VANGUARD(R)
NEW YORK TAX-EXEMPT
FUNDS
ANNUAL REPORT
NOVEMBER 30, 1999
VANGUARD NEW YORK
TAX-EXEMPT MONEY
MARKET FUND
VANGUARD NEW YORK
INSURED LONG-TERM
TAX-EXEMPT FUND
[PHOTO OF JOHN C. BOGLE]
DEAR SHAREHOLDERS:
Two roads diverged in a wood, and I--I took the one less traveled by, and that
has made all the difference.
I can think of no better words than those of Robert Frost to begin this special
letter to our shareholders, who have placed such extraordinary trust in me and
in Vanguard over the past quarter century. When the firm was founded 25 years
ago, we deliberately took a new road to managing a mutual fund enterprise.
Instead of having the funds controlled by an outside management company with its
own financial interests, the Vanguard funds--there were only 11 of them
then--would be controlled by their own shareholders and operate solely in their
financial interests. The outcome of our unprecedented decision was by no means
certain. We described it then as "The Vanguard Experiment."
Well, I guess it's fair to say it's an experiment no more. During the past 25
years, the assets we hold in stewardship for investors have grown from $1
billion to more than $500 billion, and I believe that our reputation for
integrity, fair-dealing, and sound investment principles is second to none in
this industry. Our staggering growth--which I never sought--has come in
important part as a result of the simple investment ideas and basic human values
that are the foundation of my personal philosophy. I have every confidence that
they will long endure at Vanguard, for they are the right ideas and right
values, unshakable and eternal.
While Emerson believed that "an institution is the lengthened shadow of one
man," Vanguard today is far greater than any individual. The Vanguard crew has
splendidly implemented and enthusiastically supported our founding ideas and
values, and deserves the credit for a vital role in forging our success over the
years. It is a dedicated crew of fine human beings, working together in an
organization that is well prepared to press on regardless long after I am gone.
Creating and leading this enterprise has been an exhilarating run. Through it
all, I've taken the kudos and the blows alike, enjoying every moment to the
fullest, and even getting a second chance at life with a heart transplant three
years ago. What more could a man ask?
While I shall no longer be serving on the Vanguard Board, I want to assure
you that I will remain vigorous and active in a newly created Vanguard unit,
researching the financial markets, writing, and speaking. I'll continue to focus
whatever intellectual power and ethical strength I possess on my mission to
assure that mutual fund investors everywhere receive a fair shake. In the spirit
of Robert Frost:
But I have promises to keep, and miles to go before I sleep, and miles to go
before I sleep.
You have given me your loyalty and friendship over these long years,
and I deeply appreciate your thousands of letters of support. For my part, I
will continue to keep an eagle eye on your interests, for you deserve no less.
May God bless you all, always.
/S/
JCB
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CONTENTS
Report From The Chairman .................1
The Markets In Perspective ...............6
Report From The Adviser ..................8
Performance Summaries ...................10
Fund Profiles ...........................12
Financial Statements ....................15
Report Of Independent Accountants........30
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<PAGE>
[PHOTO OF JOHN J. BRENNAN]
REPORT FROM THE CHAIRMAN
Concerns about higher inflation took hold of the bond market during the early
months of Vanguard New York Tax-Exempt Funds' 1999 fiscal year and never
loosened their grip. The resulting decline in prices made the 12 months ended
November 30 a difficult period for fixed-income investors. Our Insured Long-Term
Tax-Exempt Fund registered a total return of -2.3%, which was a hair better than
that of its average peer, but behind that of its unmanaged benchmark index. Our
Tax-Exempt Money Market Fund earned a total return of 3.0%, a bit better than
the 2.6% return of the average New York tax-exempt money market fund.
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TOTAL RETURNS
FISCAL YEAR ENDED
NOVEMBER 30, 1999
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VANGUARD NEW YORK TAX-EXEMPT
MONEY MARKET FUND 3.0%
(SEC 7-Day Annualized Yield: 3.49%)
Average New York Tax-Exempt
Money Market Fund* 2.6
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VANGUARD NEW YORK INSURED LONG-TERM
TAX-EXEMPT FUND -2.3%
Average New York Insured
Municipal Debt Fund* -2.4
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*Derived from data provided by Lipper Inc.
The table at right presents each fund's 12-month return along with those of
our average mutual fund competitors. The total return (capital change plus
reinvested dividends) of our 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
$10.42 per share on November 30, 1999, and is adjusted for dividends totaling
$0.547 per share paid from net investment income and a distribution of $0.091
per share paid from net realized capital gains. The Money Market Fund's net
asset value remained at $1 per share, as was expected but not guaranteed. At the
end of the fiscal year, the Insured Long-Term Tax-Exempt Fund's yield was 5.22%,
up from 4.41% a year earlier; the Money Market Fund's yield was 3.49%, up from
2.97%.
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 to the
alternative minimum tax.
FINANCIAL MARKETS IN REVIEW
The 12 months ended November 30 featured plenty of positive economic news, as
well as a good deal of apprehension over how long the good times can last
without touching off higher inflation. The U.S. economy expanded at an
inflation-adjusted rate of 4.3% from the third quarter of 1998 to the third
quarter of 1999, the nation's unemployment rate hovered near record-low levels,
and inflation barely stirred.
However, the nagging concern that inflation would soon accelerate resulted
in a steady rise in interest rates during the fiscal year. The rate increase
merely restrained the stock market, which managed an impressive advance, but
dealt a heavy blow to bond prices, which suffered their worst year since 1994.
The Federal Reserve Board went along with the uptrend in interest rates, hiking
its target for short-term interest rates by
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25 basis points on three separate occasions in an attempt to head off inflation
it believes could result from strong growth and tight labor markets.
Technology companies propelled the U.S. stock market higher, and the
Standard & Poor's 500 Index, which is dominated by large-capitalization stocks,
returned 20.9%--the index's fifth straight year of returns higher than 20%. The
broad market, as represented by the Wilshire 5000 Total Market Index, advanced
an even higher 22.4%, but a large portion of the gain was concentrated in a
relatively small number of stocks. Many value-oriented stocks were left far
behind.
The yield of the 30-year U.S. Treasury bond ended the fiscal year at 6.29%,
up 123 basis points (1.23 percentage points) from its starting point of 5.06% on
November 30, 1998. The yield of 3-month U.S. Treasury bills climbed to 5.30% on
balance, from 4.48%. Yields of high-quality, long-term municipal bonds climbed
nearly a full percentage point, from 4.89% when the period began to 5.87% on
November 30, 1999. Yields of top-grade (MIG-1) 3-month notes, which react more
quickly to changes in short-term interest rates, rose from 2.95% to 3.80%.
The Lehman Brothers 10 Year Municipal Bond Index, a good measure of the
long-term municipal market, recorded a return of -0.4% during our fiscal year.
Long-term bonds suffer more when interest rates are rising, just as they benefit
more from a decline in interest rates.
Municipal bonds performed well early in the 1999 fiscal year as new
issuance dropped off from 1998's near-record levels and yields remained high
relative to Treasuries. But their relative performance faltered later in the
period because many investors were attracted to corporate bonds.
At the end of the fiscal year, the spread between yields of long-term
Treasuries and long-term munis stood at just 42 basis points (0.42 percentage
point). This is an extremely narrow gap, given that the income from Treasuries
is subject to federal income taxes (but not state taxes), while income from a
state-specific municipal bond fund is fully exempt from federal and state taxes.
On November 30, the yield of a top-quality, long-term municipal bond was equal
to about 93% of the yield of the 30-year U.S. Treasury bond. Historically, the
ratio has been about 84%.
FISCAL 1999 PERFORMANCE OVERVIEW
The -2.3% return of the Vanguard New York Insured Long-Term Tax-Exempt Fund was
slightly ahead of the -2.4% return of the average New York municipal bond fund,
which has lower average credit quality than our fund but a slightly longer
average maturity. Our return, however, was 1.2 percentage points behind that of
the unmanaged Lehman Municipal Bond Index. Though our fund earned an income
return of 4.7%, a price decline of -7.0% engendered by the rise in interest
rates pulled our total return into negative territory for the year. (The
Performance Summary on page 11 presents a breakdown of the fund's returns into
their income and capital components dating to the fund's inception.) The Lehman
index, which includes municipal bonds from across the country, is a notoriously
tough competitor because it does not incur the "real world" operating expenses
and transaction costs that all mutual funds must bear. The index also has a
slightly lower average maturity than your fund, making it slightly less
sensitive to interest rate changes--an advantage during fiscal 1999.
The Tax-Exempt Money Market Fund provided a total return of 3.0%, outpacing
the 2.6% return of its average peer.
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<PAGE>
Though the rise in interest rates during the past 12 months was to blame
for the poor bond returns, a slide in rates just one year ago provided a boost
to bond prices and returns. The simple lesson is that interest rates rise and
fall, sometimes gradually and sometimes sharply. All bond investors should know
that over long periods, the ups and downs in interest rates tend to offset each
other, leaving a bond fund's interest income as the chief source of return. And
considering that interest paid on munis today is considerably higher than a year
ago, it would seem that tax-exempt securities have become more attractive. At a
yield of about 5.2% compounded annually, money doubles in about 14 years, or
more than two years sooner than at 4.4%.
THE MUNICIPAL BOND TAX ADVANTAGE
For New York residents, the income earned by our funds is exempt from federal,
state, and, in most cases, local income taxes. At current yields, investors in
long-term municipal bonds who are taxed at the highest marginal tax rate (39.6%)
can earn an astounding 55% more after-tax income than they could in comparable
long-term U.S. Treasury bonds. Short-term municipal securities also offer an
advantage over taxable investments with similar maturities. On November 30, the
yield of MIG-1 notes was almost 20% higher than the after-tax yield of 90-day
U.S. Treasury bills. For New York taxpayers subject to the highest tax rates, a
yield of 5.9% on a tax-exempt long-term bond is the equivalent of a 9.8% taxable
yield. For a tax-exempt short-term yield of 3.8%, the taxable equivalent is
6.3%.
These remarkable advantages are illustrated in the table below, which
compares the annual net income earned on U.S. Treasury and tax-exempt securities
as of November 30, 1999, assuming a $100,000 investment.
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ILLUSTRATION OF INCOME FROM
A HYPOTHETICAL $100,000 INVESTMENT
-----------------------------------------
SHORT-TERM LONG-TERM
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Taxable gross income $5,300 $6,300
Less taxes (39.6%) (2,100) (2,500)
Net after-tax income 3,200 3,800
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Tax-exempt income $3,800 $5,900
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Tax-exempt income advantage $ 600 $2,100
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Percentage advantage 19% 55%
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This illustration assumes current yields (as of November 30, 1999) of 6.3% for
long-term U.S. Treasury bonds, 5.3% for U.S. Treasury bills, 5.9% for long-term
municipals, and 3.8% for short-term municipals. The tax adjustment assumes a
typical itemized tax return based on a federal tax rate of 39.6%. Income from
U.S. Treasuries is not subject to state taxes; local taxes are not considered.
The illustration is not intended to represent future results.
There is an important distinction between state-specific municipal bond
funds and U.S. Treasury bonds. Treasury securities are backed by the full faith
and credit of the U.S. government and therefore have unmatched credit quality.
Also, municipal bond funds that confine their investments to a single state lack
the diversification that comes from spreading investments among various states,
which may be subject to different economic conditions and different risks.
Private insurance on the bonds in our Long-Term Tax-Exempt Fund, however, helps
to reduce these additional credit risks. Though the insurance does not provide
protection against fluctuations in the fund's value, it guarantees full payment
of interest and principal for our bond holdings.
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This insurance, however, is not generally available for short-term
securities. As a result, our investment adviser, Vanguard's Fixed Income Group,
is responsible for preserving the principal value of the Tax-Exempt Money Market
Fund. Money market mutual funds are not guaranteed by the Federal Deposit
Insurance Corporation, which insures bank accounts and certificates of deposit.
LONG-TERM PERFORMANCE OVERVIEW
An annual review of any mutual fund should be accompanied by an examination of
the fund's longer-term record. The table below compares the performance of
Vanguard New York Insured Long-Term Tax-Exempt Fund over the past decade with
that of its average peer mutual fund, along with the current value of
hypothetical $10,000 investments made ten years ago. It also presents the return
of our Tax-Exempt Money Market Fund since its inception on September 3, 1997. As
you can see, our Long-Term Tax-Exempt Fund has established a fine record versus
its competitors. Our advantage over this period has amounted, in the case of the
Insured Long-Term Fund, to $1,106, or about 11% of the original investment.
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TOTAL RETURNS
TEN YEARS ENDED NOVEMBER 30, 1999*
------------------------------------------------
FINAL VALUE OF
AVERAGE A $10,000
ANNUAL RETURN INITIAL INVESTMENT**
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AVERAGE AVERAGE
NEW YORK VANGUARD COMPETING VANGUARD COMPETING VANGUARD
TAX-EXEMPT FUND FUND FUND FUND FUND ADVANTAGE
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Money Market 3.2% 2.8% $10,728 $10,646 $ 82
Insured Long-Term 6.9 6.3 19,446 18,340 1,106
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* For the Money Market Fund, annualized return since inception on September
3, 1997; for the Insured Long-Term Fund, annualized ten-year return.
** Assuming reinvestment of all income dividends and capital gains
distributions.
A large part of our performance edge versus competitors over nearly a
decade can be explained by the same factor that explained our outperformance
during the 1999 fiscal year: cost. Our funds have expense ratios (annual
expenses as a percentage of average net assets) of 0.20% for the Insured
Long-Term Tax-Exempt Fund and 0.17% for the Tax-Exempt Money Market Fund--far
below the 1.16% charged by the average long-term New York tax-exempt fund and
the 0.61% charged by the average New York tax-exempt money market fund. Because
fund operating costs are deducted directly from the income earned by a bond
fund, our funds have a significant edge in their quest to provide returns that
are superior to those of similar funds. The combination of our cost advantage
and skillful management by Vanguard's Fixed Income Group has benefited our
shareholders over the past decade, and we expect it to continue to do so in the
future.
IN SUMMARY
During a period when the stock market seems invulnerable, it's easy to overlook
the merits of bonds. However, bond funds must not be judged by how well their
returns stack up against those of stock funds in a particular period, but by
what they can add to a balanced investment program, namely, current income and
relative stability. Vanguard New York Tax-Exempt Funds can provide a high level
of after-tax income, particularly for those in high income tax brackets, and
especially compared to the income available from the stock market, whose average
dividend yield is less than 1.5%. And because the performance of bonds often
differs from that of equities, a commitment to bonds is a useful diversifier
that can help smooth the sometimes-volatile returns of stocks.
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We advise investors to hold balanced portfolios of stock funds, bond funds,
and short-term reserves in proportions suitable to their own investment goals,
time horizon, and tolerance for risk. Once you have such a plan in place, we
advise you to stick with it through good times and bad.
/S/ John J. Brennan
John J. Brennan
Chairman and Chief Executive Officer
December 18, 1999
================================================================================
A Note of Thanks to Our Founder
================================================================================
As you may have read on the inside cover of our report, our founder, John C.
Bogle, is retiring December 31, 1999, as Senior Chairman of our Board after
nearly 25 years of devoted service to Vanguard and our shareholders. Vanguard
investors have Jack to thank for creating a truly mutual mutual fund company
that operates solely in the interest of its fund shareholders. And mutual fund
investors everywhere have benefited from his energetic efforts to improve this
industry. Finally, on a personal note, I am forever grateful to Jack for giving
me the opportunity to join this great company in 1982.
5
<PAGE>
THE MARKETS IN PERSPECTIVE
YEAR ENDED NOVEMBER 30, 1999
Strong economic expansion sent global stock markets charging higher but
dealt a blow to bond prices during the fiscal year ended November 30, 1999. The
powerhouse U.S. economy led the global growth parade, joined by Asian, European,
and Latin American economies that had slumped or stagnated in 1998.
Interest rates rose sharply as investors and monetary policymakers grew
increasingly worried that such strong economic growth would cause inflation to
surge. Although the rise in rates caused bond prices to fall, it only tempered
the stock market's advance.
U.S. STOCK MARKETS
Against the backdrop of a booming economy, U.S. companies reported solid
increases in earnings during the fiscal year. The nation's economic output
increased at an inflation-adjusted rate of 4.3%--a very rapid pace for such a
large, mature economy. Consumer spending, which accounts for roughly two-thirds
of economic activity, powered the expansion. Americans spent freely, encouraged
by rising wealth from a long bull market, a hot job market, and climbing
incomes.
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AVERAGE ANNUAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
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1 YEAR 3 YEARS 5 YEARS
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STOCKS
S&P 500 Index 20.9% 24.3% 27.5%
Russell 2000 Index 15.7 10.1 14.8
Wilshire 5000 Index 22.4 22.6 25.6
MSCI EAFE Index 21.4 12.3 11.4
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BONDS
Lehman Aggregate Bond Index 0.0% 5.6% 8.0%
Lehman 10 Year Municipal Bond Index -0.4 4.8 7.6
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 4.7 5.0 5.2
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OTHER
Consumer Price Index 2.6% 2.0% 2.4%
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The stock market, as measured by the Wilshire 5000 Index, gained 22.4%
overall. For a change, mid-capitalization and small-cap stocks outpaced their
large-cap brethren. The large-cap S&P 500 Index, which accounts for more than
75% of the U.S. stock market's total value, gained 20.9% during the year; the
rest of the market (as measured by the Wilshire 4500 Index) gained 29.0%.
Increasingly optimistic expectations for future corporate earnings more
than offset the negative effects of rising interest rates during fiscal 1999.
Higher rates often hurt stock prices because many investors use current rates to
discount the value of a stock's projected earnings and dividends. The higher the
interest rate, the more future earnings are discounted, and the less investors
will pay for the stock now.
Because of a remarkable surge in prices for technology stocks, growth
stocks again outperformed value stocks during the past year. Within the S&P 500
Index, growth stocks--characterized by high prices in relation to earnings, book
value, and dividends--recorded a 28.5% return, 16 percentage points above the
12.5% return for value stocks. The disparity was even greater in the small-cap
segment of the market; growth stocks within the small-cap Russell 2000 Index
gained 32.7%, while value stocks posted a -1.4% return.
Technology stocks within the S&P 500 Index gained 66%. QUALCOMM posted an
eye-popping 1,200% return, and a number of computer-related stocks doubled or
tripled in price, including Sun Microsystems (+257%), Apple Computer (+206%),
Oracle (+197%), Gateway (+172%), Texas Instruments (+152%), and Cisco Systems
(+136%).
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Big gains for wireless telecommunications and cable-TV stocks powered the
utilities category to an overall gain of nearly 28%. The producer-durables
group, which includes some technology-related manufacturers as well as aircraft
and equipment makers, gained 27%. Oil exploration and service firms in the
"other energy" category posted a 26% return, assisted by a jump in prices for
oil and natural gas.
The year's worst-performing sector was consumer staples (down nearly -12%).
This group suffered as severe price competition and a stronger dollar in Europe
crimped profits for many food and beverage makers, and the specter of litigation
costs caused tobacco stocks to slump. The auto & transportation group declined
- -2% overall, with airline stocks hurt by rising prices for jet fuel.
U.S. BOND MARKETS
Stock investors may cheer a fast-growing economy, but rapid growth tends to
worry bond investors. Early in the fiscal year, inflation seemed
dormant--plunging oil prices had taken commodity price indexes to the lowest
point in a quarter-century. But as the world economy began hitting on all
cylinders, the bond market feared that a minuscule U.S. unemployment rate,
rising commodity prices, and capacity constraints would cause inflation to
accelerate. Although oil prices were up nearly 150% during the fiscal year, the
overall price level, as measured by the Consumer Price Index, increased by a
moderate 2.6%.
The Federal Reserve Board, anticipating price pressures, abandoned its bias
toward easier monetary policy, and by mid-year was boosting interest rates to
try to throttle back the economic engines. The bond market was ahead of the
Fed--interest rates began rising sharply in February. By fiscal year-end, the
yield of 30-year U.S. Treasury bonds had risen 1.23 percentage points (123 basis
points) to 6.29%. The 10-year Treasury note's yield rose 148 basis points, from
4.71% to 6.19%. The rise in short-term rates was more restrained; 3-month
Treasury bill yields were up 82 basis points to 5.30% at fiscal year-end.
Bond prices fall when interest rates rise, and long-term bond prices are
most sensitive to changing rates. Long-term Treasury bond prices fell by more
than -13%, resulting in total returns of -8%. The Lehman Aggregate Bond Index, a
measure of the overall taxable bond market, which has an intermediate-term
structure on average, broke even on the year, as interest income of 6.2% was
offset by price declines. The damage to municipal bond prices was not as severe
as for Treasuries, and the intermediate-term Lehman 7 Year Municipal Bond Index
recorded a price decline of -3.7% and a total return of 0.5%.
INTERNATIONAL STOCK MARKETS
International markets had a strong year, with European stocks gaining 21.9% in
local-currency terms and Pacific-region stocks advancing 30.2%. However,
currency effects significantly altered the returns to U.S.-based investors. The
U.S. dollar rose in value against most European currencies but fell sharply
against the Japanese yen. As a result, returns from Europe plunged to 9.8% in
dollar terms while returns from the Pacific soared to 51.0%.
Overall, U.S. investors earned 21.4% in the major developed international
markets, as measured by the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE) Index. The bull markets in most nations stemmed
from renewed optimism that economic growth would continue to accelerate. Japan
and the rest of Asia, which were hit hardest by currency and economic crises in
1997 and 1998, saw the biggest stock gains.
Emerging markets, as measured by the Select Emerging Markets Free Index,
gained 37.1% in U.S.-dollar terms, as investors regained an appetite for the
considerable risks of smaller markets.
7
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REPORT FROM THE ADVISER
Interest rates rose during the 12 months ended November 30, 1999, the fiscal
year for the Vanguard New York Tax-Exempt Funds. The rise was principally due to
investors' fears about the impact of the strong economy and the low unemployment
rate on inflation. In the past, these factors have caused inflation to increase,
and many investors expect that history will repeat itself at some point. So far,
employment costs and consumer price indexes have not risen substantially, but
each number is being closely watched for any upsurge. A desire to head off
inflation and concerns about the booming stock market led the Federal Reserve
Board to increase interest rates three times during the fiscal year, raising the
federal funds rate by a total of 0.75 percentage point.
As you might expect, yields of insured long-term municipal bonds rose along
with yields on U.S. Treasury bonds during fiscal 1999. During the first half of
the year, long-term insured municipals performed better than Treasury
securities; municipal yields increased by less than half as much as those for
long-term Treasuries. But the relative performance flip-flopped during the
second half, when yields on long-term municipals increased almost 11/2 times as
much as those on long Treasuries. Over the full fiscal year, the yield on the
benchmark 30-year U.S. Treasury bond rose by 1.23 percentage points (from 5.06%
to 6.29%), while the yield of a similar AAA-rated municipal bond rose by about 1
percentage point (from 4.89% to 5.87%).
Two factors account for the first-half outperformance of insured municipal
bonds and for their later underperformance. First, as the fiscal year began in
December 1998, insured municipal bonds were especially attractive to investors,
because the AAA-rated insured municipal's tax-exempt yield of about 4.9% was
equal to 97% of the yield of a 30-year Treasury. For an investor in the top
marginal tax bracket of 39.6%, that 4.9% yield was equivalent to an 8.1% yield
on a taxable bond. By May 31, the middle of our fiscal year, the long-term
insured municipal's yield was about 89% as high as the 30-year Treasury's yield,
making insured municipal bonds somewhat less alluring. The second factor was
that in the second half of the fiscal year, corporate bond yields had become
quite attractive, providing stiff competition for the bond investor's dollar.
During this period the corporate bond market encountered the same type of supply
imbalance that the municipal market had seen in fiscal 1998, as corporations
rushed bond issues to market to complete their financing before the end of the
century. The result was attractively high yields on corporate debt, which
enticed some large institutional buyers away from the municipal market. At
year-end, yields on long-term insured municipal bonds had risen in relation to
those on Treasuries, and 30-year munis offered yields equal to 94% of yields on
30-year Treasuries.
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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.
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The municipal market was aided by the fact that the supply of new issues
was lower during 1999 than in 1998. Through November, issuance of municipal
securities in 1999 amounted to $207 billion, down more than 20% from the same
period in 1998. The main reason for the decline was a 53% decrease in the
issuance of refunding bonds, whose proceeds are used
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to pay off older, higher-coupon bonds. Because of the rise in interest rates,
refunding issues generally did not make fiscal sense during 1999. As the economy
continued to expand, the supply of bonds issued for new projects was unchanged
from 1998.
THE INSURED LONG-TERM TAX-EXEMPT FUND
Long-term bonds typically are hurt most by rising interest rates. As a result,
the New York Insured Long-Term Tax-Exempt Fund suffered a price decline of -7.0%
and posted a total return of -2.3%. A negative return is not good news, but our
result was a bit better than the -2.4% total return for the average peer fund.
Across all bond maturities, we seek to find the best values for each level of
interest rate risk. This strategy helped in a year of rising interest rates. Our
focus on keeping expenses low is helpful at all times and is critical in
delivering above-average tax-exempt income, since expenses are deducted directly
from a bond fund's interest income. Our emphasis on keeping the funds invested
in high-quality securities benefits our shareholders by reducing credit risk.
The overall effect of combining low costs and high quality is to provide both
superior yields and low credit risk.
THE TAX-EXEMPT MONEY MARKET FUND
Our Tax-Exempt Money Market Fund returned 3.0% during fiscal 1999, beating the
2.6% return of the average New York tax-exempt money market fund. The rise in
interest rates during the period was slightly less pronounced for tax-exempt
money market instruments than for long-term bonds. After rising 19 basis points
during the first half of the fiscal year, yields on 1-year municipals rose 69
basis points during the second half, which is traditionally a time of heavy
borrowing by municipalities. The benchmark 1-year MIG-1 note closed the fiscal
year with a yield of 3.87%, up 88 basis points from the 2.99% yield a year
earlier. Yields on the 1-year U.S. Treasury bill, meanwhile, rose by 118 basis
points for the year to 5.68%, after a second-half jump of 71 basis points. On
balance, short-term tax-exempt securities became slightly more attractive
relative to Treasury securities: The ratio of the yield on 1-year MIG-1 notes to
that on 1-year Treasury bills rose from 66.4% to 68.1% during the year.
As we begin fiscal year 2000, the Tax-Exempt Money Market Fund is
positioned to take advantage of its dual strengths of conservative,
quality-oriented management and low operating expenses. We believe these
strengths will continue to generate superior risk-adjusted returns for our
shareholders.
Ian A. MacKinnon, Managing Director
Christopher M. Ryon, Principal
Pamela Wisehaupt Tynan, Principal
Kathryn Allen, Principal
Vanguard Fixed Income Group
December 13, 1999
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<PAGE>
PERFORMANCE SUMMARY
NEW YORK TAX-EXEMPT MONEY MARKET FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note that annual
returns can fluctuate widely. 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.
TOTAL INVESTMENT RETURNS: SEPTEMBER 3, 1997-NOVEMBER 30, 1999
- -------------------------------------------------------------
NEW YORK TAX-EXEMPT AVERAGE
MONEY MARKET FUND FUND*
Fiscal Capital Income Total Total
Year Return Return Return Return
1997 0.0% 0.8% 0.8% 0.8%
1998 0.0 3.3 3.3 2.9
NEW YORK TAX-EXEMPT AVERAGE
MONEY MARKET FUND FUND*
Fiscal Capital Income Total Total
Year Return Return Return Return
1999 0.0% 3.0% 3.0% 2.6%
- -------------------------------------------------------------
SEC 7-Day Annualized Yield (11/30/1999): 3.49%
- -------------------------------------------------------------
* Average New York Tax-Exempt Money Market Fund.
See Financial Highlights table on page 26 for dividend
information since the fund's inception.
CUMULATIVE PERFORMANCE: SEPTEMBER 3, 1997-NOVEMBER 30, 1999
- -------------------------------------------------------------
199711 10084 10084
199802 10166 10157
199805 10251 10235
199808 10334 10307
199811 10414 10377
199902 10486 10438
199905 10564 10506
199908 10642 10571
199911 10728 10646
- -------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
---------------------------------------- FINAL VALUE OF A
1 YEAR SINCE INCEPTION $10,000 INVESTMENT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York Tax-Exempt Money Market Fund 3.01% 3.18% $10,728
Average New York Tax-Exempt Money Market Fund* 2.59 2.83 10,646
- ------------------------------------------------------------------------------------------------------
*Derived from data provided by Lipper Inc.
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- ------------------------------------------------------------------------------------------------------
Since Inception
Inception -------------------------
Date 1 Year Capital Income Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New York Tax-Exempt Money Market Fund 9/3/1997 2.98% 0.00% 3.18% 3.18%
- ------------------------------------------------------------------------------------------------------
* SEC rules require that we provide this average annual total return
information through the latest calendar quarter.
</TABLE>
10
<PAGE>
PERFORMANCE SUMMARY
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note, too, that both
share price and return can fluctuate widely. An investor's shares, when
redeemed, could be worth more or less than their original cost.
TOTAL INVESTMENT RETURNS: APRIL 7, 1986-NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
NEW YORK INSURED
LONG-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NEW YORK INSURED
LONG-TERM TAX-EXEMPT FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- --------------------------------------------------------------------------------
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 -7.0 4.7 -2.3 -1.1
- --------------------------------------------------------------------------------
*Lehman Municipal Bond Index.
See Financial Highlights table on page 27 for dividend and capital gains
information for the past five years.
CUMULATIVE PERFORMANCE: NOVEMBER 30, 1989-NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
198911 10000 10000 10000
199002 10019 10064 10124
199005 10152 10168 10273
199008 10146 10261 10363
199011 10600 10571 10770
199102 10884 10818 11057
199105 11183 11110 11308
199108 11485 11528 11585
199111 11752 11705 11875
199202 12079 11967 12161
199205 12376 12224 12418
199208 12831 12803 12878
199211 13001 12882 13065
199302 13973 13648 13835
199305 14075 13719 13904
199308 14581 14407 14449
199311 14616 14373 14513
199402 14677 14377 14600
199405 14379 13969 14248
199408 14539 14278 14475
199411 13686 13366 13755
199502 15071 14505 14881
199505 15672 15076 15551
199508 15768 15326 15759
199511 16409 15956 16356
199602 16599 15940 16525
199605 16270 15521 16261
199608 16582 16003 16585
199611 17367 16692 17317
199702 17390 16534 17435
199705 17578 16623 17608
199708 18056 17239 18119
199711 18472 17635 18559
199802 18953 17809 19029
199805 19164 17936 19259
199808 19634 18526 19687
199811 19892 18793 19999
199902 20117 18719 20199
199905 20021 18568 20159
199908 19541 18406 19785
199911 19446 18340 19785
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ------------------------------------------------------------------------------------------------------
New York Insured Long-Term Tax-Exempt Fund -2.25% 7.28% 6.88% $19,446
Average New York Insured Municipal Fund* -2.41 6.53 6.25 18,340
Lehman Municipal Bond Index -1.07 7.54 7.06 19,785
- ------------------------------------------------------------------------------------------------------
*Derived from data provided by Lipper Inc.
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 YEARS
INCEPTION -------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- ------------------------------------------------------------------------------------------------------
New York Insured Long-Term
Tax-Exempt Fund 4/7/1986 -2.07% 6.41% 1.34% 5.89% 7.23%
- ------------------------------------------------------------------------------------------------------
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
</TABLE>
11
<PAGE>
FUND PROFILE
NEW YORK TAX-EXEMPT MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999. Key elements of this Profile are defined on page 13.
FINANCIAL ATTRIBUTES
- --------------------------------------------
Yield 3.5%
Average Maturity 49 days
Average Quality MIG-1
Expense Ratio 0.17%
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -----------------------------------------------
MIG-1/SP-1+ 61.1%
A-1/P-1 33.6
AAA/AA 5.3
A 0.0
- -----------------------------------------------
Total 100.0%
12
<PAGE>
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.
13
<PAGE>
FUND PROFILE
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 13.
FINANCIAL ATTRIBUTES
- --------------------------------------------------------------------------------
NEW YORK INSURED LEHMAN
LONG-TERM INDEX*
- --------------------------------------------------------------------------------
Number of Issues 263 52,144
Yield 5.2% --
Yield to Maturity 5.4% --
Average Coupon 5.3% 5.5%
Average Maturity 13.9 years 13.0 years
Average Quality AAA AA+
Average Duration 8.5 years 7.5 years
Expense Ratio 0.20% --
Cash Reserves 3.2% --
*Lehman Municipal Bond Index.
INVESTMENT FOCUS
- -------------------------
[GRID]
AVERAGE MATURITY LONG
CREDIT QUALITY HIGH
VOLATILITY MEASURES
- --------------------------------------------------------------------------------
NEW YORK INSURED LEHMAN
LONG-TERM INDEX*
- --------------------------------------------------------------------------------
R-Squared 0.98 1.00
Beta 1.12 1.00
*Lehman Municipal Bond Index.
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
- ----------------------------------------------
AAA 99.8%
AA 0.2
A 0.0
BBB 0.0
BB 0.0
B 0.0
- ----------------------------------------------
Total 100.0%
DISTRIBUTION BY MATURITY
(% OF PORTFOLIO)
- ----------------------------------------------
Under 1 Year 8.3%
1-5 Years 13.7
5-10 Years 11.8
10-20 Years 37.8
20-30 Years 28.4
Over 30 Years 0.0
- ----------------------------------------------
Total 100.0%
14
<PAGE>
FINANCIAL STATEMENTS
NOVEMBER 30, 1999
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>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- ----------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.9%)
- ----------------------------------------------------------------------------------------------------------
Babylon NY IDA Resource Recovery Bonds VRDO
(Ogden Martin Project) 3.65% 12/8/1999 (4) 20,000 20,000
Erie County NY Water Auth. Rev. VRDO 3.65% 12/8/1999 (2) 11,400 11,400
Great Neck NY Unified School Dist. TAN 4.00% 6/29/2000 5,000 5,012
Great Neck NY Unified School Dist. TAN 4.25% 6/29/2000 10,000 10,030
Half Hollow Hills NY Central School Dist. of
Huntington & Babylon-Suffork County TAN 4.00% 6/29/2000 18,000 18,064
Long Island NY Power Auth. Electric System Rev. 3.45% 12/9/1999 LOC 7,000 7,000
Long Island NY Power Auth. Electric System Rev. CP 3.65% 3/15/2000 LOC 10,000 10,000
Long Island NY Power Auth. Electric System Rev. VRDO 3.85% 12/8/1999 LOC 14,000 14,000
Metro. Transp. Auth. of New York 7.50% 7/1/2000 (Prere.) 4,350 4,536
Metro. Transp. Auth. of New York TOB VRDO 3.98% 12/2/1999 (4)+ 9,495 9,495
Metro. Transp. Auth. of New York Transit Fac. CP 3.45% 12/7/1999 LOC 11,500 11,500
Metro. Transp. Auth. of New York Transit Fac. CP 3.45% 12/9/1999 LOC 10,000 10,000
Metro. Transp. Auth. of New York Transit Fac. CP 3.50% 3/13/2000 LOC 12,000 12,000
New York City NY Cultural Resources
(Museum of Modern Art) 5.00% 1/1/2000 (2) 2,000 2,003
New York City NY Cultural Resources VRDO
(Carnegie Hall Project) 3.80% 12/8/1999 LOC 15,325 15,325
New York City NY Cultural Resources VRDO
(Solomon R. Guggenheim Foundation) 3.70% 12/2/1999 LOC 12,425 12,425
New York City NY GO 7.25% 3/15/2000 (Prere.) 3,155 3,238
New York City NY GO VRDO 3.65% 12/2/1999 (1)LOC 3,461 3,461
New York City NY GO VRDO 3.75% 12/2/1999 LOC 3,000 3,000
New York City NY GO VRDO 3.75% 12/8/1999 LOC 8,700 8,700
New York City NY GO VRDO 3.80% 12/8/1999 LOC 11,400 11,400
New York City NY GO VRDO 3.90% 12/8/1999 LOC 12,000 12,000
New York City NY Health & Hosp. Corp. Rev.
PUT (Health Systems) 3.75% 2/1/2000 LOC 12,000 12,000
New York City NY Health & Hosp. Corp. Rev.
VRDO (Health System) 3.80% 12/8/1999 LOC 20,165 20,165
New York City NY IDA Dev.
VRDO (National Audubon Society) 3.70% 12/2/1999 LOC 13,600 13,600
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- ----------------------------------------------------------------------------------------------------------
New York City NY Muni. Water Finance Auth. CP 3.55% 12/23/1999 LOC 27,500 27,500
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.80% 12/2/1999 (3) 31,520 31,520
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 4.00% 12/2/1999 (3) 600 600
New York City NY TOB VRDO 4.01% 12/2/1999 (3)+ 2,275 2,275
New York City NY Transitional Finance Auth. TOB PUT 4.00% 12/2/1999 (3)+ 13,000 13,000
New York City NY Transitional Finance Auth.
Future Tax Rev. VRDO 3.60% 12/2/1999 3,700 3,700
New York City NY Transitional Finance Auth.
Future Tax Rev. VRDO 3.85% 12/8/1999 7,800 7,800
New York City NY Transitional Finance Auth.
Future Tax Rev. VRDO 3.90% 12/8/1999 38,300 38,300
New York State Dormitory Auth. CP (Cornell Univ.) 3.55% 12/20/1999 10,000 10,000
New York State Dormitory Auth. CP (Cornell Univ.) 3.55% 12/21/1999 9,800 9,800
New York State Dormitory Auth. CP (State Univ.) 6.50% 5/15/2000 (Prere.) 5,000 5,075
New York State Dormitory Auth. Rev. (City Univ.) 7.625% 7/1/2000 (Prere.)28,970 30,244
New York State Dormitory Auth. Rev. (City Univ.) 7.875% 7/1/2000 (Prere.)25,665 26,781
New York State Dormitory Auth. Rev. (State Univ.) 7.70% 5/15/2000 (Prere.)17,000 17,660
New York State Dormitory Auth. Rev. VRDO
(Foundling Charities Corp.) 3.80% 12/8/1999 LOC 12,435 12,435
New York State Dormitory Auth. Rev. VRDO
(Rockefeller Univ.) 3.85% 12/8/1999 29,100 29,100
New York State Dormitory Auth. VRDO
(Sloan-Kettering Cancer Center) 3.70% 12/2/1999 LOC 5,500 5,500
New York State Dormitory Auth. VRDO
(Sloan-Kettering Cancer Center) 3.75% 12/8/1999 LOC 31,400 31,400
New York State Dormitory Auth.
Rev. TOB VRDO (City Univ.) 3.98% 12/2/1999 (1)+ 4,000 4,000
New York State Dormitory Auth.
VRDO (Cornell Univ.) 3.75% 12/2/1999 11,300 11,300
New York State Dormitory Auth.
VRDO (New York Public Library) 3.85% 12/8/1999 LOC 20,000 20,000
New York State Energy Research & Dev. Auth.
VRDO (Con Edison) 3.80% 12/1/1999 11,000 11,000
New York State Energy Research & Dev. Auth.
VRDO (Con Edison) 3.85% 12/8/1999 11,100 11,100
New York State Energy Research & Dev. Auth.
VRDO (Con Edison) 3.95% 12/8/1999 11,950 11,950
New York State Environmental Fac. Corp. TOB VRDO
(New York City Muni. Water Finance Auth. Project) 3.98% 12/2/1999 (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. VRDO 3.70% 12/8/1999 LOC 41,300 41,300
New York State Local Govt. Assistance Corp. VRDO 3.80% 12/8/1999 LOC 1,400 1,400
New York State Local Govt. Assistance Corp. TOB VRDO 3.98% 12/2/1999 (2)+ 2,000 2,000
New York State Power Auth. CP 3.50% 12/8/1999 6,000 6,000
New York State Power Auth. CP 3.70% 12/13/1999 13,500 13,500
Onondaga County NY BAN 3.50% 5/20/2000 7,587 7,600
Oyster Bay NY BAN 3.50% 4/28/2000 14,712 14,734
Port Washington NY Unified Free School Dist. TAN 4.00% 6/29/2000 7,000 7,025
St. Lawrence County NY IDA VRDO (Pollution Control) 3.89% 12/8/1999 2,140 2,140
Westchester County NY Health Care Corp. CP 3.45% 12/15/1999 10,000 10,000
Westchester County NY Health Care Corp. CP 3.45% 12/17/1999 7,000 7,000
Outside New York:
Puerto Rico Govt. Dev. Bank CP 3.55% 12/9/1999 10,300 10,300
Puerto Rico Govt. Dev. Bank VRDO 3.60% 12/8/1999 (1) 5,755 5,755
Puerto Rico Highway & Transp. Auth. VRDO 3.65% 12/8/1999 (2) 15,000 15,000
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $789,148) 789,148
- ----------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
<S> <C>
MARKET
VALUE*
(000)
- ----------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.1%)
- ----------------------------------------------------------------------------------------------------
Other Assets--Note B $ 11,914
Liabilities (2,788)
---------
9,126
- ----------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- ----------------------------------------------------------------------------------------------------
Applicable to 798,280,081 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $798,274
====================================================================================================
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 November 30,
1999, the aggregate value of these securities was $35,770,000, representing
4.5% of net assets.
For key to abbreviations and other references, see page 23.
- --------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------
Paid in Capital $798,280 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses (6) --
Unrealized Appreciation -- --
- --------------------------------------------------------------------------------
NET ASSETS $798,274 $1.00
================================================================================
17
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (96.8%)
- ------------------------------------------------------------------------------------------------------------------
ISSUER INSURED (84.4%)
Albany County NY GO 5.00% 10/1/2005 (3) 2,000 2,031
Albany County NY GO 5.00% 10/1/2012 (3) 4,400 4,298
Albany County NY GO 7.00% 1/15/2005 (2) 1,250 1,280
Albany NY Muni. Water Finance Auth. 7.50% 12/1/2017 (1) 2,080 2,106
Battery Park City NY Auth. 5.50% 11/1/2026 (2) 11,750 10,925
Broome County NY Public Safety Fac. Project 5.25% 4/1/2015 (1) 3,000 2,872
Buffalo & Erie County NY Toll Bridge Auth. 6.00% 1/1/2015 (1) 4,500 4,576
Buffalo NY GO 5.125% 2/1/2012 (2) 1,870 1,823
Buffalo NY GO 5.125% 2/1/2013 (2) 2,945 2,837
Buffalo NY General Improvement 6.75% 3/1/2001 (1)(Prere.) 3,380 3,547
Buffalo NY Muni. Water Finance Auth. 5.75% 7/1/2003 (4)(Prere.) 8,500 8,993
Buffalo NY Sewer Auth. System Rev. 5.00% 7/1/2012 (3) 5,675 5,459
Buffalo NY Sewer Auth. System Rev. 5.25% 7/1/2008 (3) 3,500 3,526
Duchess County NY Resource Recovery Solid Waste System 7.50% 1/1/2000 (3)(Prere.) 2,000 2,046
Erie County NY GO 6.10% 1/15/2006 (3) 1,865 1,988
Erie County NY GO 6.125% 1/15/2007 (3) 1,660 1,776
Erie County NY Water Auth. Rev. 0.00% 12/1/2005 (2) 3,000 2,240
Erie County NY Water Auth. Rev. 0.00% 12/1/2006 (2) 6,915 4,887
Erie County NY Water Auth. Rev. 6.00% 12/1/2008 (2) 1,600 1,686
Huntington NY GO 5.50% 4/1/2013 (3) 3,400 3,409
Huntington NY GO 6.70% 2/1/2011 (3) 310 351
Long Island NY Power Auth. Electric System Rev. 5.00% 12/1/2018 (4) 6,000 5,356
Long Island NY Power Auth. Electric System Rev. 5.125% 12/1/2022 (4) 66,675 59,371
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.00% 7/1/2012 (2) 8,730 8,398
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.00% 7/1/2015 (2) 5,500 5,079
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.00% 7/1/2017 (2) 5,000 4,522
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.125% 7/1/2013 (3) 3,000 2,888
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.30% 7/1/2022 (3) 17,475 16,036
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.50% 7/1/2017 (2) 11,585 11,192
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.625% 7/1/2015 (4) 5,000 4,966
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 5.70% 7/1/2017 (1) 16,000 15,807
Metro. Transit Auth. of New York (Commuter Fac. Rev.) 6.25% 7/1/2002 (1)(Prere.) 3,000 3,189
Metro. Transit Auth. of New York
(Dedicated Petroleum Tax) 5.25% 4/1/2021 (1) 7,900 7,227
Metro. Transit Auth. of New York
(Dedicated Petroleum Tax) 5.25% 4/1/2026 (1) 34,060 30,656
Metro. Transit Auth. of New York
(Dedicated Petroleum Tax) 6.00% 4/1/2020 (1) 32,500 33,306
Metro. Transit Auth. of New York (Transp. Fac. Rev.) 5.25% 7/1/2017 (3) 6,300 5,894
Metro. Transit Auth. of New York (Transp. Fac. Rev. 5.70% 7/1/2017 (1) 5,500 5,434
Metro. Transit Auth. of New York (Transp. Fac. Rev.) 6.00% 7/1/2011 (2) 2,000 2,020
Metro. Transit Auth. of New York (Transp. Fac. Rev.) 7.00% 7/1/2009 (2) 19,050 21,689
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2010 (1) 1,000 1,035
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2011 (1) 1,000 1,029
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2012 (1) 1,000 1,023
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2013 (1) 1,425 1,448
Monroe Woodbury NY Central School Dist. 5.625% 5/15/2014 (1) 1,000 1,009
Montgomery, Ostego, Scholoharie Counties
NY Solid Waste 5.25% 1/1/2014 (1) 1,640 1,583
Mount Sinai NY Union Free School Dist. 6.20% 2/15/2014 (2) 1,050 1,129
Nassau County IDA (Hofstra Univ.) 4.75% 7/1/2028 (1) 3,500 2,872
Nassau County NY Combined Sewer Dist. GO 4.80% 10/1/2005 (3) 1,760 1,758
Nassau County NY Combined Sewer Dist. GO 5.00% 10/1/2007 (3) 1,715 1,713
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2009 (3) 3,210 3,167
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2010 (3) 2,875 2,827
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2011 (3) 1,770 1,728
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2012 (3) 1,760 1,700
Nassau County NY Combined Sewer Dist. GO 5.35% 7/1/2008 (1) 4,730 4,811
Nassau County NY Combined Sewer Dist. GO 5.35% 1/15/2009 (1) 3,505 3,550
Nassau County NY Combined Sewer Dist. GO 5.35% 7/1/2009 (1) 4,635 4,697
Nassau County NY Combined Sewer Dist. GO 5.875% 8/1/2012 (3) 825 848
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/2007 (1) 840 886
</TABLE>
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<S> <C> <C> <C> <C>
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/2008 (1) 835 880
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/2009 (1) 825 871
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/2010 (1) 820 864
Nassau County NY GO 5.125% 3/1/2013 (2) 5,860 5,644
Nassau County NY GO 5.125% 3/1/2014 (2) 5,900 5,610
Nassau County NY GO 5.25% 6/1/2011 (2) 4,670 4,642
Nassau County NY GO 5.25% 6/1/2012 (2) 4,670 4,603
Nassau County NY GO 5.25% 6/1/2013 (2) 6,905 6,736
Nassau County NY GO 5.25% 6/1/2014 (2) 6,585 6,352
Nassau County NY GO 5.50% 7/15/2007 (1) 1,270 1,308
Nassau County NY GO 5.50% 7/15/2008 (1) 1,300 1,336
Nassau County NY GO 5.50% 7/15/2009 (1) 1,325 1,358
Nassau County NY GO 5.50% 7/15/2010 (1) 1,345 1,373
Nassau County NY GO 5.50% 7/15/2011 (1) 1,370 1,390
Nassau County NY GO 5.70% 8/1/2011 (3) 2,000 2,065
Nassau County NY GO 5.75% 2/1/2011 (1) 1,100 1,125
New York City NY Cultural Resources
(American Museum of Natural History) 5.60% 4/1/2018 (1) 2,635 2,564
New York City NY Cultural Resources
(American Museum of Natural History) 5.65% 4/1/2022 (1) 5,000 4,810
New York City NY Cultural Resources
(American Museum of Natural History) 5.70% 4/1/2016 (1) 12,730 12,710
New York City NY Cultural Resources
(American Museum of Natural History) 5.75% 7/1/2029 (2) 10,000 9,669
New York City NY Cultural Resources
(Museum of Modern Art) 5.40% 1/1/2006 (2) 720 738
New York City NY Cultural Resources
(Museum of Modern Art) 5.40% 1/1/2006 (2)(ETM) 85 88
New York City NY Cultural Resources
(Museum of Modern Art) 5.40% 1/1/2012 (2) 3,400 3,405
New York City NY Cultural Resources
(Museum of Modern Art) 5.50% 1/1/2007 (2) 805 825
New York City NY Cultural Resources
(Museum of Modern Art) 5.50% 1/1/2007 (2)(ETM) 35 36
New York City NY Cultural Resources
(Museum of Modern Art) 5.50% 1/1/2016 (2) 2,000 1,954
New York City NY GO 5.375% 8/1/2013 (3) 8,295 8,188
New York City NY GO 5.75% 8/1/2002 (3)(Prere.) 1,325 1,388
New York City NY GO 5.75% 8/1/2009 (3) 2,925 3,013
New York City NY GO 6.625% 8/1/2002 (1)(Prere. 535 572
New York City NY GO 6.625% 8/1/2013 (1) 140 148
New York City NY GO 6.95% 8/15/2004 (1)(Prere.) 1,460 1,614
New York City NY GO 7.10% 2/1/2002 (1)(Prere.) 200 214
New York City NY GO 7.10% 2/1/2009 (1) 400 425
New York City NY GO VRDO 3.65% 12/2/1999 (1) 400 400
New York City NY Health & Hosp. Corp. 5.625% 2/15/2013 (2) 23,400 23,466
New York City NY IDA Civic Fac. Rev. (USTA Project) 6.375% 11/15/2014 (4) 2,000 2,135
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.00% 6/15/2021 (3) 5,395 4,747
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.125% 6/15/2022 (2) 11,000 9,794
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.35% 6/15/2013 (1) 5,300 5,170
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/2012 (2) 20,000 21,081
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/2013 (2) 20,000 20,963
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 3.80% 12/2/1999 (3) 900 900
New York State Dormitory Auth. (Barnard College) 5.25% 7/1/2026 (2) 4,370 3,932
New York State Dormitory Auth. (Catholic Health) 5.50% 7/1/2022 (1) 10,000 9,385
New York State Dormitory Auth. (City Univ. of New York) 5.50% 7/1/2016 (2) 16,000 15,659
New York State Dormitory Auth. (City Univ. of New York) 6.25% 7/1/2019 (1) 4,485 4,788
New York State Dormitory Auth. (City Univ. of New York) 7.00% 7/1/2000 (3)(Prere.) 6,140 6,368
New York State Dormitory Auth. (City Univ. of New York) 7.00% 7/1/2014 (3) 14,560 15,061
New York State Dormitory Auth. (Colgate Univ.) 6.50% 7/1/2001 (1)(Prere. 1,350 1,422
</TABLE>
19
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<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------
New York State Dormitory Auth.
(Columbia Presbyterian Hosp.) 5.50% 2/15/2007 (2) 3,500 3,592
New York State Dormitory Auth.
(FHA Hosp. & Nursing Home) 5.00% 2/15/2025 (2) 3,410 2,950
New York State Dormitory Auth.
(FHA Hosp. & Presbyterian) 5.50% 2/1/2010 (2) 6,330 6,443
New York State Dormitory Auth. (Fordham Univ.) 5.00% 7/1/2028 (1) 11,125 9,558
New York State Dormitory Auth. (Fordham Univ.) 5.50% 7/1/2023 (3) 10,150 9,562
New York State Dormitory Auth. (Fordham Univ.) 5.75% 7/1/2015 (3) 1,500 1,506
New York State Dormitory Auth. (Fordham Univ.) 7.20% 7/1/2015 (2) 710 735
New York State Dormitory Auth. (Hamilton College) 5.00% 7/1/2028 (1) 17,880 15,362
New York State Dormitory Auth. (Iona College) 5.25% 7/1/2008 (1) 1,000 1,014
New York State Dormitory Auth. (Iona College) 5.35% 7/1/2009 (1) 1,000 1,016
New York State Dormitory Auth.
(Jewish Medical Center) 5.00% 7/1/2018 (1) 10,000 8,868
New York State Dormitory Auth.
(Mental Health Services) 5.00% 2/15/2023 (1) 5,000 4,349
New York State Dormitory Auth.
Montefiore Medical Center) 5.25% 2/1/2015 (2) 42,750 40,437
New York State Dormitory Auth.
(Mt. Sinai School of Medicine) 6.75% 7/1/2015 (1) 7,245 7,624
New York State Dormitory Auth.
(New School Univ.) 5.00% 7/1/2029 (1) 10,955 9,392
New York State Dormitory Auth.
(New School for Social Research) 5.625% 7/1/2016 (1) 2,260 2,242
New York State Dormitory Auth.
(New York and Presbyterian Hosp.) 4.75% 8/1/2027 (2) 7,000 5,736
New York State Dormitory Auth.
(New York Medical College) 5.00% 7/1/2021 (1) 21,980 19,314
New York State Dormitory Auth. (New York Univ.) 6.00% 7/1/2015 (3) 32,165 33,006
New York State Dormitory Auth.
(North Shore Univ. Hosp.) 5.20% 11/1/2017 (1) 30,170 27,795
New York State Dormitory Auth. (Pace) 5.625% 7/1/2017 (1) 11,185 11,019
New York State Dormitory Auth. (Queens Hosp.) 5.45% 8/15/2019 (2) 5,270 4,946
New York State Dormitory Auth.
(Rensselaer Polytech. Institute 6.50% 7/1/2006 (3) 3,000 3,159
New York State Dormitory Auth.
(Rochester Institute of Technology) 5.25% 7/1/2022 (1) 3,000 2,730
New York State Dormitory Auth.
(Rochester Institute of Technology) 5.30% 7/1/2017 (1) 6,275 5,941
New York State Dormitory Auth.
(School Dist. Program) 6.00% 7/1/2015 (3) 2,675 2,707
New York State Dormitory Auth. (Siena College) 6.00% 7/1/2011 (1) 1,500 1,574
New York State Dormitory Auth.
(Sloan-Kettering Cancer Center) 5.75% 7/1/2019 (1) 9,700 9,643
New York State Dormitory Auth. (St. John's Univ.) 5.25% 7/1/2020 (1) 15,170 13,935
New York State Dormitory Auth. (St. John's Univ.) 5.25% 7/1/2025 (1) 10,950 9,882
New York State Dormitory Auth. (St. John's Univ.) 5.60% 7/1/2016 (1) 7,000 6,925
New York State Dormitory Auth. (St. John's Univ.) 5.70% 7/1/2026 (1) 9,230 8,888
New York State Dormitory Auth. (St. Joseph's Hosp.) 5.25% 7/1/2018 (1) 6,700 6,162
New York State Dormitory Auth.
(St. Vincent Hosp. Medical Center) 5.80% 8/1/2025 (2) 4,250 4,144
New York State Dormitory Auth. (State Univ.) 5.75% 7/1/2008 (2) 3,335 3,503
New York State Dormitory Auth. (State Univ.) 6.00% 5/15/2000 (2)(Prere.) 1,825 1,842
New York State Dormitory Auth. (State Univ.) 6.00% 7/1/2009 (2) 1,590 1,699
New York State Dormitory Auth. (Union College) 5.75% 7/1/2010 (3) 1,800 1,850
New York State Dormitory Auth. (Univ. of Rochester) 5.00% 7/1/2017 (1) 2,000 1,809
New York State Dormitory Auth. (Univ. of Rochester) 5.00% 7/1/2023 (1) 6,820 5,949
New York State Dormitory Auth.
(Upstate Community Colleges) 5.00% 7/1/2014 (2) 2,670 2,499
New York State Dormitory Auth.
(Upstate Community Colleges) 5.00% 7/1/2015 (2) 3,000 2,770
New York State Dormitory Auth.
(Upstate Community Colleges) 5.00% 7/1/2016 (2) 1,250 1,143
New York State Dormitory Auth.
(Upstate Community Colleges) 5.25% 7/1/2012 (2) 6,170 6,080
New York State Dormitory Auth. (Vassar Brothers Hosp.) 5.25% 7/1/2017 (4) 8,025 7,450
New York State Dormitory Auth. (Vassar Brothers Hosp. 5.375% 7/1/2025 (4) 7,000 6,414
New York State Energy Research & Dev. Auth. PCR
(Niagara Mohawk) 5.15% 11/1/2025 (2) 5,000 4,430
New York State Energy Research & Dev. Auth. PCR
(Niagara Mohawk) 6.625% 10/1/2013 (3) 10,000 10,529
New York State Environmental Fac. Water PCR 5.50% 6/15/2009 (1) 10,000 10,281
New York State Local Govt. Assistance Corp. Rev. 4.875% 4/1/2020 (1) 9,800 8,493
New York State Local Govt. Assistance Corp. Rev. 5.00% 4/1/2014 (3) 13,370 12,585
New York State Local Govt. Assistance Corp. Rev. 5.00% 4/1/2021 (1) 24,825 21,885
New York State Local Govt. Assistance Corp. Rev. 5.25% 4/1/2015 (2) 8,000 7,658
New York State Local Govt. Assistance Corp. Rev. 5.375% 4/1/2019 (1) 3,000 2,829
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 5.50% 8/15/2021 (3) 8,000 7,490
New York State Medical Care Fac. Finance Agency
(Mental Health Serivces) 6.00% 2/15/2005 (1)(Prere.) 14,850 15,929
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.00% 8/15/2015 (1) 150 155
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.375% 2/15/2002 (3)(Prere.) 6,000 6,355
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.375% 8/15/2010 (3) 100 105
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 7.40% 8/15/2007 (1) 460 470
New York State Medical Care Fac. Finance Agency
(Sisters of Charity-Buffalo) 6.625% 11/1/2018 (2) 5,500 5,790
New York State Thruway Auth. Rev. 5.00% 1/1/2020 (1) 5,055 4,480
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.30% 4/1/2010 (1) 3,775 3,805
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.50% 4/1/2015 (1) 12,480 12,301
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund 5.80% 4/1/2010 (2) 14,215 15,111
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.80% 4/1/2011 (2) 8,635 9,179
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 6.00% 4/1/2004 (3)(Prere.) 5,000 5,354
New York State Thruway Auth. Rev.
(Service Contract 5.75% 4/1/2004 (1)(Prere.) 4,000 4,244
New York State Urban Dev. Corp. 5.50% 4/1/2016 (1) 13,350 12,998
New York State Urban Dev. Corp.
Correctional Fac. Rev. 5.00% 1/1/2017 (2) 6,670 6,042
New York State Urban Dev. Corp.
Correctional Fac. Rev. 5.375% 1/1/2012 (1) 21,375 21,327
New York State Urban Dev. Corp.
Correctional Fac. Service Contract 6.00% 1/1/2011 (2) 2,500 2,639
New York State Urban Dev. Corp.
Correctional Fac. Service Contract 6.00% 1/1/2012 (2) 3,000 3,148
New York State Urban Dev. Corp.
Correctional Fac. Service Contract 6.00% 1/1/2013 (2) 4,110 4,277
New York State Urban Dev. Corp.
Correctional Fac. Service Contract 6.00% 1/1/2014 (2) 5,000 5,164
Niagara Falls NY Bridge Comm. 5.25% 10/1/2015 (3) 5,000 4,843
Niagara Falls NY Bridge Comm. 6.25% 10/1/2020 (3) 8,685 9,164
Niagara Falls NY Bridge Comm. 6.25% 10/1/2021 (3) 9,230 9,740
North Hempstead NY GO 6.30% 4/1/2008 (3) 2,055 2,238
North Hempstead NY GO 6.40% 4/1/2010 (3) 1,500 1,658
North Hempstead NY GO 6.40% 4/1/2011 (3) 2,075 2,297
North Hempstead NY Solid Waste Auth. 5.00% 2/1/2012 (1) 3,370 3,259
Smithtown NY GO 5.25% 4/1/2006 (1) 1,000 1,021
Smithtown NY GO 5.45% 4/1/2008 (1) 400 409
Suffolk County NY GO 5.00% 4/1/2006 (1) 2,255 2,266
Suffolk County NY GO 5.00% 7/15/2006 (3) 1,000 1,005
Suffolk County NY GO 5.10% 7/15/2007 (3) 1,280 1,287
Suffolk County NY GO 5.20% 7/15/2008 (3) 1,100 1,107
Suffolk County NY Water Auth. 5.25% 6/1/2010 (2)(ETM) 3,790 3,848
Suffolk County NY Water Auth. 5.25% 6/1/2011 (2)(ETM 2,380 2,403
Suffolk County NY Water Auth. 5.25% 6/1/2012 (2)(ETM) 4,290 4,294
Suffolk County NY Water Auth. 5.25% 6/1/2017 (2) 1,695 1,617
Suffolk County NY Water Auth. 5.75% 6/1/2002 (2)(Prere.) 1,100 1,155
Suffolk County NY Water Auth. 5.75% 6/1/2013 (2) 7,340 7,436
Town of Hempstead NY GO 5.50% 8/1/2011 (3) 2,450 2,496
Town of Hempstead NY GO 5.625% 2/1/2012 (3) 1,490 1,523
Town of Hempstead NY GO 5.625% 2/1/2013 (3) 1,170 1,188
Triborough Bridge & Tunnel Auth. Rev. NY 5.00% 1/1/2016 (4) 9,000 8,262
Triborough Bridge & Tunnel Auth. Rev. NY 5.125% 1/1/2015 (1) 6,500 6,137
Triborough Bridge & Tunnel Auth. Rev. NY 5.50% 1/1/2017 (2) 3,745 3,640
Yonkers NY School Dist. GO 5.60% 8/1/2009 (3) 535 549
Yonkers NY School Dist. GO 5.70% 8/1/2010 (3) 545 560
OUTSIDE NEW YORK:
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2015 (4) 5,000 4,860
Puerto Rico GO 5.00% 7/1/2017 (1) 11,475 10,614
Puerto Rico GO 5.00% 7/1/2018 (1) 2,650 2,428
Puerto Rico Govt. Dev. Bank VRDO 3.60% 12/8/1999 (1) 1,400 1,400
Puerto Rico Highway & Transp. Auth. VRDO 3.65% 12/8/1999 (2) 2,940 2,940
Puerto Rico Infrastrusture Financing Auth. Rev. 5.00% 7/1/2021 (2) 16,935 15,201
- ------------------------------------------------------------------------------------------------------------------
1,291,350
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</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------
SECONDARY MARKET INSURED (7.2%)
Muni. Assistance Corp. for New York City NY 6.00% 7/1/2008 (3) 22,350 22,950
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.00% 6/15/2017 (3) 4,000 3,630
New York City Transitional Finance Auth. 4.75% 11/15/2023 (3) 5,385 4,493
New York State Dormitory Auth.
(City Univ. of New York) 5.75% 7/1/2009 (3) 3,750 3,921
New York State Dormitory Auth.
(City Univ. of New York) 5.75% 7/1/2011 (3) 5,950 6,221
New York State Dormitory Auth. (Cornell Univ.) 7.25% 7/1/2012 (1) 1,175 1,218
New York State Dormitory Auth. (State Univ.) 5.50% 5/15/2026 (1) 12,805 11,993
New York State Dormitory Auth. (State Univ.) 6.00% 5/15/2017 (2) 3,775 3,779
New York State Medical Care Fac. Finance Agency 5.25% 2/15/2019 (3) 16,230 14,834
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 5.375% 2/15/2014 (1) 5,000 4,852
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.00% 4/1/2016 (4) 7,400 6,809
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.00% 4/1/2018 (4) 5,450 4,904
Port Auth. of NY & NJ Special Obligation Rev. 6.50% 1/15/2026 (1) 1,500 1,546
Triborough Bridge & Tunnel Auth. NY 6.00% 1/1/2012 (1) 7,805 8,316
Triborough Bridge & Tunnel Auth. NY 6.75% 1/1/2009 (2) 3,000 3,329
Triborough Bridge & Tunnel Auth. NY 6.875% 1/1/2015 (3) 7,000 7,307
------------
110,102
------------
NONINSURED (5.2%)
Long Island NY Power Auth. Electric System Rev. VRDO 3.60% 12/2/1999 LOC 2,500 2,500
Long Island NY Power Auth. Electric System Rev. VRDO 3.65% 12/2/1999 LOC 1,300 1,300
Long Island NY Power Auth. Electric System Rev. VRDO 3.85% 12/8/1999 LOC 600 600
New York City NY Cultural Resources VRDO
(Solomon R. Guggenheim Foundation) 3.70% 12/2/1999 LOC 100 100
New York City NY GO VRDO 3.70% 12/2/1999 LOC 200 200
New York City NY GO VRDO 3.75% 12/8/1999 LOC 3,200 3,200
New York City NY GO VRDO 3.75% 12/8/1999 LOC 1,300 1,300
New York City NY GO VRDO 3.80% 12/2/1999 LOC 1,035 1,035
New York City NY GO VRDO 3.80% 12/8/1999 LOC 7,700 7,700
New York City NY Transitional Finance Auth.
Future Tax Rev. VRDO 3.60% 12/2/1999 1,235 1,235
New York City NY VRDO 3.85% 12/8/1999 LOC 2,650 2,650
New York State Dormitory Auth. (Columbia Univ.) 5.75% 7/1/2015 11,965 12,041
New York State Dormitory Auth. (Rockefeller Univ.) 5.00% 7/1/2015 1,100 1,037
New York State Dormitory Auth. (Rockefeller Univ.) 5.00% 7/1/2018 4,555 4,168
New York State Dormitory Auth. VRDO (Cornell Univ.) 3.75% 12/2/1999 600 600
New York State Energy Research & Development Auth.
(Con Edison) VRDO 3.85% 12/8/1999 800 800
New York State Energy Research & Development Auth.
(Con Edison) VRDO 3.95% 12/8/1999 1,600 1,600
New York State Environmental Fac. Water PCR 5.55% 7/15/2009 2,000 2,067
New York State Local Govt. Assistance Corp. VRDO 3.70% 12/8/1999 LOC 7,500 7,500
New York State Local Govt. Assistance Corp. VRDO 3.70% 12/8/1999 LOC 6,600 6,600
New York State Local Govt. Assistance Corp. VRDO 3.80% 12/8/1999 LOC 8,000 8,000
Onondaga County NY Public Improvements 5.875% 2/15/2008 2,475 2,624
Port Auth. of NY & NJ Special Obligation Rev. VRDO
(Versatile Structure) 3.65% 12/2/1999 2,700 2,700
Westchester County NY GO 6.70% 11/1/2008 3,250 3,671
Westchester County NY GO 6.70% 11/1/2009 3,645 4,140
------------
79,368
------------
- ------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,506,566) 1,480,820
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
22
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<TABLE>
<CAPTION>
<S> <C>
OTHER ASSETS AND LIABILITIES (3.2%)
- ------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 54,461
Liabilities (5,662)
- ------------------------------------------------------------------------------------------------------------------
48,799
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- ------------------------------------------------------------------------------------------------------------------
Applicable to 146,824,454 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $1,529,619
==================================================================================================================
NET ASSET VALUE PER SHARE $10.42
==================================================================================================================
*See Note A in Notes to Financial Statements.
For key to abbreviations and other references, see below.
- ------------------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- ------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ------------------------------------------------------------------------------------------------------------------
Paid in Capital $1,556,326 $10.60
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses--Note E (961) (.01)
Unrealized Depreciation--Note F (25,746) (.17)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,529,619 $10.42
==================================================================================================================
</TABLE>
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.
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.
23
<PAGE>
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
- ---------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
(000) (000)
- ---------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Interest $20,318 $ 79,421
- ---------------------------------------------------------------------------------------------
Total Income 20,318 79,421
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 76 189
Management and Administrative 858 2,571
Marketing and Distribution 132 278
Custodian Fees 7 14
Auditing Fees 8 8
Shareholders' Reports 4 22
Trustees' Fees and Expenses 1 2
--------------------------------
Total Expenses 1,086 3,084
Expenses Paid Indirectly--Note C (7) (35)
- ---------------------------------------------------------------------------------------------
Net Expenses 1,079 3,049
- ---------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 19,239 76,372
- ---------------------------------------------------------------------------------------------
REALIZED NET Gain (LOSS)
Investment Securities Sold (3) (4,278)
Futures Contracts -- 3,297
- ---------------------------------------------------------------------------------------------
REALIZED NET LOSS (3) (981)
- ---------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities -- (114,125)
Futures Contracts -- 1,568
- ---------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) -- (112 ,557)
- ---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $19,236 $ (37,166)
=============================================================================================
</TABLE>
24
<PAGE>
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
----------------------- --------------------------
YEAR ENDED NOVEMBER 30,
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 1998 1999 1998
(000) (000) (000) (000)
- ---------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 19,239 $ 10,509 $ 76,372 $ 63,995
Realized Net Gain (Loss) (3) (2) (981) 13,605
Change in Unrealized Appreciation (Depreciation) -- -- (112,557) 16,031
--------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 19,236 10,507 (37,166) 93,631
--------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (19,239) (10,509) (76,372) (63,995)
Realized Capital Gain -- -- (11,381) (1,756)
--------------------------------------------------------
Total Distributions (19,239) (10,509) (87,753) (65,751)
CAPITAL SHARE TRANSACTIONS1
Issued 920,274 641,396 524,842 412,179
Issued in Lieu of Cash Distributions 18,542 10,102 65,691 48,283
Redeemed (624,003) (315,991) (341,929) (215,824)
--------------------------------------------------------
Net Increase from Capital Share Transactions 314,813 335,507 248,604 244,638
- ---------------------------------------------------------------------------------------------------------------
Total Increase 314,810 335,505 123,685 272,518
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 483,464 147,959 1,405,934 1,133,416
--------------------------------------------------------
End of Year $798,274 $483,464 $1,529,619 $1,405,934
===============================================================================================================
1Shares Issued (Redeemed)
Issued 920,274 641,396 47,958 36,807
Issued in Lieu of Cash Distributions 18,542 10,102 6,029 4,309
Redeemed (624,003) (315,991) (31,589) (19,284)
--------------------------------------------------------
Net Increase in Shares Outstanding 314,813 335,507 22,398 21,832
===============================================================================================================
</TABLE>
25
<PAGE>
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
YEAR ENDED
NOVEMBER 30,
------------------------- SEP. 3* TO
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 1999 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 .030 .032 .008
Net Realized and Unrealized Gain (Loss) on Investments -- -- --
----------------------------------------------
Total from Investment Operations .030 .032 .008
DISTRIBUTIONS
Dividends from Net Investment Income (.030) (.032) (.008)
Distributions from Realized Capital Gains -- -- --
----------------------------------------------
Total Distributions (.030) (.032) (.008)
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
==================================================================================================================
TOTAL RETURN 3.01% 3.27% 0.84%
==================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $798 $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 2.99% 3.19% 3.52%**
==================================================================================================================
*Inception.
**Annualized.
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND
YEAR ENDED NOVEMBER 30,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $11.30 $11.05 $10.99 $11.01 $ 9.70
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .547 .564 .572 .569 .581
Net Realized and Unrealized Gain (Loss) on Investments (.789) .267 .101 .045 1.310
-----------------------------------------------------
Total from Investment Operations (.242) .831 .673 .614 1.891
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.547) (.564) (.572) (.569) (.581)
Distributions from Realized Capital Gains (.091) (.017) (.041) (.065) --
-----------------------------------------------------
Total Distributions (.638) (.581) (.613) (.634) (.581)
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.42 $11.30 $11.05 $10.99 $11.01
==================================================================================================================
TOTAL RETURN -2.25% 7.69% 6.36% 5.84% 19.90%
==================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,530 $1,406 $1,133 $959 $859
Ratio of Total Expenses to Average Net Assets 0.20% 0.21% 0.20% 0.20% 0.22%
Ratio of Net Investment Income to Average Net Asset 5.02% 5.03% 5.26% 5.28% 5.51%
Portfolio Turnover Rate 5% 17% 6% 5% 10%
==================================================================================================================
</TABLE>
27
<PAGE>
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.
28
<PAGE>
B. The Vanguard Group furnishes at cost investment advisory, corporate
management, administrative, marketing, and distribution services. The costs of
such services are allocated to each fund 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 November 30, 1999, the funds had
contributed capital to Vanguard (included in Other Assets) of:
- --------------------------------------------------------------------------------
CAPITAL CONTRIBUTED PERCENTAGE PERCENTAGE
TO VANGUARD OF FUND OF VANGUARD'S
NEW YORK TAX-EXEMPT FUND (000) NET ASSETS CAPITALIZATION
- --------------------------------------------------------------------------------
Money Market $159 0.02% 0.16%
Insured Long-Term 317 0.02 0.32
- --------------------------------------------------------------------------------
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 year ended November 30, 1999, these arrangements
reduced expenses by:
- --------------------------------------------------------------------------------
EXPENSE REDUCTION
(000)
- --------------------------------------------------------------------------------
MANAGEMENT AND CUSTODIAN
NEW YORK TAX-EXEMPT FUND ADMINISTRATIVE FEES
- --------------------------------------------------------------------------------
Money Market -- $ 7
Insured Long-Term $21 14
- --------------------------------------------------------------------------------
D. During the year ended November 30, 1999, the Insured Long-Term Tax-Exempt
Fund purchased $297,658,000 of investment securities and sold $70,328,000 of
investment securities, other than temporary cash investments.
E. Capital gain distributions are determined on a tax basis and may differ from
realized capital gains for financial reporting purposes due to differences in
the timing of realization of gains. The Insured Long-Term Tax-Exempt Fund had
realized losses totaling $163,000 through November 30, 1999, which are deferred
for tax purposes and increase the amount of unrealized depreciation on
investment securities for tax purposes (see Note F). At November 30, 1999, the
fund had available capital losses of $798,000 to offset future net capital gains
through November 30, 2007.
F. At November 30, 1999, net unrealized depreciation of Insured Long-Term
Tax-Exempt Fund investment securities for federal income tax purposes was
$25,909,000, consisting of unrealized gains of $30,900,000 on securities that
had risen in value since their purchase and $56,809,000 in unrealized losses on
securities that had fallen in value since their purchase. (See Note E.)
29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Vanguard New York Tax-Exempt Funds
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
New York Tax-Exempt Money Market Fund and New York Insured Long-Term Tax-Exempt
Fund (constituting Vanguard New York Tax-Exempt Funds, hereafter referred to as
the "Funds") at November 30, 1999, the results of each of their operations for
the year then ended, and the changes in each of their net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
January 6, 2000
30
<PAGE>
================================================================================
SPECIAL 1999 TAX INFORMATION (UNAUDITED) FOR VANGUARD NEW YORK TAX-EXEMPT FUNDS
This information for the fiscal year ended November 30, 1999, is included
pursuant to provisions of the Internal Revenue Code.
The Insured Long-Term Tax-Exempt Fund distributed $11,381,000 as capital
gain dividends (from net long-term capital gains) to shareholders in December
1998, all of which is designated as a 20% rate gain distribution.
Each fund designates 100% of its income dividends as exempt-interest
dividends.
================================================================================
31
<PAGE>
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 International 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 A
dmiral 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.
For information about Vanguard funds and our variable annuity plan, including
charges and expenses, obtain a prospectus from The Vanguard Group, P.O. Box
2600, Valley Forge, PA 19482-2600. Read it carefully before you invest or send
money.
32
<PAGE>
THE PEOPLE WHO GOVERN YOUR FUND
The Trustees of your mutual fund are there to see that the fund is operated and
managed in your best interests since, as a shareholder, you are part owner of
the fund. Your fund Trustees also serve on the Board of Directors of The
Vanguard Group, which is owned by the funds and exists solely to provide
services to them on an at-cost basis.
The majority of Vanguard's board members are independent, meaning that they
have no affiliation with Vanguard or the funds they oversee, apart from the
sizable personal investments they have made as private individuals. They bring
distinguished backgrounds in business, academia, and public service to their
task of working with Vanguard officers to establish the policies and oversee the
activities of the funds.
Among board members' responsibilities are selecting investment advisers for
the funds; monitoring fund operations, performance, and costs; reviewing
contracts; nominating and selecting new Trustees/Directors; and electing
Vanguard officers.
The list below provides a brief description of each Trustee's professional
affiliations. Noted in parentheses is the year in which the Trustee joined the
Vanguard Board.
TRUSTEES
JOHN C. BOGLE (1967) 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 (1987) 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 (1998) Vice President, Chief Information Officer, and a
member of the Executive Committee of Johnson & Johnson; Director of Johnson &
JohnsonoMerck Consumer Pharmaceuticals Co., The Medical Center at Princeton, and
Women's Research and Education Institute.
BURTON G. MALKIEL (1977) 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 Select Sector SPDR
Trust.
ALFRED M. RANKIN, Jr. (1993) Chairman, President, Chief Executive Officer, and
Director of NACCO Industries, Inc.; Director of The BFGoodrich Co.
JOHN C. SAWHILL (1991) 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. (1971) 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 (1985) Retired Chairman 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.
VANGUARD MANAGING DIRECTORS
R. GREGORY BARTON Legal Department.
ROBERT A. DISTEFANO Information Technology.
JAMES H. GATELY Individual Investor Group.
KATHLEEN C. GUBANICH Human Resources.
IAN A. MACKINNON Fixed Income Group.
F. WILLIAM MCNABB, III Institutional Investor Group.
MICHAEL S. MILLER Planning and Development.
RALPH K. PACKARD Chief Financial Officer.
GEORGE U. SAUTER Core Management Group.
<PAGE>
ABOUT OUR COVER
Our cover art, depicting HMS Vanguard at sea, is a
reproduction of Leading the Way, a 1984 work created
and copyrighted by noted naval artist Tom Freeman,
of Forest Hill, Maryland.
All comparative mutual fund data are from Lipper Inc. or Morningstar,
Inc., unless otherwise noted.
"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.
[SHIP]
[THE VANGUARD GROUP LOG]
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.
Q760-01/24/2000
(C) 2000 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing Corporation, Distributor.
