment securities, other than temporary cash investments.
E. Capital gain distributions are determined on a tax basis and may differ from
realized gains for financial reporting purposes due to differences in the
timing of realization of gains. The Insured Long-Term Tax-Exempt Fund had
realized losses totaling $1,548,000 through November 30, 1998, which are
deferred for tax purposes and reduce the amount of unrealized appreciation on
investment securities for tax purposes (see Note F).
F. At May 31, 1999, net unrealized appreciation of Insured Long-Term Tax-Exempt
Fund investment securities for federal income tax purposes was $54,505,000,
consisting of unrealized gains of $62,210,000 on securities that had risen in
value since their purchase and $7,705,000 in unrealized losses on securities
that had fallen in value since their purchase.
At May 31, 1999, the aggregate settlement value of open futures contracts
expiring in June 1999 and the related unrealized appreciation were:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
(000)
---------------------------------
AGGREGATE
NEW YORK TAX-EXEMPT FUND/ NUMBER OF SETTLEMENT UNREALIZED
FUTURES CONTRACTS SHORT CONTRACTS VALUE APPRECIATION
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insured Long-Term/
U.S. Treasury Bond 223 $26,293 $974
----------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 29
NOTICE TO SHAREHOLDERS ABOUT Y2K
As is well known by now, the approaching calendar change to 2000 has posed a
challenge to many computer systems worldwide. Computers that are not modified
could interpret "00" as 1900 rather than 2000 and produce errors in
date-dependent calculations, including bond interest payments, stock trade
settlements, retirement benefits, and other financial transactions.
OUR APPROACH
Vanguard has taken this challenge seriously. We have had a Year 2000 Project
under way since 1996 to fulfill our responsibility to safeguard our business
relationships and the security of our investors' accounts.
Our internal systems are Year 2000-compliant. They have been renovated and
thoroughly tested and are ready for the date change. As for the external systems
that connect with ours, we have been working for many months with clients,
business partners, and providers of products and services to assess their
compliance. We have analyzed the external services we require and have developed
contingency plans--including provision for alternative providers where
appropriate.
On New Year's Day, our telephone centers will be staffed and ready for
shareholder calls. However, we expect the volume of inquiries over the New
Year's weekend to be high, and we encourage shareholders to check their accounts
via our website or automated telephone systems, which offer much greater service
capacity and efficiency. This will also help our live representatives to provide
a higher level of service to those with specific transaction or other
service-related needs.
WHAT YOU CAN DO
We assure you we will protect our shareholders' records, so account records will
not be lost. Nevertheless, keeping copies of current records is always
advisable. You should keep at least your third-quarter statement and any
confirmations you receive from us between October 1, 1999, and year-end.
If you are a registered user of Access Vanguard(TM) (www.vanguard.com), you
can retrieve this information through the secure "Your Accounts" section and
print copies for your files. If you are not registered for Access Vanguard and
wish to have this flexibility, you should register as soon as possible so that
you can receive your password and become familiar with this service before the
New Year's weekend. Likewise, you may need personal identification numbers to
use our automated telephone services: Vanguard Tele-Account(R) for individual
investors (1-800-662-6273) and The VOICE(TM) Network for participants in
employer-sponsored retirement plans (1-800-523-1188).
Our Year 2000 Project's primary goal from the start has been to prepare our
systems for business as usual on behalf of our shareholders into 2000 and
beyond. We remain confident we will meet that goal, and we look forward to
serving you in the years to come.
27
<PAGE> 30
THE VANGUARD FAMILY OF FUNDS
STOCK FUNDS
- ------------------------------------------------
500 Index Fund
Aggressive Growth Fund
Capital Opportunity Fund
Convertible Securities Fund
Emerging Markets Stock Index Fund
Energy Fund
Equity Income Fund
European Stock Index Fund
Explorer Fund
Extended Market Index Fund*
Global Equity Fund
Gold and Precious Metals Fund
Growth and Income Fund
Growth Index Fund*
Health Care Fund
Institutional Index Fund*
International Growth Fund
International Value Fund
Mid-Cap Index Fund*
Morgan Growth Fund
Pacific Stock Index Fund
PRIMECAP Fund
REIT Index Fund
Selected Value Fund
Small-Cap Growth Index Fund*
Small-Cap Index Fund*
Small-Cap Value Index Fund*
Tax-Managed Capital Appreciation Fund*
Tax-Managed Growth and Income Fund*
Tax-Managed Small-Cap Fund*
Total International Stock Index Fund
Total Stock Market Index Fund*
U.S. Growth Fund
Utilities Income Fund
Value Index Fund*
Windsor Fund
Windsor II Fund
BALANCED FUNDS
- ------------------------------------------------
Asset Allocation Fund
Balanced Index Fund
Global Asset Allocation Fund
LifeStrategy Conservative Growth Fund
LifeStrategy Growth Fund
LifeStrategy Income Fund
LifeStrategy Moderate Growth Fund
STAR Fund
Tax-Managed Balanced Fund
Wellesley Income Fund
Wellington Fund
BOND FUNDS
- ------------------------------------------------
Admiral Intermediate-Term Treasury Fund
Admiral Long-Term Treasury Fund
Admiral Short-Term Treasury Fund
GNMA Fund
High-Yield Corporate Fund
High-Yield Tax-Exempt Fund
Insured Long-Term Tax-Exempt Fund
Intermediate-Term Bond Index Fund
Intermediate-Term Corporate Fund
Intermediate-Term Tax-Exempt Fund
Intermediate-Term Treasury Fund
Limited-Term Tax-Exempt Fund
Long-Term Bond Index Fund
Long-Term Corporate Fund
Long-Term Tax-Exempt Fund
Long-Term Treasury Fund
Preferred Stock Fund
Short-Term Bond Index Fund
Short-Term Corporate Fund*
Short-Term Federal Fund
Short-Term Tax-Exempt Fund
Short-Term Treasury Fund
State Tax-Exempt Bond Funds
(California, Florida,
Massachusetts, New Jersey,
New York, Ohio, Pennsylvania)
Total Bond Market Index Fund*
MONEY MARKET FUNDS
- ------------------------------------------------
Admiral Treasury Money Market Fund
Federal Money Market Fund
Prime Money Market Fund*
State Tax-Exempt Money Market Funds
(California, New Jersey, New York,
Ohio, Pennsylvania)
Tax-Exempt Money Market Fund
Treasury Money Market Fund
VARIABLE ANNUITY PLAN
- ------------------------------------------------
Balanced Portfolio
Diversified Value Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Portfolio
High-Grade Bond Portfolio
High Yield Bond Portfolio
International Portfolio
Mid-Cap Index Portfolio
Money Market Portfolio
REIT Index Portfolio
Short-Term Corporate Portfolio
Small Company Growth Portfolio
* Offers Institutional Shares.
28
<PAGE> 31
TRUSTEES AND OFFICERS
JOHN C. BOGLE
Founder, Senior Chairman of the Board, and Director/Trustee of The Vanguard
Group, Inc., and each of the investment companies in The Vanguard Group.
JOHN J. BRENNAN
Chairman of the Board, Chief Executive Officer, and Director/Trustee of The
Vanguard Group, Inc., and each of the investment companies in The Vanguard
Group.
JOANN HEFFERNAN HEISEN
Vice President, Chief Information Officer, and a member of the Executive
Committee of Johnson & Johnson; Director of Johnson & Johnson-Merck Consumer
Pharmaceuticals Co., Women First HealthCare, Inc., Recording for the Blind and
Dyslexic, The Medical Center at Princeton, and Women's Research and Education
Institute.
BURTON G. MALKIEL
Chemical Bank Chairman's Professor of Economics, Princeton University; Director
of Prudential Insurance Co. of America, Banco Bilbao Gestinova, Baker Fentress &
Co., The Jeffrey Co., and Southern New England Telecommunications Co.
ALFRED M. RANKIN, JR.
Chairman, President, and Chief Executive Officer of NACCO Industries, Inc.;
Director of NACCO Industries, The BFGoodrich Co., and The Standard Products Co.
JOHN C. SAWHILL
President and Chief Executive Officer of The Nature Conservancy; formerly,
Director and Senior Partner of Mckinsey & Co. and President of New York
University; Director of Pacific Gas and Electric Co., Procter & Gamble Co.,
NACCO Industries, and Newfield Exploration Co.
JAMES O. WELCH, JR.
Retired Chairman of Nabisco Brands, Inc.; retired Vice Chairman and Director of
RJR Nabisco; Director of TECO Energy, Inc., and Kmart Corp.
J. LAWRENCE WILSON
Chairman and Chief Executive Officer of Rohm & Haas Co.; Director of Cummins
Engine Co. and The Mead Corp.; Trustee of Vanderbilt University.
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY
Secretary; Managing Director and Secretary of The Vanguard Group, Inc.;
Secretary of each of the investment companies in The Vanguard Group.
THOMAS J. HIGGINS
Treasurer; Principal of The Vanguard Group, Inc.; Treasurer of each of the
investment companies in The Vanguard Group.
OTHER VANGUARD OFFICERS
R. GREGORY BARTON
Managing Director, Legal Department.
ROBERT A. DiSTEFANO
Managing Director, Information Technology.
JAMES H. GATELY
Managing Director, Individual Investor Group.
KATHLEEN C. GUBANICH
Managing Director, Human Resources.
IAN A. MacKINNON
Managing Director, Fixed Income Group.
F. WILLIAM McNABB, III
Managing Director, Institutional Investor Group.
MICHAEL S. MILLER
Managing Director, Planning and Development.
RALPH K. PACKARD
Managing Director and Chief Financial Officer.
GEORGE U. SAUTER
Managing Director, Core Management Group.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500,"
and "500" are trademarks of The McGraw-Hill Companies, Inc. Frank Russell
Company is the owner of trademarks and copyrights relating to the Russell
Indexes. "Wilshire 4500" and "Wilshire 5000" are trademarks of Wilshire
Associates.
<PAGE> 32
VANGUARD
MILESTONES
[PHOTO]
The Vanguard Group is
named for HMS Vanguard,
Admiral Horatio Nelson's flagship
at the Battle of the Nile on
August 1, 1798. Our founder,
John C. Bogle, chose the name
after reading Nelson's inspiring
tribute to his fleet: "Nothing could
withstand the squadron . . .
with the judgment of the captains,
together with their valour, and that
of the officers and men of every
description, it was absolutely irresistible."
[PHOTO]
Walter L. Morgan, founder of
Wellington Fund, the nation's
oldest balanced mutual fund
and forerunner of today's family
of some 100 Vanguard funds,
celebrated his 100th birthday on
July 23, 1998. Mr. Morgan,
a true investment pioneer, died
six weeks later on September 2.
[PHOTO]
Wellington Fund,
The Vanguard Group's oldest fund,
was incorporated by Mr. Morgan
70 years ago, on December 28, 1928.
The fund was named after
the Duke of Wellington,
whose forces defeated
Napoleon Bonaparte at the
Battle of Waterloo in 1815.
[THE VANGUARD GROUP LOGO]
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
INDIVIDUAL ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
This report is intended for the funds' shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
Q762-07/22/1999
(C) 1999 The Vanguard Group, Inc. All rights reserved.
Vanguard Marketing Corporation, Distributor.
