UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 33-2908
Name of Registrant: VANGUARD NEW YORK TAX-FREE FUNDS
Address of Registrant: P.O. BOX 2600, VALLEY FORGE, PA 19482
Name and address of agent for service: R. GREGORY BARTON
P.O. BOX 876
VALLEY FORGE, PA 19482
Registrant's telephone number, including area code: (610) 669-1000
Date of fiscal year end: November 30
Date of reporting period: December 1, 2002 - November 30, 2003
ITEM 1: Reports to Shareholders
VANGUARD(R) NEW YORK TAX-EXEMPT FUNDS
NOVEMBER 30, 2003
[GRAPHIC]
ANNUAL REPORT
VANGUARD (R) NEW YORK TAX-EXEMPT MONEY MARKET FUND
vANGUARD (R) NEW YORK LONG-TERM TAX-EXEMPT FUND
THE VANGUARD GROUP (R) LOGO
HOW TO READ YOUR FUND REPORT
This report contains information that can help you evaluate your investment. It
includes details about your fund's return and presents data and analysis that
provide insight into the fund's performance and investment approach.
By reading the letter from Vanguard's chairman, John J. Brennan, together with
the letter from the managers who select securities for your fund, you'll get an
understanding of how the fund invests and how the market environment affected
its performance. The statistical information that follows can help you
understand how the fund's performance and characteristics stack up against those
of similar funds and market benchmarks.
It's important to keep in mind that the opinions expressed by Vanguard's
investment managers are just that: informed opinions. They should not be
considered promises or advice. The opinions, like the statistics, cover the
period through the date on the cover of this report. As things change--and in
the financial markets you can be certain only of change--an investment manager's
job is to evaluate new information and make adjustments, if necessary. Of
course, the risks of investing in the fund are spelled out in the prospectus.
Frequent updates on the fund's performance and information about some of its
holdings are available on Vanguard.com(R).
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CONTENTS
1 letter from the chairman
6 report from the advisor
9 fund profiles
11 glossary of investment terms
12 performance summaries
14 about your fund's expenses
15 financial statements
- --------------------------------------------------------------------------------
SUMMARY
* The Vanguard New York Tax-Exempt Funds outperformed their peer group
averages in fiscal 2003.
* Interest rates in the taxable and municipal bond markets moved in different
directions during the period.
* The Vanguard funds achieved peer- beating results with the same emphasis on
prudence, quality, and low costs that has contributed to their long-term
success.
Want less clutter in your mailbox? Just register with Vanguard.com and opt to
get fund reports online.
- --------------------------------------------------------------------------------
LETTER FROM THE CHAIRMAN
Dear Shareholder,
During the 12 months ended November 30, 2003, the Vanguard New York Tax-Exempt
Funds met their investment objectives while negotiating the volatile interest
rate environment more successfully than their average peer mutual funds.
[PICTURES OF JOHN J. BRENNAN]
Vanguard New York Tax-Exempt Money Market Fund*
- ----------------------------------------------------
2003 TOTAL RETURNS FISCAL YEAR ENDED
NOVEMBER 30
- ----------------------------------------------------
VANGUARD NEW YORK TAX-EXEMPT
MONEY MARKET FUND*
(SEC 7-Day Annualized Yield: 0.88%) 0.9%
Average New York Tax-Exempt
Money Market Fund** 0.5
- ----------------------------------------------------
VANGUARD NEW YORK LONG-TERM
TAX-EXEMPT FUND
Investor Shares 7.2%
Admiral Shares 7.3
Lehman 10 Year Municipal Bond Index 6.9
Average New York Municipal Debt Fund** 6.3
Lehman Municipal Bond Index 6.7
- ----------------------------------------------------
*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.
**Derived from data provided by Lipper Inc.
The New York Tax-Exempt Money Market Fund maintained its $1 share price (as is
expected but not guaranteed) while generating a significantly higher return than
the peer-group average, as illustrated in the table at left.
The New York Long-Term Tax-Exempt Fund generated a relatively high level of
income exempt from federal and New York State income taxes. For the fund's
Investor Shares, the total return (reinvested distributions plus capital change)
was 0.9 percentage point more than the average return for the peer group. The
Admiral Shares returned a full percentage point more than the peer-group
average. The fund also outperformed two unmanaged indexes of the municipal bond
market. These benchmarks are imperfect analogs of your fund's portfolio, but
they illustrate that the fund's returns were strong by any measure.
At the end of November 2003, the Tax-Exempt Money Market Fund's yield was 0.88%,
down from 1.12% one year earlier. For New York
1
residents in the highest federal income tax bracket, the fund's current yield
was equivalent to a fully taxable yield of 1.47% (accounting for state and
federal taxes, but not for local taxes or exposure to the alternative minimum
tax). The yield of the Long-Term Tax-Exempt Fund's Investor Shares finished the
year at 3.16%, down from 3.69% at the end of November 2002, for a taxable
equivalent yield of 5.27%. For the fund's Admiral Shares, the ending yield was
3.21% (down from 3.80% a year earlier), with a taxable equivalent yield of
5.35%.
ADMIRAL (TM) SHARES
A LOWER-COST CLASS OF SHARES AVAILABLE TO MANY LONGTIME SHAREHOLDERS AND TO
THOSE WITH SIGNIFICANT INVESTMENT IN THE FUND.
Details of the per-share components of the funds' total returns--their starting
and ending net asset values, plus distributions--appear on page 5.
TAXABLE BONDS AND MUNICIPALS WENT THEIR SEPARATE WAYS
During the past fiscal year, the yields of most U.S. Treasury securities rose,
even as the yields of their tax-exempt municipal counterparts declined. (Money
market securities were an exception to this interest rate pattern, however,
since they are subject more to the Federal Reserve Board's monetary-policy
actions than to market forces. The yields of the shortest-term municipal and
U.S. Treasury securities declined during the 12 months.) These disparate
12-month performances reflected a sea change in investors' risk tolerance, as
well as market recognition of municipal bonds' exceptional value.
- --------------------------------------------------------------------------------
MARKET BAROMETER AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 2003
---------------------------------
ONE THREE FIVE
YEAR YEARS YEARS
- --------------------------------------------------------------------------------
BONDS
LEHMAN AGGREGATE BOND INDEX 5.2% 7.9% 6.5%
(BROAD TAXABLE MARKET)
LEHMAN MUNICIPAL BOND INDEX 6.7 7.2 5.7
CITIGROUP 3-MONTH TREASURY BILL INDEX 1.1 2.4 3.6
- --------------------------------------------------------------------------------
STOCKS
RUSSELL 1000 INDEX (LARGE-CAPS) 16.9% -4.9% 0.2%
RUSSELL 2000 INDEX (SMALL-CAPS) 36.3 8.5 8.0
WILSHIRE 5000 INDEX (ENTIRE MARKET) 19.0 -3.3 0.8
MSCI ALL COUNTRY WORLD INDEX FREE
EX USA (International) 27.1 -2.3 0.7
================================================================================
CPI
Consumer Price Index 1.8% 2.0% 2.4%
- --------------------------------------------------------------------------------
In November 2002, as the broad stock market rattled near bear-market lows and
fear was the dominant mood, investors embarked on a "flight to quality," bidding
up the prices of Treasuries. Over the next few months, successful combat
operations in Iraq, as well as upbeat economic and corporate-profit reports,
ignited a stock market rally, whetting an appetite for risk. In the bond market,
corporate issues
2
outperformed risk-free Treasuries for the full fiscal year, and in the stock
market, volatile small-capitalization shares outperformed the broad U.S. stock
market: The small-cap Russell 2000 Index climbed 36.3%, while the Wilshire 5000
Total Market Index returned 19.0%.
Although municipal securities are generally high-quality bonds, they benefited
from the broader bond market's dynamics. When the fiscal year started, municipal
securities were largely ignored, leaving them with tax-exempt yields that were
very high relative to the yields of Treasuries. At the end of November 2002, a
10-year general-obligation municipal bond yielded 92% of what its Treasury
counterpart offered, despite the muni's significant tax advantages. As investors
were attracted to this disparity--bidding up munis and bidding down
Treasuries--the ratio declined to 82% at the end of November 2003--still high,
but more typical of its historical level.
THE FUNDS' TRADITIONAL VIRTUES WERE IN EVIDENCE
Among intermediate- to long-term bonds--the focus of Vanguard New York Long-Term
Tax-Exempt Fund--yields declined steadily through the first half of the fiscal
year, touching 12-month lows in late spring. During the second half, yields
spiked in the summer, then drifted back below their year-end 2002 levels.
The approach of the funds' advisor, Vanguard Fixed Income Group, to the past
year's market tumult was typically measured. The advisor made few changes to the
composition of the Long-Term Tax-Exempt Fund's high-quality portfolio. As of
November 30, 2003, 80% of the portfolio was invested in securities with the
highest credit rating, essentially the same weighting as a year earlier.
Anticipating higher interest rates in coming months, the advisor elected not to
stretch for yield in longer maturities, keeping the fund's duration (its price
sensitivity to rate changes) roughly constant. This positioning produced a 7.2%
total return for the fund's Investor Shares--2.8 percentage points from capital
growth and 4.4 from income. The Fixed Income Group's skilled management,
combined with the fund's low operating costs, put the fund's result well ahead
of the peer group's average return of 6.3%. (For a comparison of the expense
ratios of Vanguard's funds with the averages for their peer groups, please see
the table on page 14.)
As the yields of the shortest-term securities declined from their already low
levels during the period, the advisor nudged the average weighted
3
- --------------------------------------------------------------------------------
Total Returns Ten Years Ended November 30, 2003
- --------------------------------------------------------------------------------
Average Final Value of a $10,000
Annual Return Initial Investment
-------------------- --------------------------------
Average Average
New York Vanguard Competing Vanguard Competing Vanguard
Tax-Exempt Fund Fund Fund* Fund Fund* Advantage
- --------------------------------------------------------------------------------
Money Market** 2.6% 2.2% $11,708 $11,436 $ 272
Long-Term Investor Shares 6.1 5.1 18,091 16,450 1,641
- --------------------------------------------------------------------------------
*For the Long-Term Tax-Exempt Fund: Average New York Insured Municipal Debt Fund
through March 31, 2002, and Average New York Municipal Debt Fund thereafter.
**Annualized returns since inception on September 3, 1997.
maturity of the Tax-Exempt Money Market Fund higher--from 38 days to 55 days--to
limit the fund's decline in income. For the full fiscal year, the fund returned
0.9%--0.4 percentage point more than the peer-group average--again reflecting
the powerful combination of skilled management and low operating costs.
SKILLED MANAGEMENT, LOW COSTS, AND HIGH QUALITY ARE AN IMPRESSIVE TRIO
The same characteristics that explained our funds' strong relative performances
in fiscal 2003 have contributed to their excellent long-term returns. The table
above shows the average annual return of the Long-Term Tax-Exempt Fund over the
past ten years, the average return of the Tax-Exempt Money Market Fund since its
1997 inception, and the returns of their peer-group averages. We also display
the growth of hypothetical initial investments of $10,000 in the funds and their
average peers.
As you can see, both funds outperformed their average peers, creating additional
wealth for shareholders. For example, the Long-Term Tax-Exempt Fund's
1-percentage-point margin in average total return translated into an extra
$1,641 in shareholder wealth on a $10,000 investment--a significant difference
on a relatively modest initial outlay.
BONDS ARE VITAL IN ANY ENVIRONMENT
Today, municipal bond yields are lower than they were a year
ago, which makes continued declines in interest rates--and increases in bond
prices--less likely. A strengthening economy also suggests that rates are more
likely to rise than to fall.
4
In a sense, though, none of this matters. The primary reasons to invest in bonds
are the same in any interest rate environment: diversification and income. Bond
funds are an essential component of a well-balanced portfolio, helping you to
meet your financial goals while keeping risk in check by counterbalancing your
stock investments. A related, but different, reason to hold bond funds is that,
over the long term, they generate virtually all of their returns from income,
which is generally a less volatile source of return than capital growth. Changes
in the share price of a bond fund--up or down--have relatively little impact on
the fund's total return over a period of many years. Income, and the interest
earned on the reinvestment of that income, are the long-term drivers of the
fund's return.
I want to close this letter with an assurance that the reports of late trading
and market-timing at some competing investment management firms are as
shocking--and upsetting--to us as they no doubt are to you. Vanguard has
policies and procedures in place to identify and deter such behavior. More
important, Vanguard shareholders can be confident both in the integrity of our
excellent crew and in the virtues of our client-owned corporate structure--a
structure that aligns our day-to-day efforts with your long-term financial
goals.
Thank you for entrusting us with your assets.
Sincerely,
/S/JOHN J. BRENNAN
John J. Brennan
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
DECEMBER 18, 2003
- --------------------------------------------------------------------------------
YOUR FUND'S PERFORMANCE AT A GLANCE NOVEMBER 30, 2002-NOVEMBER 30, 2003
Distributions Per Share
---------------------------
New York Starting Ending Income Capital
Tax-Exempt Fund Share Price Share Price Dividends Gains
- --------------------------------------------------------------------------------
Money Market $ 1.00 $ 1.00 $0.009 $0.000
Long-Term
Investor Shares 11.38 11.57 0.486 0.125
Admiral Shares 11.38 11.57 0.493 0.125
- --------------------------------------------------------------------------------
5
REPORT FROM THE ADVISOR
During fiscal 2003, Vanguard New York Tax-Exempt Money Market Fund returned
0.9%, and Vanguard New York Long-Term Tax-Exempt Fund's Investor Shares returned
7.2% (7.3% for the Admiral Shares), outperforming their peer-group averages.
Generally declining interest rates in the municipal bond market translated into
lower yields for the funds at fiscal year-end.
THE INVESTMENT ENVIRONMENT
Although growth was subdued in the first half of the period, the economy ground
into gear as the fiscal year progressed. In the third quarter of calendar 2003,
the nation's gross domestic product expanded at an annualized rate of 8.2%, a
20-year high. The job market, which was notably weak for much of the period,
also began to improve. From September to November, the unemployment rate dropped
0.2 percentage point to 5.9%. Despite signs of economic acceleration, inflation
remained remarkably tame. The Consumer Price Index rose just 1.8% in the 12
months ended November 30. The "core" CPI, which excludes volatile food and
energy prices, was up just 1.1%.
INVESTMENT PHILOSOPHY
THE ADVISOR 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 PENNSYLVANIA INCOME TAXES BY INVESTING IN HIGH-QUALITY
SECURITIES ISSUED BY PENNSYLVANIA STATE, COUNTY, AND MUNICIPAL GOVERNMENTS.
Amid the murky economic picture for much of the year, the Federal Reserve Board
stood pat, at least until June, when it cut its target for the federal funds
rate--the rate banks charge one another for overnight loans--by 25 basis points
(0.25 percentage point) to 1.00%. As the year came to a close with the abundance
of rosy reports, the Fed kept its target unchanged, though it did acknowledge
that growth was accelerating. The Fed's cautious stance reflects its assessment
that the economy's "upside" and "downside" prospects are roughly equal. Our view
is that the economy will continue to expand, potentially pushing up interest
rates.
6
FEW NEW ISSUES, GOOD RELATIVE VALUE MEANT A SOLID YEAR FOR MUNIS
Interest rates were volatile in both the municipal and U.S. Treasury markets,
though the yields in each group generally moved in opposite directions. The
yield of the 10-year Treasury note began the fiscal year at 4.21%, fell to a low
of 3.11% on June 13, then rebounded to finish the period at 4.33%.
By contrast, the yield of the 10-year AAA general-obligation municipal bond fell
during the year, declining 32 basis points to end the period at 3.55%. (On June
13, it was 2.85%.) The adjacent tables display 12-month changes in the yield
curves of the municipal and Treasury markets. Both curves steepened, meaning
that the difference between the yields of shorter- and longer-term securities
increased.
As the interest rate movements suggest, municipal bonds outperformed Treasuries;
the declining yields meant higher prices for municipals. The low level of new
municipal issuance and unusually good municipal bond values at the start of the
fiscal year help explain the strong performance.
From January to November, the supply of new municipal bonds rose 4.6% from the
same period a year earlier. If taxable municipal bonds are excluded, however,
supply increased just 1.2%. (During the year, the majority of taxable muni bonds
were issued to help state and local governments fund shortfalls in their pension
plans. The Vanguard New York funds own no taxable municipal debt.) In New York,
the rate of new issuance, including taxable debt, declined a significant 22.3%,
which provided relatively strong support for the price of existing New York
debt. (Lower issuance reduces pressure on existing bonds' prices.)
- --------------------------------------------------------------------------------
YIELDS OF MUNICIPAL BONDS
(AAA-Rated General-Obligation Issues)
Change
Maturity Nov. 30, 2002 Nov. 30, 2003 (basis points)
- --------------------------------------------------------------------------------
2 years 1.70% 1.40% -30
5 years 2.75 2.39 -36
10 years 3.87 3.55 -32
30 years 5.01 4.72 -29
- --------------------------------------------------------------------------------
SOURCE: THE VANGUARD GROUP.
- --------------------------------------------------------------------------------
Yields of U.S. Treasury Securities
Change
Maturity Nov. 30, 2002 Nov. 30, 2003 (basis points)
2 years 2.06% 2.04% -2
5 years 3.27 3.35 +8
10 years 4.21 4.33 +12
30 years 5.04 5.13 +9
- --------------------------------------------------------------------------------
SOURCE: THE VANGUARD GROUP.
During the past year, investors were also attracted by munis' "cheapness"
relative to Treasuries. At the beginning of the fiscal year, a 10-year AAA
general-obligation municipal bond yielded 92% of what
7
a 10-year Treasury note paid--high by historical levels. By year-end, with muni
prices rising and Treasury prices declining, this ratio had declined to a more
normal 82%.
LOW EXPENSES HELP ENSURE THAT OUR QUALITY STAYS HIGH
Despite the decline in longer-term interest rates, we kept the Long-Term
Tax-Exempt Fund's duration (a measure of interest rate sensitivity) roughly
constant. We don't consider the slightly higher yields available on longer-term
bonds sufficient compensation for the risk that interest rates will rise in the
coming year.
We made few changes to the Long-Term Tax-Exempt Fund's credit profile, keeping
it at its customary high level of quality. The Tax-Exempt Money Market Fund
maintained its exceptionally high-quality portfolio as well: Our dollar-weighted
credit rating on November 30 was MIG-1, the highest rating in a pool of
high-quality securities. In both funds, our ability to maintain a high-quality
portfolio while delivering higher returns than competing funds is a reflection
of Vanguard's low expense ratios. There's no need to compromise quality in a
quest for yield.
As municipal bond yields have declined, the always significant benefit of low
expenses has become even more apparent. An expense ratio of 1.2% (typical among
long-term tax-exempt funds) consumes almost one-fourth of the income generated
by a bond portfolio yielding 5%. When market yields fall to 3.5%, the typical
expense ratio looms much larger, consuming one-third of the available income.
Robert F. Auwaerter, PRINCIPAL
Christopher M. Ryon, PRINCIPAL
Pamela Wisehaupt Tynan, PRINCIPAL
Kathryn Allen, PRINCIPAL
VANGUARD FIXED INCOME GROUP
DECEMBER 17, 2003
8
AS OF 11/30/2003
FUND PROFILES
These Profiles provide snapshots of each fund's characteristics, compared where
indicated with both an appropriate market index and a broad market index. Key
terms are defined on page 11.
NEW YORK TAX-EXEMPT
MONEY MARKET FUND
- ---------------------------------- ------------------------------------------
FINANCIAL ATTRIBUTES Distribution by Credit Quality
(% of portfolio)
Yield 0.9% MIG-1/SP-1+ 55%
Average Weighted Maturity 55 days A-1/P-1 44
Average Quality MIG-1 AAA/AA 0
Expense Ratio 0.17% A 1
- ---------------------------------- ------------------------------------------
Total 100%
------------------------------------------
Visit our website at Vanguard.com for regularly updated fund information.
9
FUND PROFILES (continued)
NEW YORK LONG-TERM
TAX-EXEMPT FUND
- -----------------------------------------------------------------------
FINANCIAL ATTRIBUTES
Comparative Broad
Fund Index* Index**
- -----------------------------------------------------------------------
Number of Issues 248 9,054 47,482
Yield
Investor Shares 3.2% -- --
Admiral Shares 3.2% -- --
Yield to Maturity 3.3%Y -- --
Average Coupon 4.8% 5.2% 5.2%
Average Effective Maturity 7.5 years 9.9 years 13.8 years
Average Quality AAA AA+ AA+
Average Duration 5.8 years 7.0 years 8.1 years
Expense Ratio -- --
Investor Shares 0.17%
Admiral Shares 0.11%
Short-Term Reserves 8% -- --
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
- ----------------------------------------
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
AAA 80%
AA 18
A 1
BBB 1
- ----------------------------------------
Total 100%
- ----------------------------------------
- ----------------------------------------
Investment Focus
CREDIT QUALITY
Low Medium High
AVERAGE MATURITY
Short Medium Long
- ----------------------------------------
- -----------------------------------------------------------------------
Volatility Measures
Comparative Broad
Fund Index* Fund Index**
- -----------------------------------------------------------------------
R-Squared 0.97 1.00 0.98 1.00
Beta 1.04 1.00 1.20 1.00
- -----------------------------------------------------------------------
DISTRIBUTION BY MATURITY (% of portfolio)
Under 1 Year 10%
1-5 Years 19
5-10 Years 57
10-20 Years 11
20-30 Years 2
Over 30 Years 1
- -------------------------------------
Total 100%
*Lehman 10 Year Municipal Bond Index.
**Lehman Municipal Bond Index.
+Before expenses.
10
GLOSSARY OF INVESTMENT TERMS
AVERAGE COUPON. The average interest rate paid on the fixed income securities
held by a fund. It is expressed as a percentage of face value.
- --------------------------------------------------------------------------------
AVERAGE DURATION. An estimate of how much the value of the bonds held by a fund
will fluctuate in response to a change in interest rates. To see how the value
could change, multiply the average duration by the change in rates. If interest
rates rise by 1 percentage point, the value of the bonds in a fund with an
average duration of five years would decline by about 5%. If rates decrease by a
percentage point, the value would rise by 5%.
- --------------------------------------------------------------------------------
AVERAGE EFFECTIVE MATURITY. The average length of time until fixed income
securities held by a fund reach maturity and are repaid, taking into
consideration the possibility that the issuer may call the bond before its
maturity date. The figure reflects the proportion of fund assets represented by
each security; it also reflects any futures contracts held. In general, the
longer the average effective 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 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.
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY. The average length of time until fixed income
securities held by a fund reach maturity and are repaid. The figure reflects the
proportion of fund assets represented by each security.
- --------------------------------------------------------------------------------
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of a given market index. The index is assigned a
beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically
would have seen its share price rise or fall by 12% when the index rose or fell
by 10%. A fund's beta should be reviewed in conjunction with its R-squared (see
definition below). The lower the R-squared, the less correlation there is
between the fund and the index, and the less reliable beta is as an indicator of
volatility.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the market in general, as measured by a given index. If a
fund's total returns were precisely synchronized with an index's returns, its
R-squared would be 1.00. If the fund's returns bore no relationship to the
index's returns, its R-squared would be 0.
- --------------------------------------------------------------------------------
SHORT-TERM RESERVES. The percentage of a fund invested in highly liquid,
short-term securities that can be readily converted to cash.
- --------------------------------------------------------------------------------
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 fixed
income securities held by a fund were held to their maturity dates.
- --------------------------------------------------------------------------------
11
AS OF 11/30/2003
PERFORMANCE SUMMARIES
All of the returns in this report represent past performance, which cannot be
used to predict future returns that may be achieved by the funds. 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 Tax-Exempt
Money Market Fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund. For bond funds,
both share price and return can fluctuate widely. An investor's shares, when
redeemed, could be worth more or less than their original cost. The returns
shown do not reflect taxes that a shareholder would pay on fund distributions or
on the redemption of fund shares. The annualized yield shown for the money
market fund reflects the current earnings of the fund more closely than does the
total return.
NEW YORK TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE SEPTEMBER 3, 1997-NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
[CHART]
- ---------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 2003 FINAL VALUE
----------------------------------- (SINCE INCEPTION)
ONE FIVE TEN OF A $10,000
YEAR YEARS YEARS INVESTMENT
New York Tax-Exempt Money Market Fund 0.89% 2.37% 2.56% $11,708
Average New York Tax-Exempt
Money Market Fund* 0.53 1.96 2.17 11,436
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) SEPTEMBER 3, 1997-NOVEMBER 30, 2003
- ---------------------------------------------------------------------------------------------------
New York Tax-Exempt Average
Money Market Fund Fund*
Fiscal Total Total
Year Return Return
- ----------------------------------------------
1997 0.8% 0.8%
1998 3.3 2.9
1999 3.0 2.6
2000 3.9 3.4
- ----------------------------------------------
- ----------------------------------------------
New York Tax-Exempt Average
Money Market Fund Fund*
Fiscal Total Total
Year Return Return
- ----------------------------------------------
2001 2.8% 2.4%
2002 1.3 0.9
2003 0.9 0.5
- ----------------------------------------------
SEC 7-Day Annualized Yield (11/30/2003): 0.88%
- ----------------------------------------------
- --------------------------------------------------------------------------------
Average Annual Total Returns for periods ended September 30, 2003
This table presents average annual total returns through the latest calendar
quarter--rather than through the end of the fiscal period. Securities and
Exchange Commission rules require that we provide this information.
Since Inception
One Five --------------------------
Inception Date Year Years Capital Income Total
- --------------------------------------------------------------------------------------------------------
NEW YORK TAX-EXEMPT MONEY MARKET FUND 9/3/1997 0.97% 2.45% 0.00% 2.61% 2.61%
- --------------------------------------------------------------------------------------------------------
*Returns for Average New York Tax-Exempt Money Market Fund are derived from data
provided by Lipper Inc.
Note: See Financial Highlights table on page 30 for dividend information.
12
- --------------------------------------------------------------------------------
NEW YORK INSURED LONG-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE NOVEMBER 30, 1993-NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
[CHART]
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended November 30, 2003
--------------------------------- Final Value
One Five Ten of a $10,000
Year Years Years Investment
- --------------------------------------------------------------------------------------------------------
New York Long-Term Tax-Exempt Fund Investor Shares 7.20% 5.86% 6.11% $18,091
Lehman Municipal Bond Index 6.65 5.71 6.16 18,179
Lehman 10 Year Municipal Bond Index 6.88 5.75 6.24 18,320
Average New York Municipal Debt Fund* 6.33 4.70 5.10 16,450
- --------------------------------------------------------------------------------------------------------
Final Value
One Since of a $250,000
Year Inception** Investment
- --------------------------------------------------------------------------------------------------------
New York Long-Term Tax-Exempt Fund Admiral Shares 7.26% 7.13% $297,947
Lehman Municipal Bond Index 6.65 6.80 295,627
Lehman 10 Year Municipal Bond Index 6.88 6.87 296,134
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) NOVEMBER 30, 1993-NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
New York Long-Term
Tax-Exempt Fund Investor Shares Lehman+
Fiscal Capital Income Total Total
Year Return Return Return Return
- ----------------------------------------------------------------
1994 -11.5% 5.1% -6.4% -4.5%
1995 13.5 6.4 19.9 18.6
1996 0.4 5.4 5.8 5.7
1997 0.9 5.5 6.4 7.1
1998 2.4 5.3 7.7 8.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
New York Long-Term
Tax-Exempt Fund Investor Shares Lehman+
Fiscal Capital Income Total Total
Year Return Return Return Return
- ----------------------------------------------------------------
1999 -7.0% 4.7% -2.3% -0.4%
2000 3.9 5.7 9.6 7.7
2001 3.4 5.0 8.4 8.2
2002 2.2 4.6 6.8 6.7
2003 2.8 4.4 7.2 6.9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average Annual Total Returns for periods ended September 30, 2003
This table presents average annual total returns through the latest calendar
quarter--rather than through the end of the fiscal period. Securities and
Exchange Commission rules require that we provide this information.
Ten Years
One Five ---------------------------
Inception Date Year Years Capital Income Total
New York Long-Term Tax-Exempt Fund
Investor Shares 4/7/1986 3.58% 5.75% 0.74% 5.21% 5.95%
Admiral Shares 5/14/2001 3.65 7.37** -- -- --
- -----------------------------------------------------------------------------------------------------
*Derived from data provided by Lipper Inc.; based on the Average New York
Insured Municipal Debt Fund through March 31, 2002, and the Average New York
Municipal Debt Fund thereafter.
**Returns since inception on May 14, 2001.
+Lehman 10 Year Municipal Bond Index.
Note: See Financial Highlights tables on page 31 for dividend and capital gains information.
13
ABOUT YOUR FUND'S EXPENSES
All mutual funds have operating expenses. These expenses include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of the fund. A fund's
expenses are expressed as a percentage of its net assets. This figure is known
as the expense ratio. a hypothetical example
We believe it is important for you to understand the impact of costs on your
investment. The following example illustrates the costs that you would incur
over a 12-month period if you invested $10,000 in your fund, using the fund's
actual return and operating expenses for the fiscal year ended November 30,
2003. The cost in dollars is calculated by applying the expense ratio to the
average balance in the hypothetical account. For comparative purposes, we also
list the average expense ratio for each fund's peer group, which is derived from
data provided by Lipper Inc.
- -------------------------------------------------------------------------------------------
Cost of $10,000 Fund Peer Group*
Investment in Fund Expense Ratio Expense Ratio
- -------------------------------------------------------------------------------------------
New York Tax-Exempt Money Market Fund $17 0.17% 0.62%
New York Long-Term Tax-Exempt Fund
Investor Shares 18 0.17 1.08
Admiral Shares 11 0.11 --
- -------------------------------------------------------------------------------------------
*Peer groups are: for the New York Tax-Exempt Money Market Fund, the Average New
York Tax-Exempt Money Market Fund; for the New York Long-Term Tax-Exempt Fund,
the Average New York Municipal Debt Fund.
Calculations assume no shares were sold. Your actual costs may have been higher
or lower, depending on the amount of your investment and your holding period.
Peer-group ratios capture data through year-end 2002.
You can find more information about the funds' expenses, including annual
expense ratios for the past five years, in the Financial Statements section of
this report. For additional information on operating expenses and other
shareholder costs, please refer to the funds' prospectus. The prospectus
presents hypothetical shareholder costs over various time periods based upon a
$10,000 investment and a return of 5% a year. This standardized example, which
appears in all mutual fund prospectuses, may be useful to you in comparing the
costs of investing in different funds.
14
AS OF 11/30/2003
FINANCIAL STATEMENTS
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. 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.
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
NEW YORK TAX-EXEMPT MATURITY AMOUNT VALUE*
MONEY MARKET FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (100.5%)
- ------------------------------------------------------------------------------------------------------------------------------
Albany County NY BAN 1.75% 12/3/2004 Y $ 50,000 $ 50,307
Allegany County NY IDA (Atlantic Richfield Project) VRDO 1.12% 12/1/2003 4,700 4,700
Arlington NY Central School Dist. BAN 1.20% 12/19/2003 20,600 20,603
Battery Park City NY Auth. Rev. TOB VRDO 1.13% 12/8/2003 * 30,825 30,825
Battery Park City NY Auth. Rev. TOB VRDO 1.13% 12/8/2003 * 5,345 5,345
Erie County NY RAN 1.50% 6/23/2004 27,000 27,090
Erie County NY Water Auth. Rev. VRDO 1.04% 12/8/2003 (2) 11,400 11,400
Garden City NY UFSD TAN 1.60% 6/29/2004 5,000 5,018
Great Neck NY UFSD TAN 1.60% 6/29/2004 5,000 5,019
Great Neck NY UFSD TAN 2.00% 6/29/2004 15,000 15,091
Half Hollow Hills NY Central School Dist.
Huntington & Babylon TAN 1.75% 6/29/2004 7,000 7,031
Hempstead NY BAN 1.75% 4/16/2004 5,075 5,087
Long Island NY Power Auth. Electric System Rev. VRDO 1.08% 12/1/2003 LOC 6,600 6,600
Long Island NY Power Auth. Electric System Rev. VRDO 1.08% 12/1/2003 LOC 9,600 9,600
Long Island NY Power Auth. Electric System Rev. VRDO 1.08% 12/1/2003 LOC 3,400 3,400
Long Island NY Power Auth. Electric System Rev. VRDO 1.10% 12/8/2003 (1) 4,000 4,000
Long Island NY Power Auth. Electric System Rev. VRDO 1.10% 12/8/2003 (4) 13,625 13,625
Metro. New York Transp. Auth. Rev. (Transit Rev.)
TOB VRDO 1.13% 12/8/2003 (1) * 3,300 3,300
Metro. New York Transp. Auth. Rev. CP 0.95% 3/24/2004 LOC 15,000 15,000
Metro. New York Transp. Auth. Rev. CP 1.00% 4/8/2004 LOC 20,000 20,000
Metro. New York Transp. Auth. Rev. TOB VRDO 1.15% 12/8/2003 (3) * 19,985 19,985
Metro. New York Transp. Auth. Rev. VRDO 1.10% 12/8/2003 (4) 19,200 19,200
Nassau County NY Interim Finance Auth. VRDO 1.10% 12/8/2003 (4) 27,055 27,055
15
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
NEW YORK TAX-EXEMPT MATURITY AMOUNT VALUE*
MONEY MARKET FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
New York City NY Cultural Resources Rev.
(American Museum of Natural History) PUT 0.85% 7/1/2004 (2) $ 35,975 $ 35,975
New York City NY Cultural Resources Rev.
(Asia Society) VRDO 1.10% 12/8/2003 LOC 12,000 12,000
New York City NY Cultural Resources Rev.
(Carnegie Hall) VRDO 1.10% 12/8/2003 LOC 14,835 14,835
New York City NY Cultural Resources Rev.
(Solomon R. Guggenheim Foundation) VRDO 1.08% 12/1/2003 LOC 18,607 18,607
New York City NY GO 2.00% 8/1/2004 17,780 17,906
New York City NY GO TOB VRDO 1.12% 12/8/2003 (1) * 9,995 9,995
New York City NY GO TOB VRDO 1.13% 12/8/2003 (4) * 6,144 6,144
New York City NY GO TOB VRDO 1.13% 12/8/2003 (10)* 6,955 6,955
New York City NY GO TOB VRDO 1.16% 12/8/2003 (3) * 5,620 5,620
New York City NY GO TOB VRDO 1.16% 12/8/2003 (3) * 8,455 8,455
New York City NY GO TOB VRDO 1.16% 12/8/2003 (3) * 5,795 5,795
New York City NY GO VRDO 1.08% 12/1/2003 (1) 9,950 9,950
New York City NY GO VRDO 1.08% 12/1/2003 (1) 2,575 2,575
New York City NY GO VRDO 1.10% 12/8/2003 LOC 8,135 8,135
New York City NY GO VRDO 1.10% 12/8/2003 LOC 6,050 6,050
New York City NY Housing Dev. Corp.
(Westmont Apartments) VRDO 1.10% 12/8/2003 LOC 24,200 24,200
New York City NY IDA (National Audubon Society) VRDO 1.08% 12/1/2003 LOC 14,700 14,700
New York City NY Muni. Water Finance Auth.
Water & Sewer System CP 1.07% 2/4/2004 25,000 25,000
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. TOB VRDO 1.13% 12/8/2003 (1) * 12,075 12,075
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. TOB VRDO 1.15% 12/8/2003 * 20,500 20,500
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 1.05% 12/1/2003 (3) 5,600 5,600
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 1.10% 12/1/2003 12,400 12,400
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 1.10% 12/1/2003 35,050 35,050
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 1.10% 12/8/2003 9,800 9,800
New York City NY Transitional Finance Auth. Rev.
TOB VRDO 1.13% 12/8/2003 (3) * 6,080 6,080
New York City NY Transitional Finance Auth. Rev.
TOB VRDO 1.16% 12/8/2003 * 9,850 9,850
New York City NY Transitional Finance Auth. Rev. VRDO 1.08% 12/1/2003 870 870
New York City NY Transitional Finance Auth. Rev. VRDO 1.08% 12/1/2003 400 400
New York City NY Transitional Finance Auth. Rev. VRDO 1.08% 12/1/2003 22,200 22,200
New York City NY Transitional Finance Auth. Rev. VRDO 1.10% 12/1/2003 3,200 3,200
New York City NY Transitional Finance Auth. Rev. VRDO 1.10% 12/1/2003 1,900 1,900
New York City NY Transitional Finance Auth. Rev. VRDO 1.10% 12/8/2003 4,700 4,700
New York City NY Transitional Finance Auth. Rev. VRDO 1.12% 12/8/2003 10,000 10,000
New York City NY Transitional Finance Auth. Rev. VRDO 1.12% 12/8/2003 14,500 14,500
New York State Dormitory Auth. Rev. (Columbia Univ.) CP 0.88% 1/7/2004 11,635 11,635
New York State Dormitory Auth. Rev. (Columbia Univ.) CP 0.88% 1/8/2004 21,005 21,005
New York State Dormitory Auth. Rev. (Columbia Univ.) PUT 1.05% 3/5/2004 9,000 9,000
New York State Dormitory Auth. Rev. (Cornell Univ.) VRDO 1.10% 12/1/2003 10,525 10,525
16
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
New York State Dormitory Auth. Rev. (Cornell Univ.) VRDO 1.10% 12/8/2003 $ 26,900 $ 26,900
New York State Dormitory Auth. Rev. (Cornell Univ.) VRDO 1.10% 12/8/2003 24,845 24,845
New York State Dormitory Auth. Rev.
(Mental Health Services) 2.00% 2/15/2004 9,950 9,972
New York State Dormitory Auth. Rev.
(Mental Health Services) TOB VRDO 1.13% 12/8/2003 (1) * 16,455 16,455
New York State Dormitory Auth. Rev.
(Mental Health Services) VRDO 1.12% 12/8/2003 12,000 12,000
New York State Dormitory Auth. Rev.
(Mental Health Services) VRDO 1.12% 12/8/2003 (1) 9,200 9,200
New York State Dormitory Auth. Rev.
(New York Public Library) VRDO 1.10% 12/8/2003 (1) 10,800 10,800
New York State Dormitory Auth. Rev.
(New York Public Library) VRDO 1.10% 12/8/2003 (1) 40,465 40,465
New York State Dormitory Auth. Rev.
(Rochester Institute of Technology) TOB VRDO 1.10% 12/8/2003 (2) 9,700 9,700
New York State Dormitory Auth. Rev.
(Rockefeller Univ.) VRDO 1.10% 12/8/2003 34,600 34,600
New York State Dormitory Auth. Rev.
(Rockefeller Univ.) VRDO 1.10% 12/8/2003 39,000 39,000
New York State Dormitory Auth. Rev.
(State Univ.) TOB VRDO 1.15% 12/8/2003 * 8,995 8,995
New York State Dormitory Auth. Rev. TOB VRDO 1.13% 12/8/2003 * 4,725 4,725
New York State Energy Research & Dev. Auth. PCR
(NY Electric & Gas) PUT 1.08% 10/15/2004 LOC 15,775 15,775
New York State Environmental Corp. Rev.
(General Electric) CP 0.98% 12/5/2003 23,400 23,400
New York State Environmental Corp. Rev.
(General Electric) CP 0.98% 12/8/2003 21,000 21,000
New York State Environmental Corp. Rev.
(General Electric) CP 1.04% 2/13/2004 8,000 8,000
New York State Environmental Fac. Corp. PCR TOB VRDO 1.13% 12/8/2003 (4) * 26,725 26,725
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) TOB VRDO 1.13% 12/8/2003 * 5,000 5,000
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) TOB VRDO 1.13% 12/8/2003 * 13,925 13,925
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) TOB VRDO 1.13% 12/8/2003 * 8,250 8,250
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) TOB VRDO 1.13% 12/8/2003 * 6,500 6,500
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) TOB VRDO 1.13% 12/8/2003 * 2,715 2,715
New York State GO PUT 1.02% 8/5/2004 LOC 32,000 32,000
New York State GO PUT 1.05% 10/7/2004 LOC 31,600 31,600
New York State Housing Finance Agency Service
Contract Rev. VRDO 1.10% 12/8/2003 LOC 9,000 9,000
New York State Local Govt. Assistance Corp. VRDO 1.08% 12/8/2003 LOC 7,300 7,300
New York State Local Govt. Assistance Corp. VRDO 1.08% 12/8/2003 LOC 11,615 11,615
New York State Local Govt. Assistance Corp. VRDO 1.10% 12/8/2003 LOC 11,400 11,400
New York State Local Govt. Assistance Corp. VRDO 1.10% 12/8/2003 LOC 14,920 14,920
New York State Mortgage Agency Rev. PUT 1.125% 4/2/2004 11,000 11,000
New York State Mortgage Agency Rev. TOB VRDO 1.03% 12/8/2003 (1) * 11,805 11,805
17
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
NEW YORK TAX-EXEMPT MATURITY AMOUNT VALUE*
MONEY MARKET FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
New York State Mortgage Agency Rev. TOB VRDO 1.03% 12/8/2003 (1) * $ 2,845 $ 2,845
New York State Mortgage Agency Rev. TOB VRDO 1.03% 12/8/2003 * 2,795 2,795
New York State Mortgage Agency Rev. TOB VRDO 1.17% 12/8/2003 * 5,960 5,960
New York State Power Auth. Rev. CP 1.05% 12/10/2003 13,800 13,800
New York State Power Auth. Rev. CP 1.12% 12/11/2003 6,000 6,000
New York State Power Auth. Rev. CP 1.12% 1/14/2004 9,977 9,977
New York State Power Auth. Rev. CP 1.12% 1/22/2004 20,000 20,000
New York State Power Auth. Rev. CP 1.12% 1/23/2004 6,900 6,900
New York State Power Auth. Rev. PUT 0.90% 3/1/2004 14,500 14,513
New York State Power Auth. Rev. VRDO 1.10% 12/8/2003 16,000 16,000
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 1.75% 4/1/2004 25,935 25,993
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) TOB VRDO 1.12% 12/8/2003 (3) * 8,215 8,215
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) TOB VRDO 1.16% 12/8/2003 (1) * 8,580 8,580
New York State Thruway Auth. Rev. CP 0.85% 12/5/2003 9,500 9,500
New York State Thruway Auth. Rev. CP 0.90% 12/8/2003 26,000 26,000
New York State Thruway Auth. Rev. CP 0.90% 12/10/2003 5,000 5,000
New York State Thruway Auth. Rev. CP 0.89% 12/15/2003 15,000 15,000
Oneida County NY IDA Rev. (Hamilton College) VRDO 1.07% 12/8/2003 (1) 24,335 24,335
Port Auth. of New York & New Jersey CP 0.85% 12/11/2003 7,000 7,000
Port Auth. of New York & New Jersey CP 0.91% 12/16/2003 5,120 5,120
Port Auth. of New York & New Jersey CP 1.05% 12/16/2003 25,000 25,000
St. Lawrence County NY IDA Environmental
Improvement Rev. (Alcoa Corp.) VRDO 1.11% 12/8/2003 LOC 14,100 14,100
Suffolk County NY Water Auth. Rev. VRDO 1.08% 12/8/2003 39,100 39,100
Syosset NY Central School Dist. BAN 2.00% 2/13/2004 6,000 6,011
Tobacco Settlement Financing Corp. NY Rev. TOB VRDO 1.15% 12/8/2003 (2) * 6,295 6,295
Tompkins County NY IDA Civic Fac. (Cornell Univ.) VRDO 1.10% 12/8/2003 12,300 12,300
Tompkins County NY IDA Civic Fac. (Cornell Univ.) VRDO 1.10% 12/8/2003 8,390 8,390
Triborough Bridge & Tunnel Auth. New York Rev. TOB VRDO 1.13% 12/8/2003 * 16,230 16,230
Triborough Bridge & Tunnel Auth. New York Rev. TOB VRDO 1.13% 12/8/2003 (1) * 7,200 7,200
Triborough Bridge & Tunnel Auth. New York Rev. TOB VRDO 1.16% 12/8/2003 * 9,260 9,260
Triborough Bridge & Tunnel Auth. New York Rev. TOB VRDO 1.16% 12/8/2003 (2) * 16,675 16,675
Triborough Bridge & Tunnel Auth. New York Rev. VRDO 1.10% 12/8/2003 (4) 25,200 25,200
Triborough Bridge & Tunnel Auth. New York Rev. VRDO 1.10% 12/8/2003 (4) 15,400 15,400
Triborough Bridge & Tunnel Auth. New York Rev. VRDO 1.10% 12/8/2003 8,800 8,800
Troy County NY IDA Civic Fac. Rev.
(Rensselaer Polytechnic Institute) VRDO 1.12% 12/8/2003 11,250 11,250
Outside New York:
Puerto Rico Highway & Transp. Auth. Rev. VRDO 1.07% 12/8/2003 (2) 12,800 12,800
Puerto Rico TRAN 2.00% 7/30/2004 10,000 10,068
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,780,667) 1,780,667
- ------------------------------------------------------------------------------------------------------------------------------
18
- ------------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
(000)
- ------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.5%)
- ------------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 45,860
Liabilities (54,221)
---------
(8,361)
---------
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- ------------------------------------------------------------------------------------------------------------------------------
Applicable to 1,772,295,283 outstanding $.001
par value shares of beneficial interest (unlimited authorization) $1,772,306
==============================================================================================================================
NET ASSET VALUE PER SHARE $1.00
==============================================================================================================================
*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, 2003, the aggregate
value of these securities was $340,074,000, representing 19.2% of net assets.
+Security purchased on a when-issued or delayed delivery basis for which the
fund has not taken delivery as of November 30, 2003.
For key to abbreviations and other references, see page 27.
- --------------------------------------------------------------------------------
Amount Per
(000) Share
- --------------------------------------------------------------------------------
AT NOVEMBER 30, 2003, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
Paid-in Capital $1,772,315 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses (9) --
Unrealized Appreciation -- --
- --------------------------------------------------------------------------------
NET ASSETS $1,772,306 $1.00
================================================================================
19
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.9%)
- ------------------------------------------------------------------------------------------------------------------------------
Albany County NY GO 5.00% 10/1/2012 (3) 4,400 4,936
Albany NY GO 7.00% 1/15/2005 (1) 20 20
Battery Park City NY Auth. Rev. 5.50% 11/1/2006 (2)(Prere.) 11,750 13,272
Broome County NY Public Safety Fac. Project COP 5.25% 4/1/2015 (1)(ETM) 2,665 2,792
Broome County NY Public Safety Fac. Project COP 5.25% 4/1/2015 (1) 335 346
Buffalo & Erie Counties NY Toll Bridge Auth. Rev. 6.00% 1/1/2015 (1) 4,500 4,740
Buffalo NY GO 5.125% 2/1/2012 (2) 1,870 2,048
Buffalo NY GO 5.125% 2/1/2013 (2) 2,945 3,227
Erie County NY Water Auth. Rev. 6.00% 12/1/2008 (2)(ETM) 1,600 1,814
Hempstead NY GO 5.50% 8/1/2005 (3)(Prere.) 190 207
Hempstead NY GO 5.50% 8/1/2005 (3)(Prere.) 2,260 2,434
Hempstead NY GO 5.625% 2/1/2006 (3)(Prere.) 270 299
Hempstead NY GO 5.625% 2/1/2006 (3)(Prere.) 210 233
Hempstead NY GO 5.625% 2/1/2012 (3) 1,220 1,332
Hempstead NY GO 5.625% 2/1/2013 (3) 960 1,047
Huntington NY GO 6.70% 2/1/2011 (3) 310 378
Long Island NY Power Auth. Electric System Rev. 0.00% 6/1/2011 (4) 16,690 12,920
Long Island NY Power Auth. Electric System Rev. 5.25% 6/1/2013 15,690 17,101
Long Island NY Power Auth. Electric System Rev. 0.00% 6/1/2014 (4) 5,000 3,311
Long Island NY Power Auth. Electric System Rev. 0.00% 6/1/2019 (4) 2,460 1,239
Long Island NY Power Auth. Electric System Rev. 0.00% 6/1/2021 (4) 13,355 5,962
Long Island NY Power Auth. Electric System Rev. 0.00% 6/1/2023 (4) 35,500 13,939
Long Island NY Power Auth. Electric System Rev. 0.00% 6/1/2024 (4) 21,830 8,040
Long Island NY Power Auth. Electric System Rev. 0.00% 6/1/2027 (4) 23,905 7,504
Long Island NY Power Auth. Electric System Rev. VRDO 1.08% 12/1/2003 LOC 16,700 16,700
Long Island NY Power Auth. Electric System Rev. VRDO 1.08% 12/1/2003 LOC 10,000 10,000
Metro. New York Transp. Auth. Rev.
(Commuter Fac.) 5.125% 7/1/2009(3)(Prere.) 3,000 3,398
Metro. New York Transp. Auth. Rev.
(Commuter Fac.) 5.30% 7/1/2009 (3)(Prere.) 17,475 19,954
Metro. New York Transp. Auth. Rev.
(Commuter Fac.) 5.00% 7/1/2013 (2)(Prere.) 5,500 6,155
Metro. New York Transp. Auth. Rev.
(Commuter Fac.) 5.50% 7/1/2013 (2)(Prere.) 11,585 13,433
Metro. New York Transp. Auth. Rev.
(Dedicated Petroleum Tax) 5.25% 10/1/2010 (1)(Prere.) 34,060 39,028
Metro. New York Transp. Auth. Rev.
(Dedicated Petroleum Tax) 5.25% 10/1/2010 (1)(Prere.) 7,900 9,052
Metro. New York Transp. Auth. Rev.
(Dedicated Petroleum Tax) 6.00% 4/1/2020 (1)(ETM) 32,500 38,853
Metro. New York Transp. Auth. Rev. (Transit Rev.) 7.00% 7/1/2009 (2)(ETM) 9,050 10,710
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.00% 1/1/2012 (2)(Prere.) 5,000 5,584
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.50% 11/15/2014 (2) 8,000 9,241
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.50% 11/15/2016 (2) 28,075 31,694
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.50% 11/15/2016 (1) 4,000 4,516
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.50% 11/15/2017 (1) 5,000 5,616
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.50% 11/15/2017 (2) 35,000 39,314
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.50% 11/15/2019 (1) 6,000 6,668
Metro. New York Transp. Auth. Rev. (Transit Rev.) 5.50% 11/15/2020 (1) 7,000 7,740
Metro. New York Transp. Auth. Rev. VRDO 1.10% 12/8/2003 (4) 800 800
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/2007 (1) 840 859
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/2008 (1) 835 854
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/2009 (1) 825 844
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2010 (3) 2,875 3,203
20
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/2010 (1) $ 820 $ 839
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/2011 (3) 1,770 1,969
Nassau County NY Combined Sewer Dist. GO 5.875% 8/1/2012 (3) 825 848
Nassau County NY GO 5.70% 8/1/2004 (3)(Prere.) 2,000 2,121
Nassau County NY GO 5.75% 2/1/2011 (1) 1,100 1,119
Nassau County NY GO 5.25% 6/1/2011 (2) 3,670 4,075
Nassau County NY GO 5.25% 6/1/2012 (2) 4,670 5,173
Nassau County NY GO 5.25% 6/1/2013 (2) 6,905 7,650
Nassau County NY GO 5.25% 6/1/2014 (2) 6,585 7,294
Nassau County NY Interim Finance Auth. VRDO 1.09% 12/8/2003 (4) 11,200 11,200
Nassau County NY Interim Finance Auth. VRDO 1.10% 12/8/2003 (4) 11,635 11,635
New York City NY Cultural Resources Rev.
(American Museum of Natural History) 5.70% 4/1/2016 (1) 12,730 14,130
New York City NY Cultural Resources Rev.
(American Museum of Natural History) 5.60% 4/1/2018 (1) 2,635 2,912
New York City NY Cultural Resources Rev.
(American Museum of Natural History) 5.65% 4/1/2022 (1) 5,000 5,538
New York City NY Cultural Resources Rev.
(Museum of Modern Art) 5.40% 1/1/2006 (2)(ETM) 85 92
New York City NY Cultural Resources Rev.
(Museum of Modern Art) 5.50% 1/1/2007 (2)(ETM) 35 39
New York City NY Cultural Resources Rev.
(Museum of Modern Art) 5.50% 1/1/2016 (2) 2,000 2,213
New York City NY GO 5.75% 8/1/2011 (1) 15,750 18,180
New York City NY GO 5.125% 8/1/2013 (4) 19,025 20,821
New York City NY GO 5.375% 8/1/2013 (3) 8,295 9,198
New York City NY GO 5.20% 8/1/2014 (4) 5,000 5,457
New York City NY GO 5.25% 3/15/2016 (2) 5,000 5,473
New York City NY GO 5.75% 3/15/2027 (4) 5,000 5,556
New York City NY GO VRDO 1.09% 12/8/2003 LOC 2,800 2,800
New York City NY GO VRDO 1.10% 12/8/2003 LOC 1,350 1,350
New York City NY IDA (USTA National Tennis Center) 6.375% 11/15/2014 (4) 2,000 2,135
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/2012 (2) 18,500 21,733
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.35% 6/15/2013 (1) 5,300 5,440
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/2013 (2) 20,000 23,615
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 0.00% 6/15/2017 10,000 5,634
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.375% 6/15/2017 25,015 27,579
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 0.00% 6/15/2018 10,000 5,324
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.375% 6/15/2018 25,095 27,515
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 0.00% 6/15/2021 4,490 2,001
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.50% 6/15/2027 (1) 23,955 26,020
21
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
New York City NY Muni. Water Finance
Auth. Water & Sewer System Rev. 5.75% 6/15/2029 (1) $ 15,000 $ 16,776
New York City NY Muni. Water Finance
Auth. Water & Sewer System Rev. 5.75% 6/15/2031 (3) 30,650 34,364
New York City NY Muni. Water Finance
Auth. Water & Sewer System Rev. VRDO 1.08% 12/1/2003 (3) 300 300
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 1.10% 12/1/2003 2,100 2,100
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 1.10% 12/1/2003 25,200 25,200
New York City NY Transitional Finance Auth. Rev. 5.50% 5/1/2009 (Prere.) 1,325 1,534
New York City NY Transitional Finance Auth. Rev. 5.75% 8/15/2009 (Prere.) 5,000 5,882
New York City NY Transitional Finance Auth. Rev. 5.75% 5/15/2010 (Prere.) 930 1,096
New York City NY Transitional Finance Auth. Rev. 5.50% 2/1/2011 (Prere.) 3,995 4,644
New York City NY Transitional Finance Auth. Rev. 5.50% 2/1/2011 (Prere.) 1,150 1,337
New York City NY Transitional Finance Auth. Rev. 5.50% 2/1/2011 (Prere.) 2,955 3,435
New York City NY Transitional Finance Auth. Rev. 5.50% 5/1/2011 (Prere.) 2,265 2,633
New York City NY Transitional Finance Auth. Rev. 5.50% 2/1/2012 2,805 3,180
New York City NY Transitional Finance Auth. Rev. 5.25% 5/1/2013 12,270 13,679
New York City NY Transitional Finance Auth. Rev. 5.50% 2/1/2014 9,735 10,840
New York City NY Transitional Finance Auth. Rev. 5.25% 5/1/2014 17,720 19,582
New York City NY Transitional Finance Auth. Rev. 5.375% 2/1/2015 7,310 8,073
New York City NY Transitional Finance Auth. Rev. 5.50% 2/1/2015 3,850 4,289
New York City NY Transitional Finance Auth. Rev. 5.375% 2/15/2015 9,395 10,416
New York City NY Transitional Finance Auth. Rev. 5.375% 2/1/2016 8,415 9,260
New York City NY Transitional Finance Auth. Rev. 5.50% 2/1/2016 11,045 12,261
New York City NY Transitional Finance Auth. Rev. 5.50% 2/15/2016 2,735 3,050
New York City NY Transitional Finance Auth. Rev. 5.75% 11/15/2020 9,070 10,331
New York City NY Transitional Finance Auth. Rev. 5.50% 5/1/2025 1,675 1,824
New York City NY Transitional Finance Auth. Rev. VRDO 1.08% 12/1/2003 4,400 4,400
New York City NY Transitional Finance Auth. Rev. VRDO 1.10% 12/1/2003 6,985 6,985
New York City NY Transitional Finance Auth. Rev. VRDO 1.10% 12/1/2003 4,400 4,400
New York City NY Transitional Finance Auth. Rev. VRDO 1.10% 12/1/2003 2,700 2,700
New York City NY Transitional Finance Auth. Rev. VRDO 1.12% 12/8/2003 5,400 5,400
New York State Dormitory Auth. Rev. (Barnard College) 5.25% 7/1/2026 (2) 4,370 4,507
New York State Dormitory Auth. Rev. (Catholic Health) 5.50% 7/1/2022 (1) 10,000 11,010
New York State Dormitory Auth. Rev. (City Univ.) 5.50% 7/1/2006 (2)(Prere.) 11,360 12,692
New York State Dormitory Auth. Rev. (City Univ.) 5.75% 7/1/2011 (3) 5,950 6,937
New York State Dormitory Auth. Rev. (City Univ.) 5.75% 7/1/2015 (3) 2,215 2,509
New York State Dormitory Auth. Rev. (City Univ.) 5.75% 7/1/2015 (3) 31,620 35,814
New York State Dormitory Auth. Rev. (City Univ.) 5.50% 7/1/2016 (2)(Prere.) 4,640 5,089
New York State Dormitory Auth. Rev. (City Univ.) 5.75% 7/1/2016 (3) 7,255 8,217
New York State Dormitory Auth. Rev. (City Univ.) 5.75% 7/1/2016 (3) 4,475 5,069
New York State Dormitory Auth. Rev. (Columbia Univ.) 5.125% 7/1/2019 5,100 5,532
New York State Dormitory Auth. Rev.
(Cornell Univ.) VRDO 1.10% 12/8/2003 8,076 8,076
New York State Dormitory Auth. Rev. (Court Fac.) 5.75% 5/15/2023 (2) 21,370 23,890
New York State Dormitory Auth. Rev.
(Department of Health) 5.50% 7/1/2025 (1) 3,870 4,215
New York State Dormitory Auth. Rev. (Fordham Univ.) 5.75% 7/1/2015 (3) 1,500 1,566
New York State Dormitory Auth. Rev. (Fordham Univ.) 7.20% 7/1/2015 (2) 710 713
New York State Dormitory Auth. Rev. (Fordham Univ.) 5.50% 7/1/2023 (3) 10,150 10,578
22
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
New York State Dormitory Auth. Rev.
(Lenox Hill Hosp. Obligation Group) 5.375% 7/1/2020 $ 2,400 $ 2,491
New York State Dormitory Auth. Rev.
(Mental Health Services) 5.375% 2/15/2006 (1)(Prere.) 7,230 7,977
New York State Dormitory Auth. Rev.
(Mental Health Services) 5.875% 8/15/2013 (4) 2,475 2,843
New York State Dormitory Auth. Rev.
(Mental Health Services) 5.875% 8/15/2014 (4) 2,625 2,942
New York State Dormitory Auth. Rev.
(Mental Health Services) 5.875% 8/15/2015 (4) 2,785 3,124
New York State Dormitory Auth. Rev.
(Mental Health Services) 5.375% 2/15/2026 (1)(Prere.) 270 287
New York State Dormitory Auth. Rev.
(Mental Health Services) VRDO 1.12% 12/8/2003 (1) 12,000 12,000
New York State Dormitory Auth. Rev.
(Montefiore Medical Center) 5.25% 2/1/2015 (2) 42,750 46,812
New York State Dormitory Auth. Rev.
(New School for Social Research) 5.625% 7/1/2016 (1) 2,260 2,537
New York State Dormitory Auth. Rev. (New York Univ.) 5.75% 7/1/2016 (1) 3,500 4,116
New York State Dormitory Auth. Rev. (New York Univ.) 5.50% 7/1/2031 (2) 8,910 10,118
New York State Dormitory Auth. Rev. (New York Univ.) 5.50% 7/1/2040 (2) 20,330 23,263
New York State Dormitory Auth. Rev. (Pace) 5.625% 7/1/2017 (1) 11,185 12,554
New York State Dormitory Auth. Rev. (Queens Hosp.) 5.45% 8/15/2019 (2) 4,980 5,350
New York State Dormitory Auth. Rev.
(Rochester Institute of Technology) 5.30% 7/1/2017 (1) 6,275 6,905
New York State Dormitory Auth. Rev.
(Rochester Institute of Technology) 5.25% 7/1/2022 (1) 3,000 3,211
New York State Dormitory Auth. Rev. (Rockefeller Univ.) 5.00% 7/1/2018 2,805 2,994
New York State Dormitory Auth. Rev.
(Sloan-Kettering Cancer Center) 5.75% 7/1/2019 (1) 15,900 18,499
New York State Dormitory Auth. Rev.
(Sloan-Kettering Cancer Center) 5.75% 7/1/2020 (1) 5,500 6,396
New York State Dormitory Auth. Rev.
(Sloan-Kettering Cancer Center) 5.50% 7/1/2023 (1) 14,000 15,692
New York State Dormitory Auth. Rev. (St. John's Univ.) 5.25% 7/1/2020 (1) 15,170 16,434
New York State Dormitory Auth. Rev. (St. John's Univ.) 5.70% 7/1/2026 (1) 14,370 15,835
New York State Dormitory Auth. Rev. (St. Joseph's Hosp.) 5.25% 7/1/2018 (1) 6,700 7,070
New York State Dormitory Auth. Rev.
(St. Vincent Hosp. Medical Center) 5.80% 8/1/2025 (2) 4,250 4,607
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 7/1/2009 (2) 1,590 1,862
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 5/15/2012 (1) 16,160 18,776
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 5/15/2013 (1) 27,285 31,745
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 5/15/2014 (1) 10,660 12,369
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 5/15/2015 (1) 12,500 14,504
New York State Dormitory Auth. Rev. (State Univ.) 6.00% 5/15/2016 (1) 5,000 5,802
New York State Dormitory Auth. Rev. (State Univ.) 5.75% 5/15/2017 (4) 3,750 4,407
New York State Dormitory Auth. Rev. (State Univ.) 5.375% 7/1/2021 5,315 5,702
New York State Dormitory Auth. Rev.
(The New York & Presbyterian Hosp.) 5.50% 2/1/2010 (2) 6,330 7,187
New York State Dormitory Auth. Rev. (Univ. of Rochester) 5.00% 7/1/2017 (1) 2,000 2,147
New York State Dormitory Auth. Rev.
(Upstate Community Colleges) 5.25% 7/1/2012 (2) 6,170 6,820
23
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
New York State Dormitory Auth. Rev.
(Upstate Community Colleges) 5.00% 7/1/2015 (2) $ 3,000 $ 3,259
New York State Dormitory Auth. Rev.
(Upstate Community Colleges) 5.00% 7/1/2016 (2) 1,250 1,350
New York State Dormitory Auth. Rev.
(Vassar Brothers Hosp.) 5.25% 7/1/2017 (4) 8,025 8,530
New York State Dormitory Auth. Rev.
(Vassar Brothers Hosp.) 5.375% 7/1/2025 (4) 7,000 7,498
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) 5.375% 6/15/2015 7,650 8,570
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) 5.25% 6/15/2016 3,095 3,422
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) 5.375% 6/15/2016 6,000 6,693
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) 5.25% 6/15/2018 10,000 10,950
New York State Environmental Fac. Corp. Rev.
(Clean Water & Drinking Revolving Funds) 5.25% 6/15/2019 36,610 39,867
New York State GO 5.75% 5/15/2011 (4) 4,540 5,226
New York State GO 5.875% 5/15/2012 (4) 4,670 5,382
New York State Local Govt. Assistance Corp. 5.25% 4/1/2015 (2) 8,000 8,742
New York State Local Govt. Assistance Corp. 5.50% 4/1/2017 12,905 14,675
New York State Local Govt. Assistance Corp. 5.375% 4/1/2019 (1) 3,000 3,290
New York State Local Govt. Assistance Corp. VRDO 1.08% 12/8/2003 LOC 14,985 14,985
New York State Local Govt. Assistance Corp. VRDO 1.10% 12/8/2003 LOC 2,000 2,000
New York State Local Govt. Assistance Corp. VRDO 1.10% 12/8/2003 LOC 570 570
New York State Medical Care Fac. Finance Agency Rev. 5.25% 2/15/2019 (3) 16,230 16,675
New York State Medical Care Fac. Finance Agency Rev.
(Mental Health Services) 6.00% 2/15/2005 (1)(Prere.) 150 162
New York State Thruway Auth. Rev. 5.25% 1/1/2014 5,560 6,067
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.75% 4/1/2010 (3)(Prere.) 5,575 6,559
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.75% 4/1/2013 (3) 5,870 6,687
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.25% 4/1/2014 (1) 7,500 8,279
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.50% 4/1/2014 (2) 32,875 36,987
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.50% 4/1/2014 (3) 2,500 2,799
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.75% 4/1/2014 (3) 3,000 3,409
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.50% 4/1/2015 (3) 2,000 2,241
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.75% 4/1/2015 (3) 2,500 2,840
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.50% 4/1/2016 (3) 3,000 3,349
New York State Thruway Auth. Rev.
(Highway & Bridge Trust Fund) 5.75% 4/1/2016 (3) 2,080 2,363
New York State Thruway Auth. Rev.
(Service Contract) 5.75% 4/1/2009 (1)(Prere.) 4,000 4,675
24
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
New York State Thruway Auth. Rev. (Service Contract) 5.25% 4/1/2015 $ 8,075 $ 8,560
New York State Urban Dev. Corp. Rev.
(Community Enhancement Fac.) 5.125% 4/1/2015 (2) 5,500 6,022
New York State Urban Dev. Corp. Rev. (Correctional Fac.) 6.00% 1/1/2009 (2)(Prere.) 2,500 2,939
New York State Urban Dev. Corp. Rev. (Correctional Fac.) 6.00% 1/1/2009 (2)(Prere.) 3,000 3,527
New York State Urban Dev. Corp. Rev. (Correctional Fac.) 6.00% 1/1/2009 (2)(Prere.) 4,110 4,832
New York State Urban Dev. Corp. Rev. (Correctional Fac.) 6.00% 1/1/2009 (2)(Prere.) 5,000 5,878
New York State Urban Dev. Corp. Rev. (Correctional Fac.) 5.75% 1/1/2011 (4)(Prere.) 6,380 7,458
New York State Urban Dev. Corp. Rev. (Correctional Fac.) 5.50% 4/1/2016 (1) 13,350 14,545
Niagara County NY IDA Solid Waste Disposal Rev. PUT 5.55% 11/15/2013 12,500 13,093
Niagara Falls NY Bridge Comm. Rev. 5.25% 10/1/2015 (3) 5,000 5,660
Niagara Falls NY Bridge Comm. Rev. 6.25% 10/1/2020 (3) 8,685 10,723
Niagara Falls NY Bridge Comm. Rev. 6.25% 10/1/2021 (3) 9,230 11,377
North Hempstead NY GO 6.40% 4/1/2010 (3) 1,500 1,791
North Hempstead NY GO 6.40% 4/1/2011 (3) 2,075 2,498
North Hempstead NY Solid Waste Auth. 5.00% 2/1/2012 (1) 3,370 3,457
Oneida County NY IDA Rev. (Hamilton College) VRDO 1.07% 12/8/2003 (1) 2,645 2,645
Onondaga County NY Public Improvements 5.875% 2/15/2008 (ETM) 1,250 1,434
Onondaga County NY Public Improvements 5.875% 2/15/2008 1,225 1,405
Port Auth. of New York & New Jersey Rev. 5.50% 12/15/2016 (2) 4,190 4,610
Port Auth. of New York & New Jersey Rev. 5.50% 12/15/2017 (2) 4,600 5,030
Port Auth. of New York & New Jersey Rev. 5.50% 12/15/2018 (2) 4,620 5,031
Suffolk County NY Water Auth. Rev. 5.25% 6/1/2010 (2)(ETM) 3,790 4,331
Suffolk County NY Water Auth. Rev. 5.25% 6/1/2011 (2)(ETM) 2,380 2,724
Suffolk County NY Water Auth. Rev. 5.25% 6/1/2012 (2)(ETM) 4,290 4,892
Suffolk County NY Water Auth. Rev. 5.75% 6/1/2013 (2)(ETM) 7,340 7,485
Suffolk County NY Water Auth. Rev. 5.25% 6/1/2017 (2)(ETM) 1,695 1,907
Suffolk County NY Water Auth. Rev. VRDO 1.08% 12/8/2003 600 600
Triborough Bridge & Tunnel Auth. New York Rev. 6.75% 1/1/2009 (2)(ETM)(Prere.)3,000 3,513
Triborough Bridge & Tunnel Auth. New York Rev. 5.25% 1/1/2014 3,000 3,300
Triborough Bridge & Tunnel Auth. New York Rev. 5.25% 1/1/2015 2,930 3,219
Triborough Bridge & Tunnel Auth. New York Rev. 5.25% 1/1/2016 2,500 2,732
Triborough Bridge & Tunnel Auth. New York Rev. 5.25% 11/15/2017 16,770 18,389
Triborough Bridge & Tunnel Auth. New York Rev. 5.25% 1/1/2018 2,330 2,523
Triborough Bridge & Tunnel Auth. New York Rev. 5.25% 11/15/2018 30,285 33,017
Triborough Bridge & Tunnel Auth. New York Rev. 5.25% 11/15/2019 43,025 46,637
Triborough Bridge & Tunnel Auth. New York Rev. VRDO 1.10% 12/8/2003 (4) 3,500 3,500
Outside New York:
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2015 (1) 5,000 5,551
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2015 (1) 7,000 7,987
Puerto Rico Electric Power Auth. Rev. 5.375% 7/1/2016 (1) 16,345 18,399
Puerto Rico Electric Power Auth. Rev. 5.375% 7/1/2018 (1) 6,250 6,957
Puerto Rico Electric Power Auth. Rev. 5.375% 7/1/2019 (1) 6,500 7,195
Puerto Rico GO 5.50% 7/1/2013 (3) 6,000 6,965
Puerto Rico GO 5.50% 7/1/2014 (3) 2,500 2,906
Puerto Rico GO 5.00% 7/1/2018 (1) 2,650 2,835
Puerto Rico GO 5.50% 7/1/2020 (3) 6,305 7,285
Puerto Rico GO 5.50% 7/1/2021 (1) 16,505 18,931
Puerto Rico Govt. Dev. Bank VRDO 1.01% 12/8/2003 (1) 3,230 3,230
Puerto Rico Highway & Transp. Auth. Rev. VRDO 1.07% 12/8/2003 (2) 2,300 2,300
Puerto Rico Muni. Finance Agency 5.75% 8/1/2011 (4) 8,060 9,318
Puerto Rico Muni. Finance Agency 5.75% 8/1/2011 (4) 7,750 8,960
25
- ------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK LONG-TERM TAX-EXEMPT FUND COUPON DATE (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Muni. Finance Agency 5.875% 8/1/2014 (4) 6,480 7,504
Puerto Rico Muni. Finance Agency 6.00% 8/1/2016 (4) 2,645 3,080
Puerto Rico Muni. Finance Agency 5.25% 8/1/2017 (4) 7,000 7,717
Puerto Rico Public Buildings Auth. Govt. Fac. Rev. 5.25% 7/1/2014 (3) 10,000 11,404
Puerto Rico Public Finance Corp. 6.00% 8/1/2026 10,000 11,495
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,917,676) 2,069,202
- ------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.1%)
- ------------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 28,086
Liabilities (5,239)
---------------
22,847
---------------
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%) $2,092,049
==============================================================================================================================
*See Note A in Notes to Financial Statements.
For key to abbreviations and other references, see page 27.
- ------------------------------------------------------------------------------------------------------------------------------
Amount
(000)
- -------------------------------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 2003, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------------
Paid-in Capital $1,936,469
Undistributed Net Investment Income --
Accumulated Net Realized Gains 4,054
Unrealized Appreciation 151,526
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $2,092,049
==============================================================================================================================
Investor Shares--Net Assets
Applicable to 114,167,792 outstanding $.001
par value shares of beneficial interest (unlimited authorization) $1,321,000
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--INVESTOR SHARES $11.57
==============================================================================================================================
Admiral Shares--Net Assets
Applicable to 66,638,168 outstanding $.001
par value shares of beneficial interest (unlimited authorization) $771,049
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--ADMIRAL SHARES $11.57
==============================================================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
26
KEY TO ABBREVIATIONS
BAN--Bond Anticipation Note.
COP--Certificate of Participation.
CP--Commercial Paper.
FR--Floating Rate.
GAN--Grant Anticipation Note.
GO--General Obligation Bond.
IDA--Industrial Development Authority Bond.
IDR--Industrial Development Revenue Bond.
PCR--Pollution Control Revenue Bond.
PUT--Put Option Obligation.
RAN--Revenue Anticipation Note.
TAN--Tax Anticipation Note.
TOB--Tender Option Bond.
TRAN--Tax Revenue Anticipation Note.
UFSD--Union Free School District.
USD--United School District.
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).
(5) BIGI (Bond Investors Guaranty Insurance).
(6) Connie Lee Inc.
(7) FHA (Federal Housing Authority).
(8) CapMAC (Capital Markets Assurance Corporation).
(9) American Capital Access Financial Guaranty Corporation.
(10) XL Capital Assurance Inc.
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.
27
STATEMENT OF OPERATIONS
This Statement shows interest income earned by each fund during the reporting
period, and details the operating expenses charged to each class of its shares.
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) of investments during the
period. For money market funds, Realized Net Gain (Loss) should always be
minimal, and Unrealized Appreciation (Depreciation) should be zero.
- --------------------------------------------------------------------------------
New York New York
Tax-Exempt Long-Term
Money Market Tax-Exempt
Fund Fund
-------------------------------------
Year Ended November 30, 2003
-------------------------------------
(000) (000)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Interest $17,786 $ 94,161
- --------------------------------------------------------------------------------
Total Income 17,786 94,161
- --------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 238 307
Management and Administrative
Investor Shares 2,250 1,879
Admiral Shares -- 691
Marketing and Distribution
Investor Shares 311 191
Admiral Shares -- 95
Custodian Fees 16 20
Auditing Fees 10 15
Shareholders' Reports and Proxies
Investor Shares 14 27
Admiral Shares -- 3
Trustees' Fees and Expenses 2 2
- --------------------------------------------------------------------------------
Total Expenses 2,841 3,230
Expenses Paid Indirectly--Note C -- (191)
- --------------------------------------------------------------------------------
Net Expenses 2,841 3,039
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 14,945 91,122
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold (8) 9,778
Futures Contracts -- (4,531)
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) (8) 5,247
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities -- 53,461
Futures Contracts -- 284
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) -- 53,745
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $14,937 $150,114
================================================================================
28
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 net amount shareholders invested in or redeemed from the fund.
Distributions and Capital Share Transactions are shown separately for each class
of shares.
- -----------------------------------------------------------------------------------------------------------------
New York Tax-Exempt New York Long-Term
Money Market Fund Tax-Exempt Fund
------------------- -------------------
Year Ended November 30,
---------------------------------------------------------
2003 2002 2003 2002
(000) (000) (000) (000)
- -----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 14,945 $ 19,309 $ 91,122 $ 92,697
Realized Net Gain (Loss) (8) 67 5,247 24,118
Change in Unrealized Appreciation (Depreciation) -- -- 53,745 20,178
- -----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 14,937 19,376 150,114 136,993
- -----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income
Investor Shares (14,945) (19,309) (56,709) (59,863)
Admiral Shares -- -- (34,413) (32,834)
Realized Capital Gain*
Investor Shares -- -- (14,716) (7,382)
Admiral Shares -- -- (8,920) (3,566)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (14,945) (19,309) (114,758) (103,645)
- -----------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--NOTE F
Investor Shares 144,900 268,821 (40,117) (14,377)
Admiral Shares -- -- (54,079) 173,497
- -----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from
Capital Share Transactions 144,900 268,821 (94,196) 159,120
- -----------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 144,892 268,888 (58,840) 192,468
- -----------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of Period 1,627,414 1,358,526 2,150,889 1,958,421
- -----------------------------------------------------------------------------------------------------------------
End of Period $1,772,306 $1,627,414 $2,092,049 $2,150,889
=================================================================================================================
*Includes fiscal 2003 and 2002 short-term gain distributions by the New York
Long-Term Tax-Exempt Fund totaling $1,207,000 and $1,164,000, respectively.
Short-term gain distributions are treated as ordinary income dividends for tax
purposes.
29
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis for each class of shares. It also presents the
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.
- ------------------------------------------------------------------------------------------------------
NEW YORK TAX-EXEMPT MONEY MARKET FUND
- -------------------------------------------------------------------------------------------------------
Year Ended November 30,
------------------------------------------------
For a Share Outstanding Throughout Each Period 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .009 .013 .028 .038 .030
Net Realized and Unrealized Gain (Loss) on Investments -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
Total from Investment Operations .009 .013 .028 .038 .030
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.009) (.013) (.028) (.038) (.030)
Distributions from Realized Capital Gains -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
Total Distributions (.009) (.013) (.028) (.038) (.030)
=======================================================================================================
TOTAL RETURN 0.89% 1.32% 2.79% 3.87% 3.01%
=======================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,772 $1,627 $1,359 $1,154 $798
Ratio of Total Expenses to Average Net Assets 0.17% 0.17% 0.18% 0.14% 0.17%
Ratio of Net Investment Income to Average Net Assets 0.88% 1.31% 2.72% 3.81% 2.99%
=======================================================================================================
30
- -------------------------------------------------------------------------------------------------------
NEW YORK LONG-TERM TAX-EXEMPT FUND INVESTOR SHARES
- -------------------------------------------------------------------------------------------------------
Year Ended November 30,
------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.38 $11.20 $10.83 $10.42 $11.30
- -------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .486 .503 .525 .556 .547
Net Realized and Unrealized Gain (Loss) on Investments .315 .243 .370 .410 (.789)
- -------------------------------------------------------------------------------------------------------
Total from Investment Operations .801 .746 .895 .966 (.242)
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.486) (.503) (.525) (.556) (.547)
Distributions from Realized Capital Gains (.125) (.063) -- -- (.091)
- -------------------------------------------------------------------------------------------------------
Total Distributions (.611) (.566) (.525) (.556) (.638)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.57 $11.38 $11.20 $10.83 $10.42
=======================================================================================================
TOTAL RETURN 7.20% 6.84% 8.37% 9.56% -2.25%
=======================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,321 $1,340 $1,333 $1,664 $1,530
Ratio of Total Expenses to Average Net Assets 0.17% 0.18% 0.20% 0.20% 0.20%
Ratio of Net Investment Income to Average Net Assets 4.22% 4.46% 4.71% 5.28% 5.02%
Portfolio Turnover Rate 3% 16% 12% 21% 5%
=======================================================================================================
NEW YORK LONG-TERM TAX-EXEMPT FUND ADMIRAL SHARES
- ----------------------------------------------------------------------------------------------
Year Ended May 14* to
November 30, Nov. 30,
---------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.38 $11.20 $11.05
- ----------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .493 .509 .284
Net Realized and Unrealized Gain (Loss) on Investments .315 .243 .150
- ----------------------------------------------------------------------------------------------
Total from Investment Operations .808 .752 .434
- ----------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.493) (.509) (.284)
Distributions from Realized Capital Gains (.125) (.063) --
- ----------------------------------------------------------------------------------------------
Total Distributions (.618) (.572) (.284)
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.57 $11.38 $11.20
==============================================================================================
TOTAL RETURN 7.26% 6.89% 3.94%
==============================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $771 $811 $626
Ratio of Total Expenses to Average Net Assets 0.11% 0.13% 0.15%**
Ratio of Net Investment Income to Average Net Assets 4.28% 4.51% 4.58%**
Portfolio Turnover Rate 3% 16% 12%
==============================================================================================
*Inception.
**Annualized.
31
NOTES TO FINANCIAL STATEMENTS
Vanguard New York Tax-Exempt Funds comprise the New York Tax-Exempt Money Market
Fund and New York Long-Term Tax-Exempt Fund, 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.
The Long-Term Tax-Exempt Fund offers two classes of shares, Investor Shares
and Admiral Shares. Investor Shares are available to any investor who meets the
fund's minimum purchase requirements. Admiral Shares are designed for investors
who meet certain administrative, servicing, tenure, and account-size criteria.
The Tax-Exempt Money Market Fund offers only Investor Shares.
A. The following significant accounting policies conform to generally
accepted accounting principles for U.S. 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. 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, or whose values have been materially affected by events
occurring before the funds' pricing time but after the close of the securities'
primary markets, are valued by methods deemed by the board of trustees to
represent fair value.
2. FUTURES CONTRACTS: The 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).
3. 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.
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
32
securities sold. Premiums and discounts are amortized and accreted,
respectively, to interest income over the lives of the respective
securities.
Each class of shares has equal rights as to assets and earnings, except
that each class separately bears certain class-specific expenses related to
maintenance of shareholder accounts (included in Management and
Administrative expenses), shareholder reporting, and proxies. Marketing and
distribution expenses are allocated to each class of shares based on a
method approved by the board of trustees. Income, other non-class-specific
expenses, and gains and losses on investments are allocated to each class
of shares based on its relative net assets.
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, 2003, the funds had
contributed capital to Vanguard (included in Other Assets) of:
-------------------------------------------------------------------------
Capital Contribution Percentage Percentage of
to Vanguard of Fund Vanguard's
New York Tax-Exempt Fund (000) Net Assets Capitalization
-------------------------------------------------------------------------
Money Market $285 0.02% 0.28%
Long-Term 336 0.02 0.34
-------------------------------------------------------------------------
The funds' trustees and officers are also directors and officers of Vanguard.
C. The funds' investment advisor 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, 2003, these arrangements
reduced the Long-Term Tax-Exempt Fund's management and administrative expenses
by $190,000 and custodian fees by $1,000. The total expense reduction
represented an effective annual rate of 0.01% of the fund's average net assets.
D. Capital gain distributions are determined on a tax basis and may differ
from realized capital gains for financial reporting purposes. Differences may be
permanent or temporary. Permanent differences are reclassified among capital
accounts in the financial statements to reflect their tax character. Temporary
differences arise when gains or losses are recognized in different periods for
financial statement and tax purposes; these differences will reverse at some
time in the future.
The Long-Term Tax-Exempt Fund used a tax accounting practice to treat a portion
of the price of capital shares redeemed during the year as distributions from
realized capital gains. Accordingly, the fund has reclassified $856,000 from
accumulated net realized gains to paid-in capital.
At November 30, 2003, the Long-Term Tax-Exempt Fund had capital gains of
$4,787,000 available for distribution.
The Long-Term Tax-Exempt Fund had realized losses totaling $733,000 through
November 30, 2003, which are deferred for tax purposes and reduce the amount of
unrealized appreciation on investment securities for tax purposes.
At November 30, 2003, net unrealized appreciation of Long-Term Tax-Exempt Fund
investment securities for tax purposes was $150,793,000, consisting of
unrealized gains of $151,016,000 on securities
33
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
that had risen in value since their purchase and $223,000 in unrealized losses
on securities that had fallen in value since their purchase.
E. During the year ended November 30, 2003, the Long-Term Tax-Exempt Fund
purchased $64,914,000 of investment securities and sold $177,302,000 of
investment securities, other than temporary cash investments.
F. Capital share transactions for each class of shares were:
- -------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
2003 2002
------------------------- -------------------
AMOUNT SHARES AMOUNT SHARES
NEW YORK TAX-EXEMPT FUND (000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------------
MONEY MARKET
Issued $ 1,537,373 1,537,373 1,462,745 1,462,745
Issued in Lieu of Cash Distributions 14,439 14,439 18,618 18,618
Redeemed (1,406,912) (1,406,912) (1,212,542) (1,212,542)
----------------------------------------------------
Net Increase (Decrease) 144,900 144,900 268,821 268,821
- -------------------------------------------------------------------------------------------------------
LONG-TERM
Investor Shares
Issued $ 228,826 19,887 $ 326,425 28,983
Issued in Lieu of Cash Distributions 55,471 4,822 50,572 4,496
Redeemed (324,414) (28,257) (391,374) (34,750)
----------------------------------------------------
Net Increase (Decrease)--Investor Shares (40,117) (3,548) (14,377) (1,271)
----------------------------------------------------
Admiral Shares
Issued 161,640 14,077 315,702 28,030
Issued in Lieu of Cash Distributions 29,343 2,550 25,281 2,246
Redeemed (245,062) (21,277) (167,486) (14,867)
----------------------------------------------------
Net Increase (Decrease)--Admiral Shares (54,079) (4,650) 173,497 15,409
- -------------------------------------------------------------------------------------------------------
34
REPORT OF INDEPENDENT AUDITORS
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 Long-Term Tax-Exempt Fund
(constituting Vanguard New York Tax-Exempt Funds, hereafter referred to as the
"Funds") at November 30, 2003, the results of each of their operations for the
year then ended, 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 five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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, 2003 by correspondence with the custodian, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 6, 2004
- --------------------------------------------------------------------------------
SPECIAL 2003 TAX INFORMATION
(unaudited) for vanguard new york tax-exempt funds
This information for the fiscal year ended November 30, 2003, is included
pursuant to provisions of the Internal Revenue Code.
The Long-Term Tax-Exempt Fund distributed $23,285,000 as capital gain dividends
(from net long-term capital gains) to shareholders during the fiscal year.
Each fund designates 100% of its income dividends as exempt-interest dividends.
35
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 a part owner of
the fund. Your fund trustees also serve on the board of directors of The
Vanguard Group, Inc., which is owned by the Vanguard(R) funds and provides
services to them on an at-cost basis.
A 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.
Our independent board members 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
POSITION(S) HELD WITH
NAME FUND (NUMBER OF
(YEAR OF BIRTH) VANGUARD FUNDS
TRUSTEE/OFFICER OVERSEEN BY
SINCE TRUSTEE/OFFICER) PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------------------------
JOHN J. BRENNAN* Chairman of the Chairman of the Board, Chief Executive Officer, and Director/Trustee of
(1954) Board, Chief The Vanguard Group, Inc., and of each of the investment companies
May 1987 Executive Officer, served by The Vanguard Group.
and Trustee
(118)
- --------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
CHARLES D. ELLIS Trustee The Partners of '63 (pro bono ventures in education); Senior Advisor
(1937) (118) to Greenwich Associates (international business strategy consulting);
January 2001 Successor Trustee of Yale University; Overseer of the Stern School of
Business at New York University; Trustee of the Whitehead Institute
for Biomedical Research.
- --------------------------------------------------------------------------------------------------------------------------
RAJIV L. GUPTA Trustee Chairman and Chief Executive Officer (since October 1999), Vice
(1945) (118) Chairman (January-September 1999), and Vice President (prior to
December September 1999) of Rohm and Haas Co. (chemicals); Director of
Technitrol, Inc. (electronic components), and Agere Systems (commu-
nications components); Board Member of 2002 the American Chemistry
Council; Trustee of Drexel University.
- --------------------------------------------------------------------------------------------------------------------------
JOANN HEFFERNAN Trustee Vice President, Chief Information Officer, and Member of the
HEISEN (118) Executive Committee of Johnson & Johnson (pharmaceuticals/
(1950) consumer products); Director of the University Medical Center at
July 1998 Princeton and Women's Research and Education Institute.
- --------------------------------------------------------------------------------------------------------------------------
BURTON G. MALKIEL Trustee Chemical Bank Chairman's Professor of Economics, Princeton
(1932) (116) University; Director of Vanguard Investment Series plc (Irish invest-
May 1977 ment fund) (since November 2001), Vanguard Group (Ireland)
Limited (Irish investment management firm) (since November 2001),
Prudential Insurance Co. of America, BKF Capital (investment
management), The Jeffrey Co. (holding company), and NeuVis, Inc.
(software company).
- --------------------------------------------------------------------------------------------------------------------------
36
the funds. Among board members' responsibilities are selecting investment
advisors for the funds; monitoring fund operations, performance, and costs;
reviewing contracts; nominating and selecting new trustees/directors; and
electing Vanguard officers.
Each trustee serves a fund until its termination; or until the trustee's
retirement, resignation, or death; or otherwise as specified in the fund's
organizational documents. Any trustee may be removed at a shareholders' meeting
by a vote representing two-thirds of the net asset value of all shares of the
fund together with shares of other Vanguard funds organized within the same
trust. The table on these two pages shows information for each trustee and
executive officer of the fund. The mailing address of the trustees and officers
is P.O. Box 876, Valley Forge, PA 19482.
Position(s) Held with
Name Fund (Number of
(Year of Birth) Vanguard Funds
Trustee/Officer Overseen by
Since Trustee/Officer) Principal Occupation(s) During the Past Five Years
- --------------------------------------------------------------------------------------------------------------------------
ALFRED M. RANKIN, JR. Trustee Chairman, President, Chief Executive Officer, and Director of NACCO
(1941) (118) Industries, Inc. (forklift trucks/housewares/lignite); Director of
January 1993 Goodrich Corporation (industrial products/aircraft systems and
services); Director of Standard Products Company (supplier for
the automotive industry) until 1998.
- --------------------------------------------------------------------------------------------------------------------------
J. LAWRENCE WILSON Trustee Retired Chairman and Chief Executive Officer of Rohm and Haas Co.
(1936) (118) (chemicals); Director of Cummins Inc. (diesel engines), MeadWestvaco
April 1985 Corp. (paper products), and AmerisourceBergen Corp. (pharmaceutical
distribution); Trustee of Vanderbilt University.
- --------------------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS*
R. GREGORY BARTON Secretary Managing Director and General Counsel of The Vanguard Group, Inc.;
(1951) (118) Secretary of The Vanguard Group and of each of the investment
June 2001 companies served by The Vanguard Group.
- --------------------------------------------------------------------------------------------------------------------------
Thomas J. Higgins Treasurer Principal of The Vanguard Group, Inc.; Treasurer of each of the
(1957) (118) investment companies served by The Vanguard Group.
July 1998
- --------------------------------------------------------------------------------------------------------------------------
*Officers of the funds are "interested persons" as defined in the Investment
Company Act of 1940.
More information about the trustees is in the Statement of Additional
Information, available from The Vanguard Group.
- --------------------------------------------------------------------------------------------------------------------------
VANGUARD SENIOR MANAGEMENT TEAM
MORTIMER J. BUCKLEY, Information Technology. MICHAEL S. MILLER, Planning and Development.
JAMES H. GATELY, Investment Programs and Services. RALPH K. PACKARD, Finance.
KATHLEEN C. GUBANICH, Human Resources. GEORGE U. SAUTER, Chief Investment Officer.
F. WILLIAM MCNABB, III, Client Relationship Group.
- --------------------------------------------------------------------------------------------------------------------------
JOHN C. BOGLE, Founder; Chairman and Chief Executive Officer, 1974-1996.
- --------------------------------------------------------------------------------------------------------------------------
[SHIP]
[THE VANGUARD GROUP (R) LOGO]
POST OFFICE BOX 2600
VALLEY FORGE, PA 19482-2600
Vanguard, The Vanguard Group, Vanguard.com, Admiral, and the ship logo are
trademarks of The Vanguard Group, Inc.
All other marks are the exclusive property of their respective owners.
ABOUT OUR COVER
The photographs that appear on the cover of this report are copyrighted by
Michael Kahn.
For More Information
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.
To receive a free copy of the prospectus or the Statement of Additional
Information, or to request additional information about the funds or other
Vanguard funds, please contact us at one of the adjacent telephone numbers or by
e-mail through Vanguard.com. Prospectuses may also be viewed online.
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc.,
unless otherwise noted.
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
DIRECT INVESTOR ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
TEXT TELEPHONE
1-800-952-3335
(C) 2004 THE VANGUARD GROUP, INC.
ALL RIGHTS RESERVED.
VANGUARD MARKETING
CORPORATION, DISTRIBUTOR.
Q760 012004
ITEM 2: Code of Ethics. The Board of Trustees has adopted a code of ethics that
applies to the principal executive officer, principal financial officer,
principal accounting officer or controller of the Registrant and The Vanguard
Group, Inc., and to persons performing similar functions.
ITEM 3: Audit Committee Financial Expert. All of the members of the Audit
Committee have been determined by the Registrant's Board of Trustees to be Audit
Committee Financial Experts. The members of the Audit Committee are: Charles D.
Ellis, Rajiv L. Gupta, JoAnn Heffernan Heisen, Burton G. Malkiel, Alfred M.
Rankin, Jr., and J. Lawrence Wilson. All Audit Committee members are independent
under applicable rules.
ITEM 4: Not applicable.
ITEM 5: Not applicable.
ITEM 6: Reserved.
ITEM 7: Not applicable.
ITEM 8: Reserved.
ITEM 9: CONTROLS AND PROCEDURES.
(a) Disclosure Controls and Procedures. The Principal Executive and
Financial Officers concluded that the Registrant's Disclosure Controls and
Procedures are effective based on their evaluation of the Disclosure Controls
and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control Over Financial Reporting. There were no significant
changes in Registrant's internal control over financial reporting or in other
factors that could significantly affect this control subsequent to the date of
the evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 10: EXHIBITS. The following exhibits are attached hereto:
(a) code of ethics
(b) certifications
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
VANGUARD NEW YORK TAX-FREE FUNDS
BY:_____________(signature)________________
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: January 22, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
VANGUARD NEW YORK TAX-FREE FUNDS
BY:_____________(signature)________________
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: January 22, 2004
VANGUARD NEW YORK TAX-FREE FUNDS
BY:_____________(signature)________________
(HEIDI STAM)
THOMAS J. HIGGINS*
TREASURER
Date: January 22, 2004
*By Power of Attorney. See File Number 2-57689, filed on December 26, 2002.
Incorporated by Reference.