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: 811-5340
Name of Registrant: Vanguard New Jersey Tax-Free Funds
Address of Registrant: P.O. Box 2600
Valley Forge, PA 19482
Name and address of agent for service: R. Gregory Barton, Esquire
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, 2003 - May 31, 2004
Item 1: Reports to Shareholders
VANGUARD(R) NEW JERSEY TAX-EXEMPT FUNDS
MAY 31, 2004
SEMIANNUAL REPORT
VANGUARD(R) NEW JERSEY TAX-EXEMPT MONEY MARKET FUND
VANGUARD(R)NEW JERSEY LONG-TERM TAX-EXEMPT FUND
THE VANGUARD GROUP(R)
HOW TO READ YOUR FUND REPORTHTML1DocumentEncodingutf-8
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
16 FINANCIAL STATEMENTS
38 ADVANTAGES OF VANGUARD.COM
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SUMMARY
* The Vanguard New Jersey Tax-Exempt Funds provided returns consistent with
an environment of low, but rising, interest rates.
* The yield of the Tax-Exempt Money Market Fund budged only slightly, while
the yield of the Long-Term Tax-Exempt Fund rose as the prices of its bonds
declined.
* Both funds' returns exceeded the average returns of their peer funds.
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 six months ended May 31, 2004, surprisingly strong economic growth
fueled fears of inflation, boosting the yields (and depressing the prices) of
most municipal bonds. The shortest-term securities--those held by money market
portfolios--were an exception to this pattern. Their yields held steady as
investors awaited the Federal Reserve Board's June meeting on monetary policy.
[PICTURES OF JOHN J. BRENNAN]
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TOTAL RETURNS SIX MONTHS ENDED
MAY 31, 2004
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VANGUARD NEW JERSEY TAX-EXEMPT
MONEY MARKET FUND 0.4%
(SEC 7-Day Annualized Yield: 0.90%)
Average New Jersey Tax-Exempt
Money Market Fund* 0.2
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VANGUARD NEW JERSEY
LONG-TERM TAX-EXEMPT FUND
Investor Shares -0.4%
Admiral Shares -0.4
Lehman 10 Year Municipal Bond Index -0.1
Average New Jersey Municipal Debt Fund* -0.8
Lehman Municipal Bond Index -0.2
- --------------------------------------------------------------------
*Derived from data provided by Lipper Inc.
The Vanguard New Jersey Tax-Exempt Funds provided returns consistent with these
trends. The Long-Term Tax-Exempt Fund returned -0.4%, as its interest income was
not enough to offset the decline in bond prices. The Tax-Exempt Money Market
Fund returned 0.4%. Both funds' returns exceeded the average returns of their
peer groups. The funds' starting and ending net asset values and distributions
to shareholders in the period appear on page 5.
The funds' yields also reflected the market environment, rising slightly for the
Tax-Exempt Money Market Fund and more significantly for the Long-Term Tax-Exempt
Fund. At the end of the six-month period, the Tax-Exempt Money Market Fund
offered a yield of 0.90%, representing a taxable-equivalent yield of 1.48% for
investors in the highest federal tax bracket. (This calculation accounts for
federal and state taxes, but not local taxes or the possibility that an
1
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ADMIRAL(TM) SHARES
A LOWER-COST CLASS OF SHARES AVAILABLE TO MANY LONGTIME SHAREHOLDERS AND TO
THOSE WITH SIGNIFICANT INVESTMENTS IN THE FUND.
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investor might be subject to the alternative minimum tax.) The Investor Shares
of the Long-Term Tax-Exempt Fund provided a yield of 3.95%, for a
taxable-equivalent yield of 6.49%. The Admiral Shares' 4.01% yield was
equivalent to a taxable yield of 6.59%.
STRENGTHENING ECONOMY PUSHED BOND YIELDS HIGHER
The fixed income markets were quiet for much of the six months, but interest
rates rose sharply in April as the economic expansion gathered momentum, raising
the specter of inflation. The yield of the benchmark 10-year U.S. Treasury note
increased 32 basis points during the period, from 4.33% to 4.65%, as bond prices
declined. The Lehman Brothers Aggregate Bond Index, a measure of the taxable
investment-grade bond market, returned 0.6%.
The yields of short-term securities rose in expectation of actions by the Fed to
boost interest rates, but those of the shortest-term securities were relatively
stable. The yield of the 3-month Treasury bill, a proxy for money market rates,
closed the period at 1.06%, compared with 0.93% when the fiscal year began.
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MARKET BAROMETER TOTAL RETURNS
PERIODS ENDED MAY 31, 2004
---------------------------------
SIX ONE FIVE
MONTHS YEAR YEARS*
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BONDS
Lehman Aggregate Bond Index 0.6% -0.4% 6.8%
(Broad taxable market)
Lehman Municipal Bond Index -0.2 0.0 5.5
Citigroup 3-Month Treasury Bill Index 0.5 1.0 3.2
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STOCKS
Russell 1000 Index (Large-caps) 6.4% 18.9% -1.0%
Russell 2000 Index (Small-caps) 4.5 30.3 6.7
Dow Jones Wilshire 5000 Index 6.4 20.5 -0.5
(Entire market)
MSCI All Country World Index
ex USA (International) 9.6 33.2 1.4
================================================================================
CPI
Consumer Price Index 2.5% 3.1% 2.6%
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*Annualized.
A more pronounced version of these dynamics was at play in the municipal bond
market. Municipal yields rose more sharply than Treasury rates, producing
steeper price declines and causing municipal bonds to trail their Treasury
counterparts. The yield of a 10-year AAA-rated general-obligation bond rose 38
basis points to 3.93%. The broad municipal market, as measured by the Leh-man
Municipal Bond Index, returned -0.2%.
2
STOCKS ROSE, THEN STALLED
The fiscal half-year opened with strong returns in domestic and foreign stock
markets, as the bull market of 2003 spilled into January. Toward the end of the
period, stock prices retreated. For the six months, the U.S. stock market, as
measured by the Dow Jones Wilshire 5000 Composite Index, returned 6.4%.
Large-capitalization stocks fared better than smaller stocks, and value-oriented
shares (those that generally trade at below-market valuations relative to their
book values and other fundamental measures) posted better results than growth
stocks (those expected to produce above-average earnings growth).
PERFORMANCE WAS SUBDUED, BUT PROSPECTS BRIGHTENED
During the first half of fiscal 2004, the Long-Term Tax-Exempt Fund produced a
negative total return, but the period was marked by some positives. The most
significant influence on performance was the rise in interest rates (or, put
differently, the decline in bond prices). The increase in rates was felt most by
securities with maturities of less than 10 years.
Rising rates reduced the capital value of the fund's shares by -2.6%, which was
partially offset by the fund's six-month income return of 2.2%. (It's worth
noting that a bond fund's semiannual return includes just a half-year's worth of
interest income but reflects the full impact of any price changes resulting from
interest rate trends.) During the six months, the fund's advisor--Vanguard Fixed
Income Group--kept the fund's average duration (a measure of its interest rate
sensitivity) near the short end of its typical range. This positioning helped
moderate the effect of rising rates.
Two positive developments--mostly prospective--were New Jersey's improving
fiscal strength, which enhances the attractiveness of the state's debt, and an
improvement in the relative valuation of Treasury and municipal securities. With
the latter, the bad news is that the more attractive valuation simply reflects
the swifter decline in municipal prices than in Treasury prices. The good news
is that new municipal investments and reinvested distributions can be put to
work at higher absolute yields and at more attractive yields relative to
Treasuries.
For the Tax-Exempt Money Market Fund, the yield was mostly stable; it rose just
2 basis points during the six months. The fund maintained a net asset value of
$1 per share (as is expected, but not guaranteed) and
3
generated a higher return than its peer-group average. The advisor made few
changes to the composition of the high-credit-quality portfolio.
As I noted at the outset, both funds' returns surpassed the average returns of
their peer groups, a tribute to the talents of Vanguard Fixed Income Group and
also to the funds' very low operating expenses. Low costs are important in any
environment, but their value is especially apparent in times of low interest
rates, such as those of the past few years. For more information about the funds
and the municipal bond market, please see the Report from the Advisor, which
begins on page 6; additional information about expenses is on pages 14 and 15.
THOUGH THERE ARE NEW CONCERNS, OUR ADVICE IS THE SAME
Not long ago, during the punishing bear market, we were counseling investors not
to give up on stocks. Today, investor apprehension seems to have relocated to
the bond market, but our message is the same. The best response to the
ever-changing risks of the financial markets is to develop a plan and stick with
it. A sensible plan includes a mix of stock, bond, and money market funds
weighted in proportions appropriate to your unique circumstances. When a tough
period strikes one asset class, some of the pain can be offset by better
performance in another. Over time, this simple, balanced approach puts you in a
good position to meet your financial goals.
Thank you for entrusting your assets to us.
Sincerely,
/S/JOHN J. BRENNAN
JOHN J. BRENNAN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
JUNE 15, 2004
4
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YOUR FUND'S PERFORMANCE AT A GLANCE NOVEMBER 30, 2003-MAY 31, 2004
DISTRIBUTIONS PER SHARE
------------------------
NEW JERSEY STARTING ENDING INCOME CAPITAL
TAX-EXEMPT FUND SHARE PRICE SHARE PRICE DIVIDENDS GAINS
- --------------------------------------------------------------------------------
Money Market $1.00 $1.00 $0.004 $0.000
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Long-Term
Investor Shares $12.27 $11.87 $0.274 $0.081
Admiral Shares 12.27 11.87 0.278 0.081
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5
REPORT FROM THE ADVISOR
Interest rates declined for much of the six months ended May 31, 2004, but
reversed course in the final two months, finishing the period significantly
higher than where they started. The Vanguard New Jersey Tax-Exempt Funds
produced total returns consistent with this environment: 0.4% for the Tax-Exempt
Money Market Fund and -0.4% for the Long-Term Tax-Exempt Fund. The rise in
interest rates was most pronounced among shorter-maturity bonds, flattening the
yield curve. (In other words, the interest rate spread between short- and
long-term bonds narrowed.)
THE INVESTMENT ENVIRONMENT
The economy expanded strongly during the semiannual period. In the fourth
quarter of 2003, real (inflation-adjusted) gross domestic product increased an
annualized 4.1%, and in the first quarter of 2004 it rose 3.9%. Business capital
spending accelerated, adding fuel to an economic engine that had been powered
mostly by the consumer over the past few years.
Although the Federal Reserve Board maintained its target for the federal funds
rate at 1.00% during the six months, both the bond market's and the Fed's focus
seemed to shift from the possibility of deflation to signs of incipient
inflation. At its May 4 meeting, the Fed's Open Market Committee said it was
adopting a "measured" approach to current monetary policy, a statement widely
interpreted as a signal that the Fed would soon begin to raise rates to offset
inflationary pressures. As the six-month period ended, the market was
forecasting that the Fed would boost its rate target. Fed officials are expected
to implement any rate increases slowly over a lengthy period.
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INVESTMENT PHILOSOPHY The advisor believes that each fund, while operating
within stated maturity and stringent quality targets, can achieve a relatively
high level of current income that is exempt from federal and New Jersey income
taxes by investing in high-quality securities issued by New Jersey state,
county, and municipal governments.
- --------------------------------------------------------------------------------
On balance, the economic signals were positive, but concerns remained, including
those associated with the soaring price of oil.
6
Although OPEC members indicated that they planned to boost production, the price
of a barrel of crude at the end of May was still around $40, and gasoline prices
were stuck at more than $2 a gallon as the summer driving season began. Our
assessment is that the economy will continue to expand, and--in keeping with the
market consensus--we believe that the Fed will gradually raise rates to protect
against any reemergence of inflation.
MUNIS GENERALLY UNDERPERFORMED TREASURIES
Except for the longest-term bonds, rate increases (and the corresponding price
declines) were sharper among municipal securities than among U.S. Treasury
securities, leading munis to underperform. Because of the widespread
anticipation of rate increases by the Fed, shorter-term munis--those with
maturities of less than 10 years--were hit particularly hard, as illustrated by
the increase in yields in the adjacent table.
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YIELDS OF MUNICIPAL BONDS
(AAA-RATED GENERAL-OBLIGATION ISSUES)
CHANGE
MATURITY MAY 31, 2004 NOV. 30, 2003 (BASIS POINTS)
- --------------------------------------------------------------------------------
2 years 2.00% 1.40% +60
5 years 3.10 2.39 +71
10 years 3.93 3.55 +38
30 years 4.99 4.72 +27
- --------------------------------------------------------------------------------
Source: The Vanguard Group.
In New Jersey, the supply of newly issued municipal bonds declined 27.8%
compared with the same period a year ago--from $7.6 billion in the first half of
fiscal 2003 to $5.5 billion this fiscal half-year. Lower supply typically
provides some support for the market. State tax revenues improved as the economy
gathered momentum, enhancing the strength of the state's general-obligation
bonds.
The performances of the Vanguard New Jersey Tax-Exempt Funds were in line with
those of their market segments. We maintained our focus on the market's
higher-quality issues, and as we had during the previous six months, we
positioned the funds defensively relative to interest rate risk. The portfolios'
average maturities and durations ended the period at the low end of their
prescribed ranges. Both funds provided higher returns than their peer-group
averages.
7
An important advantage we continue to enjoy relative to peer funds is our lower
costs. Despite the rise in interest rates, yields remain at very low levels by
historical standards. Even seemingly modest differences in expense ratios can
consume a large proportion of the yield available to shareholders.
ROBERT F. AUWAERTER, PRINCIPAL
CHRISTOPHER M. RYON, PRINCIPAL
PAMELA WISEHAUPT TYNAN, PRINCIPAL
JOHN M. CARBONE, PRINCIPAL
VANGUARD FIXED INCOME GROUP
JUNE 18, 2004
8
FUND PROFILES
AS OF 5/31/2004
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 JERSEY TAX-EXEMPT
MONEY MARKET FUND
- -----------------------------------------------
Financial Attributes
Yield 0.9%
Average Weighted Maturity 45 days
Average Quality MIG-1
Expense Ratio 0.15%*
- -----------------------------------------------
Distribution by Credit Quality (% of portfolio)
MIG-1/SP-1+ 69%
A-1/P-1 31
- -----------------------------------------------
Total 100%
- -----------------------------------------------
VISIT OUR WEBSITE AT VANGUARD.COM
FOR REGULARLY UPDATED FUND INFORMATION.
*ANNUALIZED
9
FUND PROFILES (CONTINUED)
NEW JERSEY LONG-TERM
TAX-EXEMPT FUND
- ---------------------------------------------------------------------
FINANCIAL ATTRIBUTES
COMPARATIVE BROAD
FUND INDEX* INDEX**
- ---------------------------------------------------------------------
Number of Issues 335 9,079 48,257
Yield -- --
Investor Shares 4.0%
Admiral Shares 4.0%
Yield to Maturity 4.0%+ -- --
Average Coupon 4.6% 5.2% 5.2%
Average Effective Maturity 7.2 years 7.2 years 9.1 years
Average Quality AA+ AA+ AA+
Average Duration 5.4 years 5.8 years 6.3 years
Expense Ratio -- --
Investor Shares 0.15%++
Admiral Shares 0.09%++
Short-Term Reserves 5% -- --
- ---------------------------------------------------------------------
- -----------------------------------------------
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
AAA 86%
AA 8
A 4
BBB 2
- -----------------------------------------------
Total 100%
- -----------------------------------------------
- -------------------------
INVESTMENT FOCUS
CREDIT QUALITY High
AVERAGE MATURITY Long
- -------------------------
- --------------------------------------------------
VOLATILITY MEASURES
COMPARATIVE BROAD
FUND INDEX* FUND INDEX**
- --------------------------------------------------
R-Squared 0.98 1.00 0.98 1.00
Beta 0.95 1.00 1.10 1.00
- --------------------------------------------------
- -----------------------------------------
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
Under 1 Year 6%
1-5 Years 24
5-10 Years 52
10-20 Years 17
20-30 Years 1
- -----------------------------------------
Total 100%
- -----------------------------------------
*Lehman 10 Year Municipal Bond Index.
**Lehman Municipal Bond Index.
+Before expenses.
++Annualized.
VISIT OUR WEBSITE AT VANGUARD.COM
FOR REGULARLY UPDATED FUND INFORMATION.
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.
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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.
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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.
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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
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARIES
AS OF 5/31/2004
All of the returns in this report represent past performance, which is not a
guarantee of future results that may be achieved by the funds. (For performance
data current to the most recent month-end, which may be higher or lower than
that cited, visit our website at www.vanguard.com.) 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 New Jersey 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. The annualized
yield shown for this fund reflects current earnings more closely than do the
average annual returns. For bond funds, both investment returns and principal
value can fluctuate widely, so an investor's shares, when sold, 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 sale of fund
shares.
- -------------------------------------------------------------
NEW JERSEY TAX-EXEMPT MONEY MARKET FUND
- -------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) NOVEMBER 30, 1993--MAY 31, 2004
- -------------------------------------------------------------
New Jersey Tax-Exempt Average
Money Market Fund Fund*
Fiscal Total Total
Year Return Return
- -------------------------------------------------------------
1994 2.5% 2.2%
1995 3.6 3.3
1996 3.2 2.9
1997 3.3 3.0
1998 3.2 2.8
1999 2.9 2.5
2000 3.7 3.4
2001 2.8 2.4
2002 1.3 0.9
2003 0.9 0.5
2004** 0.4 0.2
- -------------------------------------------------------------
SEC 7-DAY ANNUALIZED YIELD (5/31/2004 ): 0.90%
- -------------------------------------------------------------
*Average New Jersey Tax-Exempt Money Market Fund; derived from data provided by
Lipper Inc.
**Six months ended May 31, 2004.
Note: See Financial Highlights table on page 33 for dividend information.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 2004
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 Jersey Tax-Exempt
Money Market Fund 2/3/1988 0.83% 2.17% 0.00% 2.68% 2.68%
- --------------------------------------------------------------------------------
12
NEW JERSEY LONG-TERM TAX-EXEMPT FUND
- -----------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) NOVEMBER 30, 1993-MAY 31, 2004
- -----------------------------------------------------------------
NEW JERSEY LONG-TERM
TAX-EXEMPT FUND INVESTOR SHARES LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -----------------------------------------------------------------
1994 -11.2% 5.1% -6.1% -4.5%
1995 13.3 6.4 19.7 18.6
1996 -0.7 5.4 4.7 5.7
1997 1.0 5.4 6.4 7.1
1998 2.3 5.3 7.6 8.1
1999 -6.2 4.9 -1.3 -0.4
2000 2.9 5.7 8.6 7.7
2001 3.4 5.2 8.6 8.2
2002 1.5 4.9 6.4 6.7
2003 2.1 4.7 6.8 6.9
2004** -2.6 2.2 -0.4 -0.1
- -----------------------------------------------------------------
*Lehman 10 Year Municipal Bond Index.
**Six months ended May 31, 2004.
Note: See Financial Highlights tables on page 34 for dividend and capital gains
information.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED MARCH 31, 2004
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 Jersey Long-Term Tax-Exempt Fund
Investor Shares 2/3/1988 5.22% 5.92% 1.28% 5.29% 6.57%
Admiral Shares 5/14/2001 5.28 6.82* -- -- --
- --------------------------------------------------------------------------------
*Return since inception.
13
ABOUT YOUR FUND'S EXPENSES
We believe it is important for you to understand the impact of costs on your
investment. All mutual funds have operating expenses. As a shareholder of the
fund, you incur ongoing costs, which 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 average net assets. This
figure is known as the expense ratio. The following examples are intended to
help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based
on an investment of $1,000 made at the beginning of the period shown and held
for the entire period.
The table below illustrates your fund's costs in two ways:
* ACTUAL FUND RETURN. This section helps you to estimate the actual expenses
that you paid over the period. The "Ending Account Value" shown is derived from
the fund's actual return, and the third column shows the dollar amount that
would have been paid by an investor who started with $1,000 in the fund. You may
use the information here, together with the amount you invested, to estimate the
expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your fund under the heading "Expenses Paid During Period."
- ---------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
BEGINNING ENDING EXPENSES
NEW JERSEY ACCOUNT VALUE ACCOUNT VALUE PAID DURING
TAX-EXEMPT FUND 11/30/2003 5/31/2004 PERIOD*
- ---------------------------------------------------------------
Actual Fund Return
Money Market $1,000 $1,004 $0.75
Long-Term
Investor Shares $1,000 $996 $0.75
Admiral Shares 1,000 996 0.45
Hypothetical 5% Return
Money Market $1,000 $1,049 $0.77
Long-Term
Investor Shares $1,000 $1,049 $0.77
Admiral Shares 1,000 1,050 0.46
- ---------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by the number of days in the
most recent fiscal half-year, then divided by 366.
* HYPOTHETICAL 5% RETURN. This section is intended to help you compare your
fund's costs with those of other mutual funds. It assumes that the fund had a
return of 5% before expenses during the period shown, but that the expense ratio
is unchanged. In this case--because the return used is not the fund's actual
return--the results do not apply to your investment. The example is useful in
making comparisons because the Securities and Exchange Commission requires all
mutual funds to calculate expenses based on a 5% return. You can assess your
fund's costs by comparing this hypothetical example with the hypothetical
examples that appear in shareholder reports of other funds.
14
- ---------------------------------------------------------------
ANNUALIZED EXPENSE RATIOS:
YOUR FUND COMPARED WITH ITS PEER GROUP
NEW JERSEY INVESTOR ADMIRAL PEER
TAX-EXEMPT FUND SHARES SHARES GROUP*
- ---------------------------------------------------------------
MONEY MARKET 0.15% -- 0.69%
LONG-TERM 0.15 0.09% 1.08
- ---------------------------------------------------------------
*Peer-groups are: for the New Jersey Tax-Exempt Money Market Fund, the Average
New Jersey Tax-Exempt Money Market Fund, and for the New Jersey Long-Term
Tax-Exempt Fund, the Average New Jersey Municipal Debt Fund. Peer-group expense
ratios are derived from data provided by Lipper Inc. and capture information
through year-end 2003.
Note that the expenses shown in the table on page 14 are meant to highlight and
help you compare ongoing costs only and do not reflect any transactional costs
or account maintenance fees. They do not include your fund's low-balance fee,
described in the prospectus. If this fee were applied to your account, your
costs would be higher. Your fund does not charge transaction fees, such as
purchase or redemption fees, nor does it carry a "sales load."
The calculations assume no shares were bought or sold during the period. Your
actual costs may have been higher or lower, depending on the amount of your
investment and the timing of any purchases or redemptions.
You can find more information about the fund's 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 appropriate fund prospectus.
15
AS OF 5/31/2004
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's municipal bond holdings,
including each security's market value on the last day of the reporting period
and information on credit enhancements (insurance or letters of credit). Other
assets are added to, and liabilities are subtracted from, the value of Total
Municipal Bonds to calculate the fund's Net Assets. Finally, Net Assets are
divided by the outstanding shares of the fund to arrive at its share price, or
Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets, you will find a table displaying the
composition of the fund's net assets. 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
MATURITY AMOUNT VALUE*
NEW JERSEY TAX-EXEMPT MONEY MARKET FUND COUPON DATE (000) (000)
- ----------------------------------------------------------------------------------------------
MUNICIPAL BONDS (100.3%)
- ----------------------------------------------------------------------------------------------
Avalon NJ BAN 1.75% 11/19/2004 10,820 10,845
Brick Township NJ BAN 2.00% 2/11/2005 12,515 12,570
Bridgewater Township NJ BAN 1.65% 10/8/2004 11,630 11,657
Burlington County NJ BAN 1.75% 9/10/2004 9,745 9,764
Burlington County NJ BAN 1.25% 4/15/2005 25,525 25,567
Cherry Hill Township NJ BAN 1.65% 10/7/2004 34,339 34,418
Delaware River & Bay Auth. New Jersey Rev. VRDO 1.01% 6/7/2(2) 12,200 12,200
Essex County NJ Improvement Auth.Rev
(Pooled Govt. Loan) VRDO 1.02% 6/7/2004 40,350 40,350
Gloucester County NJ BAN 2.00% 10/27/2004 8,575 8,607
Hopewell Township NJ BAN 2.00% 11/19/2004 19,404 19,498
Middlesex County NJ BAN 1.75% 1/10/2005 16,220 16,286
Monmouth County NJ Improvement Auth. Rev
(Pooled Govt. Loan) VRDO 1.02% 6/7/2004 65,965 65,965
Monroe Township NJ BAN 2.00% 2/23/2005 7,715 7,768
Moorestown Township NJ BAN 3.00% 5/27/2005 12,775 12,952
New Jersey Building Auth. Rev. TOB VRDO 1.07% 6/7/2004(1) 42,420 42,420
New Jersey COP VRDO 1.07% 6/7/2004 9,495 9,495
New Jersey COP VRDO 1.07% 6/7/2004 14,815 14,815
New Jersey COP VRDO 1.13% 6/7/2004 10,395 10,395
New Jersey Econ. Dev. Auth
Market Transition Fac. Rev. TOB VRDO 1.09% 6/7/2004(1) 2,555 2,555
New Jersey Econ. Dev. Auth. Rev
Peddie School Project) VRDO 1.00% 6/7/2004 4,100 4,100
16
- ----------------------------------------------------------------------------------------------
FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000)
- ----------------------------------------------------------------------------------------------
New Jersey Econ. Dev. Auth. Rev
(Benedictine Abbey Newark) VRDO 0.97% 6/7/2004LOC 19,000 19,000
New Jersey Econ. Dev. Auth. Rev
(Benedictine Abbey Newark) VRDO 0.97% 6/7/2004LOC 8,925 8,925
New Jersey Econ. Dev. Auth. Rev. (Hamilton YMCA 1.08% 6/7/2004LOC 5,685 5,685
New Jersey Econ. Dev. Auth. Rev
(Hoffman-La Roche) VRDO 1.09% 6/1/2004LOC 17,500 17,500
New Jersey Econ. Dev. Auth. Rev
(Jewish Community Center) VRDO 1.03% 6/7/2004LOC 6,000 6,000
New Jersey Econ. Dev. Auth. Rev
(Lawrenceville School Project) VRDO 0.98% 6/1/2004 22,400 22,4002
New Jersey Econ. Dev. Auth. Rev
(Lawrenceville School Project) VRDO 1.02% 6/1/2004 10,700 10,7001
New Jersey Econ. Dev. Auth. Rev
(Peddie School Project) VRDO 1.00% 6/7/2004 7,900 7,900
New Jersey Econ. Dev. Auth. Rev. (Russell Berri 1.00% 6/7/2004LOC 7,000 7,000
New Jersey Econ. Dev. Auth. Rev.
(School Fac.) TOB VRDO 1.07% 6/7/2004(3) 9,720 9,720
New Jersey Econ. Dev. Auth. Rev.
(School Fac.) TOB VRDO 1.09% 6/7/2004(3) 39,440 39,440
New Jersey Econ. Dev. Auth. Rev.
(School Fac.) TOB VRDO 1.09% 6/7/2004(3) 5,205 5,205
New Jersey Econ. Dev. Auth. Rev
(Transp. Project) TOB VRDO 1.06% 6/7/2004(4) 7,465 7,465
New Jersey Econ. Dev. Auth. Rev
(United States Golf Association) VRDO 1.00% 6/7/2004 5,500 5,500
New Jersey Econ. Dev. Auth. Water Fac. Rev
(New Jersey Water Co. Project) TOB VRDO 1.09% 6/7/2004(3) 4,850 4,850
New Jersey Econ. Dev. Auth. Water Fac. Rev
(United Water Co.) VRDO 1.08% 6/1/2004(2) 37,350 37,350
New Jersey Econ. Dev. Auth. Water Fac. Rev
(United Water Co.) VRDO 1.15 6/1/2004(2) 12,000 12,000
New Jersey Econ. Dev. Auth. Rev
(Columbia Univ. Project) CP 1.067% 7/23/2004 8,175 8,1758
New Jersey Econ. Dev. Auth. Rev
(Chambers Cogeneration Limited Partnership) CP 0.95% 6/10/2004 25,000 25,000
New Jersey Econ. Dev. Auth. Rev
(Chambers Cogeneration Limited Partnership) CP 0.98% 8/11/2004 35,100 35,100
New Jersey Econ. Dev. Auth. Rev. (School Fac.) 1.09% 6/7/2004(2) 5,395 5,395
New Jersey Econ. Dev. Auth. Rev
(Peddie School Project) VRDO 1.02% 6/7/2004 6,725 6,7256
New Jersey Econ. Dev. Auth. Rev. (School Fac.) 1.20% 4/7/2005(1) 13,085 13,085
New Jersey Econ. Dev. Auth. Rev. (School Fac.) 1.09% 6/7/2004(2) 11,385 11,385
New Jersey Educ. Fac. Auth. Rev
(College of New Jersey) VRDO 1.05 6/7/2004(2) 32,100 32,100
New Jersey Educ. Fac. Auth. Rev
(Institute for Defense Analyses) VRDO 1.07% 6/7/2004(2) 13,695 13,695
New Jersey Educ. Fac. Auth. Rev. (Princeton Uni 1.03% 6/1/2004 56,445 56,445
New Jersey Educ. Fac. Auth. Rev. (Princeton Uni 1.05% 6/1/2004 3,150 3,150
New Jersey GO TOB VRDO 1.09% 6/7/2004* 24,200 24,200
New Jersey GO TOB VRDO 1.09% 6/7/2004(3) 33,245 33,245
New Jersey Health Care Fac. Financing Auth Rev.
(Capital Health Systems Obligated Group) VRDO 1.03% 6/7/2LOC 11,600 11,600
17
- ----------------------------------------------------------------------------------------------
FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000)
- ----------------------------------------------------------------------------------------------
New Jersey Health Care Fac. Financing Auth Rev.
(Holy Name Hosp.) VRDO 1.00% 6/7/2004LOC 7,000 7,000
New Jersey Health Care Fac. Financing Auth Rev.
(Hosp. Capital Asset Pooled Program) VRDO 1.08% 6/7/2004LOC 13, 200 13,200
New Jersey Health Care Fac. Financing Auth Rev.
(Hosp. Capital Asset Pooled Program) VRDO 1.08% 6/7/2004LOC 15,400 15,400
New Jersey Health Care Fac. Financing Auth Rev.
(Hosp. Capital Asset Pooled Program) VRDO 1.08% 6/7/2004LOC 24,500 24,500
New Jersey Health Care Fac. Financing Auth Rev.
(Hosp. Capital Asset Pooled Program) VRDO 1.08% 6/7/2004LOC 21,600 21,600
New Jersey Health Care Fac. Financing Auth Rev.
(Meridian Health Systems) VRDO 1.06% 6/7/2004LOC 30,300 30,300
New Jersey Health Care Fac. Financing Auth Rev.
(Meridian Health Systems) VRDO 1.06% 6/7/2004LOC 14,200 14,200
New Jersey Health Care Fac. Financing Auth Rev.
(Robert Wood Johnson) VRDO 1.03% 6/7/2004LOC 16,000 16,000
New Jersey Health Care Fac. Financing Auth Rev.
(Virtua Health) VRDO 1.03% 6/7/2004LOC 11,000 11,000
New Jersey Housing & Mortgage
Finance Agency Multi-Family Housing Rev. VRDO 1.09% 6/7/2004* 15,915 15,915
New Jersey Housing & Mortgage
Finance Agency Rev. TOB PUT 1.35% 12/9/200(1) 9,840 9,835
New Jersey Housing & Mortgage
Finance Agency Rev. TOB VRDO 1.09% 6/7/2004(1) 3,910 3,910
New Jersey Housing & Mortgage
Finance Agency Rev. TOB VRDO 1.09% 6/7/2004(1) 1,425 1,425
New Jersey Housing & Mortgage
Finance Agency Single Family Rev 1.05% 10/1/2004 5,000 5,000
New Jersey Housing & Mortgage
Finance Agency Single Family Rev 1.10% 10/1/2004 4,000 4,000
New Jersey Housing & Mortgage
Finance Agency Single Family Rev 1.05% 4/1/2005 5,000 5,000
New Jersey Housing & Mortgage
Finance Agency Single Family Rev. Notes 1.00% 4/1/2005 19,355 19,355
New Jersey Sports & Exposition Auth.Rev
(Convention Center Luxury Tax) VRDO 1.06% 6/7/2004(1)* 5,345 5,345
New Jersey Sports & Exposition Auth. Rev
(Convention Center Luxury Tax) VRDO 1.06% 6/7/2004(1) 6,955 6,955
New Jersey Sports & Exposition Auth. Rev. VRDO 1.06% 6/7/2004(1) 34,195 34,195
New Jersey TRAN 2.00% 6/25/2004 58,000 58,037
New Jersey Transp. Corp. COP 5.25% 9/15/2004(2 4,000 4,049
New Jersey Transp. Trust Fund Auth. Rev. TOB PU 1.05% 6/19/2004(1 14,495 14,495
New Jersey Transp. Trust Fund Auth. Rev. TOB VR 1.06% 6/7/2004(4) 10,455 10,455
New Jersey Transp. Trust Fund Auth. Rev. TOB VR 1.09% 6/7/2004(4) 7,140 7,140
New Jersey Transp. Trust Fund Auth. Rev. TOB VR 1.11% 6/7/2004(2) 24,860 24,860
New Jersey Transp. Trust Fund Auth
Transp. System TOB VRDO 1.10% 6/7/2004(4) 21,995 21,995
New Jersey Turnpike Auth. Rev 1.04% 6/7/2004(4) 4,400 4,400
New Jersey Turnpike Auth. Rev. VRDO 1.09% 6/7/2004(2) 6,825 6,825
New Jersey Turnpike Auth. Rev. TOB VRDO 1.07% 6/7/2004(1) 18,650 18,650
New Jersey Turnpike Auth. Rev. TOB VRDO 1.10% 6/7/2004(1) 7,555 7,555
18
- ----------------------------------------------------------------------------------------------
FACE MARKET MATURITY AMOUNT VALUE* COUPON DATE (000) (000)
- ----------------------------------------------------------------------------------------------
New Jersey Turnpike Auth. Rev. TOB VRDO 1.09% 6/7/2004(2) 8,000 8,000
New Jersey Turnpike Auth. Rev. VRDO 1.02% 6/7/2004(3) 106,750 106,750
New Jersey Turnpike Auth. Rev. VRDO 1.04% 6/7/2004(4) 23,500 23,500
New Jersey Turnpike Auth. Rev. VRDO 1.04% 6/7/2004(4) 82,150 82,150
Port Auth. of New York & New Jersey CP 0.95% 6/9/2004 2,100 2,100
Port Auth. of New York & New Jersey CP 0.98% 6/9/2004 1,010 1,010
Port Auth. of New York & New Jersey CP 1.00% 6/9/2004 3,550 3,550
Port Auth. of New York & New Jersey CP 0.97% 6/11/2004 8,200 8,200
Port Auth. of New York & New Jersey CP 0.95% 8/10/2004 7,700 7,700
Port Auth. of New York & New Jersey CP 0.97% 8/13/2004 3,100 3,100
Port Auth. of New York & New Jersey CP 1.03% 9/8/2004 2 27,550 27,550
Port Auth. of New York & New Jersey CP 1.03% 9/15/2004 1 12,720 12,720
Princeton Univ. New Jersey CP 0.95% 6/7/2004 3,300 3,300
Princeton Univ. New Jersey CP 0.93% 7/14/2004 7,600 7,600
Princeton Univ. New Jersey CP 1.03% 7/20/2004 3,500 3,500
Princeton Univ. New Jersey CP 1.06% 8/12/2004 1 15,600 15,600
Princeton Univ. New Jersey CP 0.95% 8/17/2004 1 11,000 11,000
Rahway Valley NJ Sewerage Auth
Sewer Rev. Project Notes 2.00% 1/14/2005 3,517 3,517
Raritan Township NJ BAN 1.75% 9/10/2004 6,277 6,277
Ridgewood NJ BAN 1.75% 4/13/2005 2 23,412 23,412
Rutgers State Univ. New Jersey VRDO 1.04% 6/1/2004 8 83,460 83,460
Salem County NJ Financing Auth. PCR
(Atlantic City Electric Co.) VRDO 1.03% 6/7/2004(1) 8,250 8,250
Salem County NJ Financing Auth. PCR
(Atlantic City Electric Co.) VRDO 1.08% 6/7/2004(1) 2,200 2,200
Salem County NJ Financing Auth. PCR (Exelon Pro 1.05% 6/14/2004LOC 19,000 19,000
Univ. of Medicine & Dentistry New Jersey Rev. V 1.06% 6/7/2004(2) 31,000 31,000
West Windsor Township NJ BAN 1.75% 3/2/2005 5,247 5,276
OUTSIDE NEW JERSEY:
Puerto Rico Electric Power Auth. Rev. VRDO 1.05% 6/7/2004(4) 10,000 10,000
Puerto Rico Electric Power Auth. Rev. TOB PUT 0.98% 6/24/2004(4 9,870 9,870
Puerto Rico Govt. Dev. Bank VRDO 0.97% 6/7/2004(1) 20,830 20,830
Puerto Rico Highway & Transp. Auth. Rev. TOB VR 1.09% 6/7/2004(1) 21,490 21,490
Puerto Rico Highway & Transp. Auth. Rev. VRDO 1.08% 6/7/2004(1) 15,855 15,855
Puerto Rico Highway & Transp. Auth. Rev. VRDO 1.10% 6/7/2004(3) 5,165 5,165
Puerto Rico Highway & Transp. Auth
Rev. Grant Anticipation VRDO 1.08% 6/7/2004(1)* 5,250 5,250
Puerto Rico Ind. Medical & Environmental Fac.
Finance Auth. Rev. PCR (Abbott Laboratories) PU 1.30% 3/1/2005* 9,275 9,275
Puerto Rico Infrastructure Financing Auth
Special Obligation Bonds TOB PUT 1.15% 6/7/2004* 8,915 8,915
Puerto Rico Infrastructure Financing Auth
Special Obligation Bonds TOB PUT 0.95% 6/17/2004* 29,105 29,105
Puerto Rico Public Finance Corp. TOB VRDO 1.08% 6/7/2004(11)* 10,000 10,000
Puerto Rico TRAN 2.00% 7/30/2004 15,000 15,024
- ----------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (Cost $1,991,264) 1,991,264
- ----------------------------------------------------------------------------------------------
19
- --------------------------------------------------------------------------------
AMOUNT
NEW JERSEY TAX-EXEMPT MONEY MARKET FUND (000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.3%)
- --------------------------------------------------------------------------------
Other Assets--Note B 17,146
Liabilities (23,635)
----------
(6,489)
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 1,984,028,260 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $1,984,775
================================================================================
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 May 31, 2004, the aggregate value
of these securities was $521,955,000, representing 26.3% of net assets.
For key to abbreviations and other references, see page 30.
- --------------------------------------------------------------------------------
AT MAY 31, 2004, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------
Paid-in Capital $1,984,267 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains 508 --
Unrealized Appreciation -- --
- --------------------------------------------------------------------------------
NET ASSETS $1,984,775 $1.00
================================================================================
20
- ----------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW JERSEY LONG-TERM TAX-EXEMPT COUPON DATE (000) (000)
- ----------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.5%)
- ----------------------------------------------------------------------------------------------
Atlantic City NJ Board of Educ. GO 6.00% 12/1/2012(4) 4,600 5,326
Atlantic City NJ Board of Educ. GO 6.10% 12/1/2015(4) 2,000 2,338
Atlantic City NJ GO 5.25% 12/15/2012( 1,990 2,165
Atlantic City NJ GO 5.25% 12/15/2014( 2,190 2,377
Atlantic County NJ Public Fac. COP 7.40% 3/1/2010(3) 1,755 2,115
Atlantic County NJ Public Fac. COP 7.40% 3/1/2011(3) 4,025 4,903
Atlantic County NJ Public Fac. COP 6.00% 3/1/2014(3) 3,685 4,220
Atlantic County NJ Public Fac. COP 6.00% 3/1/2015(3) 1,480 1,689
Atlantic County NJ Util. Auth. Sewer Rev. 6.875% 1/1/2012(2)(ETM) 2,260 2,564
Bayonne NJ Muni. Util. Auth. Water System Rev. 5.00% 4/1/2016(10) 1,255 1,311
Bayonne NJ Muni. Util. Auth. Water System Rev. 5.00% 4/1/2017(10) 1,315 1,363
Bayonne NJ Muni. Util. Auth. Water System Rev. 5.00% 4/1/2021(10) 1,600 1,623
Camden County NJ Improvement Auth. Lease Rev. 5.50% 9/1/2010(4)(Prere.) 1,470 1,642
Camden County NJ Improvement Auth. Lease Rev. 5.50% 5/1/2016 1,140 1,233
Camden County NJ Improvement Auth. Lease Rev. 5.50% 5/1/2017 1,025 1,103
Camden County NJ Improvement Auth. Lease Rev. 5.50% 5/1/2018 1,265 1,360
Camden County NJ Improvement Auth. Lease Rev. 5.50% 5/1/2019 1,335 1,432
Camden County NJ Improvement Auth. Lease Rev. 5.375% 9/1/2019(4) 850 900
Camden County NJ Muni. Util. Auth. Rev. 0.00% 9/1/2004(3) 8,345 8,312
Camden County NJ Muni. Util. Auth. Rev. 0.00% 9/1/2005(3) 18,545 18,101
Camden County NJ Muni. Util. Auth. Rev. 0.00% 9/1/2006(3) 18,545 17,566
Cape May County NJ Muni. Util. Auth. Rev. 5 75% 1/1/2014(4) 6,930 7,876
Cape May County NJ Muni. Util. Auth. Rev. 5 25% 1/1/2017(1) 2,560 2,706
Cape May County NJ Muni. Util. Auth. Rev. 5 25% 1/1/2018(1) 2,165 2,278
Cape May County NJ PCR (Atlantic City Electric) 6.80% 3/1/2021(1) 15,400 19,215
Delaware River & Bay Auth. New Jersey Rev. 5.375% 1/1/2013(2) 750 818
Delaware River & Bay Auth. New Jersey Rev. 5.75% 1/1/2029(2) 5,000 5,336
Delaware River Joint Toll Bridge Comm
Pennsylvania & New Jersey Rev. 5.40% 1/1/2013(3) 6,750 7,200
Delaware River Joint Toll Bridge Comm
Pennsylvania & New Jersey Rev. 5.625% 1/1/2013(4) 4,205 4,630
Delaware River Joint Toll Bridge Comm
Pennsylvania & New Jersey Rev. 5.75% 1/1/2022(4) 10,000 10,806
Delaware River Joint Toll Bridge Comm
Pennsylvania & New Jersey Rev. 5.50% 1/1/2026(3) 22,885 23,738
Delaware River Joint Toll Bridge Comm
Pennsylvania & New Jersey Rev. 5.625% 1/1/2026(4) 5,000 5,217
Egg Harbor Township NJ School Dist. GO 5.00% 7/15/2012(3) 2,640 2,879
Egg Harbor Township NJ School Dist. GO 5.00% 7/15/2013(3) 2,780 2,983
Egg Harbor Township NJ School Dist. GO 5.00% 7/15/2020(3) 2,000 2,062
Egg Harbor Township NJ School Dist. GO 5.00% 7/15/2021(3) 1,400 1,436
Egg Harbor Township NJ School Dist. GO 5.10% 7/15/2022(3) 2,950 3,034
Essex County NJ Improvement Auth. Lease Rev 5.75% 10/1/2014(3) 3,390 3,784
Essex County NJ Improvement Auth. Lease Rev 5.75% 10/1/2015(3) 5,090 5,590
Essex County NJ Improvement Auth. Lease Rev 5.75% 10/1/2030(3) 2,650 2,834
Essex County NJ Solid Waste Util. Auth. 5.60% 4/1/2006(4)(Prere.) 2,200 2,382
Essex County NJ Solid Waste Util. Auth. 0.00% 4/1/2010(4) 1,000 799
Evesham NJ Util. Auth. Rev. 5.00% 7/1/2016(2) 3,435 3,600
Evesham NJ Util. Auth. Rev. 5.00% 7/1/2017(2) 3,705 3,857
Evesham NJ Util. Auth. Rev. 5.00% 7/1/2018(2) 1,605 1,663
Garden State Preservation Trust New Jersey 0.00% 11/1/2021(4 ) 11,325 4,645
21
- -----------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -----------------------------------------------------------------------------------------------------------------
Garden State Preservation Trust New Jersey 0.00% 11/1/2022(4) 41,150 15,923
Garden State Preservation Trust New Jersey 0.00% 11/1/2023(4) 15,000 5,461
Gloucester County NJ Improvement Auth. Lease Rev. 5.00% 7/15/2016(1) 1,000 1,053
Gloucester County NJ Improvement Auth. Lease Rev. 5.00% 7/15/2017(1) 1,000 1,045
Gloucester County NJ Improvement Auth. Lease Rev. 5.00% 7/15/2020(1) 1,150 1,182
Gloucester County NJ Improvement Auth. Lease Rev. 5.00% 7/15/2023(1) 1,000 1,014
Gloucester Township NJ GO 5.75% 7/15/2010(2) 2,880 3,263
Gloucester Township NJ Muni. Util. Auth. Rev. 5.65% 3/1/2018(2) 2,755 3,091
Higher Educ. Assistance Auth. of New Jersey
Student Loan Rev. 6.00% 6/1/2013(1) 2,365 2,485
Higher Educ. Assistance Auth. of New Jersey
Student Loan Rev. 6.00% 6/1/2015(1) 4,370 4,592
Higher Educ. Assistance Auth. of New Jersey
Student Loan Rev. 6.10% 6/1/2016(1) 2,360 2,484
Hillsborough Township NJ School Dist. GO 5.375% 10/1/2013(4) 1,250 1,391
Hillsborough Township NJ School Dist. GO 5.375% 10/1/2015(4) 1,720 1,899
Hillsborough Township NJ School Dist. GO 5.375% 10/1/2017(4) 720 793
Hillsborough Township NJ School Dist. GO 5.375% 10/1/2019(4) 1,720 1,889
Hoboken-Union City-Weehawken NJ Sewerage Auth. Rev. 0.00% 8/1/2004(1) 3,750 3,740
Hoboken-Union City-Weehawken NJ Sewerage Auth. Rev. 0.00% 8/1/2005(1) 3,805 3,722
Hoboken-Union City-Weehawken NJ Sewerage Auth. Rev. 0.00% 8/1/2006(1) 2,000 1,899
Hoboken-Union City-Weehawken NJ Sewerage Auth. Rev. 6.25% 8/1/2013(1)* 9,590 11,308
Hopewell Valley NJ Regional School Dist. GO 5.00% 8/15/2013(3) 2,315 2,468
Hudson County NJ GO 6.55% 7/1/2007(3) 1,300 1,450
Hudson County NJ GO 6.55% 7/1/2009(3) 635 731
Irvington Township NJ GO 0.00% 8/1/2007(1)(ETM) 1,000 913
Irvington Township NJ GO 0.00% 8/1/2009(1)(ETM) 2,580 2,143
Irvington Township NJ GO 0.00% 8/1/2010(1)(ETM) 2,080 1,641
Jackson Township NJ Board of Educ. GO 5.375% 4/15/2026(3) 6,885 7,133
Jackson Township NJ Board of Educ. GO 5.375% 4/15/2027(3) 7,676 7,949
Marlboro Township NJ Board of Educ. GO 5.00% 7/15/2012 1,005 1,083
Marlboro Township NJ Board of Educ. GO 5.00% 7/15/2013 1,000 1,066
Marlboro Township NJ Board of Educ. GO 5.25% 7/15/2013(4) 2,625 2,836
Marlboro Township NJ Board of Educ. GO 5.00% 7/15/2014 1,045 1,106
Marlboro Township NJ Board of Educ. GO 5.25% 7/15/2014(4) 2,790 3,010
Marlboro Township NJ Board of Educ. GO 5.25% 7/15/2018(4) 2,850 3,004
Mercer County NJ Improvement Auth. Solid Waste Rev. 5.375% 9/15/2012 11,120 12,090
Mercer County NJ Improvement Auth.
Special Services School Dist. Rev. 5.75% 12/15/2008 1,165 1,298
Mercer County NJ Improvement Auth.
Special Services School Dist. Rev. 5.95% 12/15/2012 4,895 5,651
Middlesex County NJ COP 5.00% 8/1/2011(1) 1,050 1,146
Middlesex County NJ COP 5.50% 8/1/2015(1) 1,195 1,286
Middlesex County NJ Improvement Auth. 5.375% 3/15/2022(3) 1,825 1,924
Middlesex County NJ Improvement Auth. 5.375% 3/15/2023(3) 1,925 2,022
Middlesex County NJ Improvement Auth. 5.00% 3/15/2031(3) 10,000 9,897
Middlesex County NJ Improvement Auth. Rev.
Open Space Trust Fund 5.25% 9/15/2019 1,585 1,673
Middlesex County NJ Improvement Auth. Rev.
Open Space Trust Fund 5.25% 9/15/2020 1,600 1,680
Middlesex County NJ Improvement Auth. Rev.
Open Space Trust Fund 5.25% 9/15/2021 2,375 2,481
22
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -----------------------------------------------------------------------------------------------------------------
Middlesex County NJ Improvement Auth. Rev.
Open Space Trust Fund 5.25% 9/15/2022 2,000 2,082
Middlesex County NJ Improvement Auth.
Util. Systems Rev. (Perth Amboy) 0.00% 9/1/2015(2) 2,000 1,191
Middlesex County NJ Improvement Auth.
Util. Systems Rev. (Perth Amboy) 0.00% 9/1/2016(2) 3,000 1,681
Middlesex County NJ Improvement Auth.
Util. Systems Rev. (Perth Amboy) 0.00% 9/1/2018(2) 4,550 2,266
Middlesex County NJ Util. Auth. Sewer Rev. 5.25% 3/15/2010(3) 1,740 1,847
Middlesex County NJ Util. Auth. Sewer Rev. 5.375% 9/15/2015(3) 3,775 3,980
Middlesex County NJ Util. Auth. Sewer Rev. 5.125% 12/1/2016(3) 3,050 3,195
Middletown Township NJ Board of Educ. GO 5.00% 8/1/2014(4) 2,735 2,905
Middletown Township NJ Board of Educ. GO 5.00% 8/1/2015(4) 2,015 2,101
Monmouth County NJ Improvement Auth. Rev.
(Howell Township Board of Educ.) 5.80% 7/15/2007(2)(Prere.) 1,180 1,304
Monmouth County NJ Improvement Auth. Rev.
(Howell Township Board of Educ.) 5.00% 7/15/2013(2) 1,305 1,404
Monmouth County NJ Improvement Auth. Rev.
(Howell Township Board of Educ.) 5.00% 7/15/2019(2) 2,115 2,180
Monmouth County NJ Improvement Auth. Rev.
(Howell Township Board of Educ.) 5.00% 7/15/2020(2) 2,225 2,282
Monroe Township NJ Muni. Util. Auth.
Middlesex County Rev. 5.25% 2/1/2013(3) 1,210 1,309
Monroe Township NJ Muni. Util. Auth.
Middlesex County Rev. 5.25% 2/1/2014(3) 1,235 1,329
Montgomery Township NJ School Dist. GO 5.25% 8/1/2013(1) 1,285 1,399
Montgomery Township NJ School Dist. GO 5.25% 8/1/2017(1) 1,280 1,365
Montgomery Township NJ School Dist. GO 5.25% 8/1/2018(1) 1,280 1,360
Mount Laurel Township NJ Muni. Util. Auth.
Util. System Rev. 6.00% 7/1/2004(1)(Prere.) 2,580 2,591
New Jersey Health Care Fac. Financing Auth. Rev.
(Capital Health Systems Obligated Group) VRDO 1.03% 6/7/2004LOC 3,400 3,400
New Jersey Econ. Dev. Auth. Lease Rev.
(Bergen County Administration Complex) 5.50% 11/15/2008(1)(Prere.) 4,375 4,870
New Jersey Econ. Dev. Auth. Lease Rev.
(Bergen County Administration Complex) 5.625% 11/15/2008(1)(Prere.) 4,870 5,446
New Jersey Econ. Dev. Auth. Lease Rev.
(Bergen County Administration Complex) 5.75% 11/15/2008(1)(Prere.) 6,080 6,831
New Jersey Econ. Dev. Auth. Lease Rev.
(Bergen County Administration Complex) 5.75% 11/15/2008(1)(Prere.) 5,440 6,112
New Jersey Econ. Dev. Auth. Rev.
(Peddie School Project) VRDO 1.00% 6/7/2004 900 900
New Jersey Econ. Dev. Auth. Rev.
(Hillcrest Health Service) 0.00% 1/1/2012(2) 2,500 1,825
New Jersey Econ. Dev. Auth. Rev.
(Hillcrest Health Service) 0.00% 1/1/2013(2) 3,000 2,071
New Jersey Econ. Dev. Auth. Rev.
(Lawrenceville School Project) VRDO 1.02% 6/1/2004 6,400 6,400
New Jersey Econ. Dev. Auth. Rev.
(Masonic Charity Foundation) 5.875% 6/1/2018 1,250 1,359
New Jersey Econ. Dev. Auth. Rev.
(Masonic Charity Foundation) 6.00% 6/1/2025 1,000 1,073
23
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -----------------------------------------------------------------------------------------------------------------
New Jersey Econ. Dev. Auth. Rev.
(Masonic Charity Foundation) 5.50% 6/1/2031 1,665 1,698
New Jersey Econ. Dev. Auth. Rev. (School Fac.) 5.50% 6/15/2013(2) 1,200 1,346
New Jersey Econ. Dev. Auth. Rev. (School Fac.) 5.25% 6/15/2017(2) 7,040 7,469
New Jersey Econ. Dev. Auth. Rev. (St. Barnabas Project)0.00% 7/1/2008(1) 2,305 2,021
New Jersey Econ. Dev. Auth. Rev. (St. Barnabas Project)0.00% 7/1/2011(1) 4,650 3,497
New Jersey Econ. Dev. Auth. Rev. (St. Barnabas Project)0.00% 7/1/2012(1) 4,550 3,239
New Jersey Econ. Dev. Auth. Rev. (St. Barnabas Project)0.00% 7/1/2013(1) 4,500 3,029
New Jersey Econ. Dev. Auth. Rev. (St. Barnabas Project)0.00% 7/1/2014(1) 4,210 2,675
New Jersey Econ. Dev. Auth. Rev. (Transp. Project) 5.25% 5/1/2009(4)(Prere.) 4,500 4,927
New Jersey Econ. Dev. Auth. Rev. (Transp. Project) 5.875% 5/1/2009(4)(Prere.) 3,465 3,892
New Jersey Econ. Dev. Auth. Rev. Motor Vehicle Comm. 0.00% 7/1/2012(1) 15,000 10,578
New Jersey Econ. Dev. Auth. Rev. Motor Vehicle Comm. 0.00% 7/1/2013(1) 18,500 12,337
New Jersey Econ. Dev. Auth. Rev. Motor Vehicle Comm. 0.00% 7/1/2014(1) 12,000 7,523
New Jersey Econ. Dev. Auth. Water Fac. Rev.
(United Water Co.) VRDO 1.08% 6/1/2004(2) 7,300 7,300
New Jersey Econ. Dev. Auth. Water Fac. Rev.
(NJ American Water Co.) 5.125% 4/1/2022(2) 5,000 5,065
New Jersey Educ. Fac. Auth. Rev. 5.875% 9/1/2007(2) 5,890 6,486
New Jersey Educ. Fac. Auth. Rev. 5.875% 9/1/2008(2) 6,165 6,882
New Jersey Educ. Fac. Auth. Rev. 5.75% 9/1/2012 7,595 8,628
New Jersey Educ. Fac. Auth. Rev. 5.75% 9/1/2016(4) 8,425 9,243
New Jersey Educ. Fac. Auth. Rev. 5.00% 9/1/2019(4) 2,715 2,778
New Jersey Educ. Fac. Auth. Rev. 5.00% 9/1/2020 11,405 11,600
New Jersey Educ. Fac. Auth. Rev. (Drew Univ.) 5.25% 7/1/2020(3) 2,060 2,223
New Jersey Educ. Fac. Auth. Rev. (Drew Univ.) 5.25% 7/1/2021(3) 1,550 1,666
New Jersey Educ. Fac. Auth. Rev. (Kean Univ.) 5.25% 7/1/2021(3) 2,605 2,716
New Jersey Educ. Fac. Auth. Rev. (Kean Univ.) 5.25% 7/1/2022(3)(Prere.) 2,775 2,883
New Jersey Educ. Fac. Auth. Rev.
(New Jersey Institute of Technology) 6.00% 7/1/2004(1)(Prere.) 1,500 1,536
New Jersey Educ. Fac. Auth. Rev.
(New Jersey Institute of Technology) 5.25% 7/1/2017(1) 1,000 1,061
New Jersey Educ. Fac. Auth. Rev.
(New Jersey Institute of Technology) 5.25% 7/1/2018(1) 1,470 1,554
New Jersey Educ. Fac. Auth. Rev.
(New Jersey Institute of Technology) 5.25% 7/1/2020(1) 1,725 1,805
New Jersey Educ. Fac. Auth. Rev. (Princeton Univ.) 5.25% 7/1/2016 2,545 2,799
New Jersey Educ. Fac. Auth. Rev. (Princeton Univ.) 5.25% 7/1/2018 4,785 5,235
New Jersey Educ. Fac. Auth. Rev. (Princeton Univ.) 5.25% 7/1/2019 7,000 7,627
New Jersey Educ. Fac. Auth. Rev. (Princeton Univ.) 5.25% 7/1/2017 10,630 11,644
New Jersey Educ. Fac. Auth. Rev. (Princeton Univ.) VRDO1.03% 6/1/2004 5,705 5,705
New Jersey Educ. Fac. Auth. Rev. (Ramapo College) 5.625% 7/1/2009(1)(Prere.) 2,105 2,354
New Jersey Educ. Fac. Auth. Rev. (Ramapo College) 5.00% 7/1/2015(3) 1,550 1,638
New Jersey Educ. Fac. Auth. Rev. (Ramapo College) 5.00% 7/1/2017(3) 1,700 1,770
New Jersey Educ. Fac. Auth. Rev. (Ramapo College) 5.00% 7/1/2020(3) 1,010 1,036
New Jersey Educ. Fac. Auth. Rev. (Rowan Univ.) 5.25% 7/1/2014(3) 2,305 2,494
New Jersey Educ. Fac. Auth. Rev. (Rowan Univ.) 5.25% 7/1/2015(3) 1,880 2,020
New Jersey Educ. Fac. Auth. Rev. (Rowan Univ.) 5.25% 7/1/2016(3) 2,050 2,188
New Jersey Educ. Fac. Auth. Rev. (Rowan Univ.) 5.125% 7/1/2021(3) 2,800 2,889
New Jersey Educ. Fac. Auth. Rev. (Rowan Univ.) 5.25% 7/1/2024(3) 11,210 11,405
New Jersey Educ. Fac. Auth. Rev. (Rowan Univ.) 5.00% 7/1/2031(3) 1,965 1,956
New Jersey Educ. Fac. Auth. Rev. (Seton Hall Univ.) 5.25% 7/1/2010(2) 1,500 1,637
24
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------
New Jersey Educ. Fac. Auth. Rev. (Seton Hall Univ.) 5.25% 7/1/2012 (2) $ 1,275 $ 1,384
New Jersey Educ. Fac. Auth. Rev. (Seton Hall Univ.) 5.25% 7/1/2014 (2) 500 539
New Jersey Educ. Fac. Auth. Rev. (Seton Hall Univ.) 5.25% 7/1/2015 (2) 400 425
New Jersey Educ. Fac. Auth. Rev. (Seton Hall Univ.) 5.25% 7/1/2016 (2) 200 212
New Jersey Educ. Fac. Auth. Rev. (Seton Hall Univ.) 5.60% 7/1/2016 (1) 1,000 1,069
New Jersey Educ. Fac. Auth. Rev. (Seton Hall Univ.) 5.625% 7/1/2019 (1) 3,625 3,877
New Jersey Educ. Fac. Auth. Rev.
(Stevens Institute of Technology) 5.125% 7/1/2022 4,000 3,974
New Jersey Educ. Fac. Auth. Rev.
(Stevens Institute of Technology) 5.25% 7/1/2032 6,000 5,870
New Jersey Educ. Fac. Auth. Rev. (William Patterson) 5.20% 7/1/2015 (3) 755 799
New Jersey Educ. Fac. Auth. Rev. (William Patterson) 5.30% 7/1/2017 (3) 250 266
New Jersey Educ. Fac. Auth. Rev. (William Patterson) 5.375% 7/1/2018 (3) 905 965
New Jersey Educ. Fac. Auth. Rev. (William Patterson) 5.375% 7/1/2019 (3) 360 382
New Jersey Environmental Infrastructure Trust
Wastewater Treatment Rev. 5.125% 9/1/2015 5,090 5,373
New Jersey Environmental Infrastructure Trust
Wastewater Treatment Rev. 5.00% 9/1/2017 1,525 1,571
New Jersey GO 5.25% 7/1/2018 15,000 16,311
New Jersey GO 5.125% 7/15/2018 8,600 9,326
New Jersey GO 5.25% 7/1/2019 10,105 10,951
New Jersey Health Care Fac. Financing Auth. Rev.
(Atlantic City Medical Center) 6.00% 7/1/2008 2,530 2,746
New Jersey Health Care Fac. Financing Auth. Rev.
(Atlantic City Medical Center) 6.25% 7/1/2017 3,950 4,305
New Jersey Health Care Fac. Financing Auth. Rev.
(Atlantic City Medical Center) 5.75% 7/1/2025 5,000 5,146
New Jersey Health Care Fac. Financing Auth. Rev.
(Capital Health Systems Obligated Group) 5.75% 7/1/2023 5,000 5,085
New Jersey Health Care Fac. Financing Auth. Rev.
(Community Medical Center/Kimball Medical Center/
Kensington Manor Care Center) 5.25% 7/1/2009 (4) 5,500 5,960
New Jersey Health Care Fac. Financing Auth. Rev.
(Community Medical Center/Kimball Medical Center/
Kensington Manor Care Center) 5.00% 7/1/2010 (4) 4,695 5,007
New Jersey Health Care Fac. Financing Auth. Rev.
(Community Medical Center/Kimball Medical Center/
Kensington Manor Care Center) 5.25% 7/1/2012 (4) 1,500 1,604
New Jersey Health Care Fac. Financing Auth. Rev.
(Hackensack Univ. Medical Center) 5.375% 1/1/2013 (1) 2,355 2,521
New Jersey Health Care Fac. Financing Auth. Rev.
(Holy Name Hosp.) 5.25% 7/1/2020 (2) 4,100 4,258
New Jersey Health Care Fac. Financing Auth. Rev.
(Jersey Shore Medical Center) 6.20% 7/1/2013 (2) 1,345 1,377
New Jersey Health Care Fac. Financing Auth. Rev.
(Jersey Shore Medical Center) 6.20% 7/1/2014 (2) 1,320 1,351
New Jersey Health Care Fac. Financing Auth. Rev.
(Jersey Shore Medical Center) 6.25% 7/1/2016 (2) 860 880
New Jersey Health Care Fac. Financing Auth. Rev.
(Meridian Health System Obligated Group) 5.625% 7/1/2012 (4) 3,710 4,059
New Jersey Health Care Fac. Financing Auth. Rev.
(Meridian Health System Obligated Group) 5.625% 7/1/2013 (4) 7,355 8,047
25
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------
New Jersey Health Care Fac. Financing Auth. Rev.
(Meridian Health System Obligated Group) 5.25% 7/1/2029 (4) $13,450 $ 13,589
New Jersey Health Care Fac. Financing Auth. Rev.
(Meridian Health Systems) VRDO 1.06% 6/7/2004 LOC 2,200 2,200
New Jersey Health Care Fac. Financing Auth. Rev.
(Riverside Medical Center) 6.25% 7/1/2010 (2)(ETM) 2,935 3,374
New Jersey Health Care Fac. Financing Auth. Rev.
(South Jersey Hosp.) 5.875% 7/1/2021 3,500 3,629
New Jersey Health Care Fac. Financing Auth. Rev.
(South Jersey Hosp.) 6.00% 7/1/2026 3,500 3,590
New Jersey Health Care Fac. Financing Auth. Rev.
(South Jersey Hosp.) 6.00% 7/1/2032 3,000 3,065
New Jersey Health Care Fac. Financing Auth. Rev.
(St. Barnabas Health Care) 5.25% 7/1/2013 (1) 3,000 3,202
New Jersey Health Care Fac. Financing Auth. Rev.
(St. Barnabas Health Care) 5.25% 7/1/2016 (1) 3,300 3,481
New Jersey Health Care Fac. Financing Auth. Rev.
(St. Barnabas Health Care) 0.00% 7/1/2021 (1) 3,000 1,252
New Jersey Health Care Fac. Financing Auth. Rev.
(St. Clares Riverside Medical Center) 5.75% 7/1/2014 (1) 8,500 8,699
New Jersey Health Care Fac. Financing Auth. Rev.
(Virtua Health) 5.25% 7/1/2014 (4) 11,000 11,663
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 4.95% 6/1/2010 (2) 4,570 4,803
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 5.05% 6/1/2011 (2) 3,650 3,835
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 5.05% 6/1/2012 (1) 775 820
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 5.15% 6/1/2012 (2) 3,790 3,973
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 5.10% 6/1/2013 (1) 1,760 1,854
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 5.20% 6/1/2013 (2) 5,905 6,175
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 5.125% 6/1/2014 (1) 1,015 1,064
New Jersey Higher Educ. Assistance Auth.
Student Loan Rev. 5.25% 6/1/2018 (1) 550 569
New Jersey Highway Auth. Rev. (Garden State Parkway) 5.60% 1/1/2010 (3)(Prere.) 7,535 8,472
New Jersey Highway Auth. Rev. (Garden State Parkway) 6.20% 1/1/2010 (2)(ETM) 20,000 22,301
New Jersey Highway Auth. Rev. (Garden State Parkway) 5.50% 1/1/2013 (3)(ETM) 10,000 11,205
New Jersey Highway Auth. Rev. (Garden State Parkway) 5.50% 1/1/2014 (3)(ETM) 7,500 8,395
New Jersey Highway Auth. Rev. (Garden State Parkway) 5.50% 1/1/2015 (3)(ETM) 7,500 8,388
New Jersey Highway Auth. Rev. (Garden State Parkway) 5.50% 1/1/2016 (3)(ETM) 2,000 2,233
New Jersey Housing & Mortgage Finance Agency
Multi-Family Housing Rev. 5.70% 5/1/2020 (4) 2,255 2,354
New Jersey Housing & Mortgage Finance Agency Rev.
(Home Buyer) 5.40% 10/1/2020 (1) 1,085 1,118
New Jersey Sports & Exposition Auth. Rev. 6.50% 3/1/2013 (1) 10,000 11,579
New Jersey Sports & Exposition Auth. Rev. 5.50% 3/1/2017 (1) 5,755 6,391
New Jersey Sports & Exposition Auth. Rev. VRDO 1.06% 6/7/2004 (1) 2,200 2,200
26
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------
New Jersey Sports & Exposition Auth. Rev.
(Convention Center Luxury Tax) 5.50% 3/1/2021 (1) $ 3,000 $ 3,283
New Jersey Transp. Corp. COP 6.00% 9/15/2009 (2)(Prere.) 10,000 11,275
New Jersey Transp. Corp. COP 5.75% 9/15/2010 (2)(Prere.) 2,000 2,263
New Jersey Transp. Corp. COP 5.50% 9/15/2012 (2) 20,000 22,207
New Jersey Transp. Corp. COP 5.50% 9/15/2014 (2) 1,500 1,665
New Jersey Transp. Corp. COP 5.50% 9/15/2015 (2) 15,000 16,554
New Jersey Transp. Trust Fund Auth. Rev. 5.50% 6/15/2005 (1)(Prere.) 200 743
New Jersey Transp. Trust Fund Auth. Rev. 6.00% 6/15/2007 (2)(Prere.) 16,280 18,213
New Jersey Transp. Trust Fund Auth. Rev. 6.00% 6/15/2010 (Prere.) 5,000 5,715
New Jersey Transp. Trust Fund Auth. Rev. 6.00% 12/15/2011 (1)(Prere) 2,000 2,312
New Jersey Transp. Trust Fund Auth. Rev. 6.00% 12/15/2011 (1)(Prere.) 15,000 17,341
New Jersey Transp. Trust Fund Auth. Rev. 6.00% 12/15/2011 (1)(Prere.) 13,000 15,029
New Jersey Transp. Trust Fund Auth. Rev. 6.00% 12/15/2011 (1)(Prere.) 5,000 5,780
New Jersey Transp. Trust Fund Auth. Rev. 5.50% 6/15/2013 (1) 2,300 2,432
New Jersey Transp. Trust Fund Auth. Rev. 5.75% 6/15/2020 5,000 5,575
New Jersey Turnpike Auth. Rev. 5.75% 1/1/2010 (1)(Prere.) 1,620 1,820
New Jersey Turnpike Auth. Rev. 6.00% 1/1/2013 (1) 1,000 1,155
New Jersey Turnpike Auth. Rev. 6.50% 1/1/2013 (1)(ETM) 20,000 23,797
New Jersey Turnpike Auth. Rev. 5.75% 1/1/2016 (1) 665 723
New Jersey Turnpike Auth. Rev. 6.50% 1/1/2016 (1)(ETM) 22,095 26,182
New Jersey Turnpike Auth. Rev. 6.50% 1/1/2016 (1) 6,175 7,345
New Jersey Turnpike Auth. Rev. 5.75% 1/1/2017 (1) 10,000 10,879
New Jersey Turnpike Auth. Rev. 5.375% 1/1/2020 (1) 3,500 3,691
New Jersey Turnpike Auth. Rev. 5.50% 1/1/2025 (1) 1,800 1,864
New Jersey Water Supply Auth.
Delaware & Raritan Water System Rev. 5.375% 11/1/2010 (1) 2,230 2,405
New Jersey Water Supply Auth.
Delaware & Raritan Water System Rev. 5.375% 11/1/2011 (1) 2,345 2,513
New Jersey Water Supply Auth.
Delaware & Raritan Water System Rev. 5.375% 11/1/2013 (1) 2,600 2,752
Newark NJ GO 5.50% 10/1/2008 (2) 1,660 1,827
Newark NJ School Dist. GO 5.375% 12/15/2013 (1) 2,000 2,199
North Bergen Township NJ GO 8.00% 8/15/2006 (4) 1,885 2,123
North Hudson NJ Sewer Auth. Rev. 5.125% 8/1/2008 (3) 2,000 2,134
North Hudson NJ Sewer Auth. Rev. 5.25% 8/1/2016 (3) 14,360 15,214
North Hudson NJ Sewer Auth. Rev. 5.125% 8/1/2022 (3) 4,000 4,056
Ocean County NJ Util. Auth. Wastewater Rev. 5.00% 1/1/2014 6,000 6,464
Ocean County NJ Util. Auth. Wastewater Rev. 5.25% 1/1/2017 2,665 2,813
Ocean County NJ Util. Auth. Wastewater Rev. 5.25% 1/1/2018 2,345 2,465
Ocean County NJ Util. Auth. Wastewater Rev. 6.60% 1/1/2018 (3)(ETM) 2,500 2,992
Port Auth. of New York & New Jersey Rev. 5.125% 11/15/2012 (3) 2,500 2,618
Port Auth. of New York & New Jersey Rev. 5.125% 11/15/2014 (3) 6,025 6,260
Port Auth. of New York & New Jersey Rev. 5.50% 12/15/2014 (2) 2,790 3,010
Port Auth. of New York & New Jersey Rev. 5.00% 8/1/2015 3,370 3,465
Port Auth. of New York & New Jersey Rev. 5.875% 9/15/2015 (3) 10,000 10,735
Port Auth. of New York & New Jersey Rev. 5.50% 12/15/2019 (2) 5,125 5,405
Port Auth. of New York & New Jersey Rev. 5.20% 7/15/2021 (2) 3,250 3,302
Port Auth. of New York & New Jersey Rev. 5.375% 7/15/2022 (3) 15,000 15,683
Port Auth. of New York & New Jersey Rev. 5.125% 10/15/2030 (1) 6,725 6,745
Port Auth. of New York & New Jersey Rev. 5.375% 10/15/2035 (1) 3,000 3,044
27
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FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------
Rutgers State Univ. New Jersey 6.40% 5/1/2013 $ 3,000 $ 3,481
Salem County NJ Financing Auth. PCR
(Atlantic City Electric Co.) VRDO 1.08% 6/7/2004 (1) 800 800
South Brunswick Township NJ Board of Educ. GO 6.40% 8/1/2005 (3)(Prere.) 2,205 2,329
South Brunswick Township NJ Board of Educ. GO 5.25% 8/1/2020 (3) 1,785 1,862
South Brunswick Township NJ Board of Educ. GO 5.25% 8/1/2022 (3) 3,000 3,110
South Jersey Port Corp. New Jersey Rev. 5.00% 1/1/2023 2,000 1,998
South Jersey Port Corp. New Jersey Rev. 5.20% 1/1/2023 1,500 1,496
South Jersey Port Corp. New Jersey Rev. 5.10% 1/1/2033 1,500 1,465
South Jersey Transp. Auth. New Jersey 5.25% 11/1/2013 (2) 4,000 4,345
Transp. System Rev.
South Jersey Transp. Auth. New Jersey 5.25% 11/1/2014 (2) 4,125 4,459
Transp. System Rev.
South Jersey Transp. Auth. New Jersey 5.00% 11/1/2029 (2) 9,000 8,987
Transp. System Rev.
Stafford NJ Muni. Util. Auth. Water & Sewer Rev. 5.50% 6/1/2011 (3) 3,100 3,468
Toms River NJ School Dist. GO 5.00% 1/15/2020 (4) 1,510 1,541
Union County NJ Improvement Auth. Rev.
(Plainfield Board of Educ.) 5.80% 8/1/2007 (3)(Prere.) 4,000 4,425
Union County NJ Util. Auth. Rev. (Ogden Martin) 5.25% 6/1/2006 (2) 5,375 5,684
Union County NJ Util. Auth. Rev. (Ogden Martin) 5.375% 6/1/2011 (2) 8,375 8,917
Union County NJ Util. Auth. Rev. (Ogden Martin) 5.375% 6/1/2012 (2) 8,995 9,552
Union County NJ Util. Auth. Rev. (Ogden Martin) 5.375% 6/1/2013 (2) 9,445 9,909
Univ. of Medicine & Dentistry New Jersey Rev. 6.50% 12/1/2012 (1)(ETM) 4,000 4,638
Univ. of Medicine & Dentistry New Jersey Rev. 5.375% 12/1/2015 (2) 2,325 2,524
Univ. of Medicine & Dentistry New Jersey Rev. 5.375% 12/1/2016 (2) 1,110 1,197
Univ. of Medicine & Dentistry New Jersey Rev. 5.50% 12/1/2018 (2) 1,250 1,350
Univ. of Medicine & Dentistry New Jersey Rev. 5.50% 12/1/2019 (2) 3,000 3,234
Univ. of Medicine & Dentistry New Jersey Rev. 5.50% 12/1/2020 (2) 3,675 3,949
Univ. of Medicine & Dentistry New Jersey Rev. 5.50% 12/1/2021 (2) 2,000 2,143
Univ. of Medicine & Dentistry New Jersey Rev. 5.50% 12/1/2023 (2) 7,330 7,790
Univ. of Medicine & Dentistry New Jersey Rev. 5.50% 12/1/2027 (2) 10,100 10,583
Vernon Township NJ School Dist. GO 5.25% 12/1/2014 (3) 1,200 1,298
Vernon Township NJ School Dist. GO 5.30% 12/1/2015 (3) 1,200 1,281
Vernon Township NJ School Dist. GO 5.375% 12/1/2016 (3) 1,200 1,287
Vernon Township NJ School Dist. GO 5.375% 12/1/2017 (3) 1,200 1,285
Vernon Township NJ School Dist. GO 5.375% 12/1/2018 (3) 1,200 1,282
West Orange NJ Board of Educ. COP 5.625% 10/1/2019 (1) 2,500 2,719
West Orange NJ Board of Educ. COP 6.00% 10/1/2024 (1) 1,000 1,104
West Orange NJ Board of Educ. COP 5.625% 10/1/2029 (1) 2,000 2,113
West Windsor Plainsboro NJ Regional School Dist. 5.00% 12/1/2012 (4) 2,720 2,974
West Windsor Plainsboro NJ Regional School Dist. 5.00% 12/1/2013 (4) 2,215 2,398
West Windsor Plainsboro NJ Regional School Dist. 5.00% 12/1/2014 (4) 1,000 1,065
West Windsor Plainsboro NJ Regional School Dist. 5.00% 12/1/2015 (4) 1,000 1,065
OUTSIDE NEW JERSEY:
Guam Govt. Ltd. Obligation Infrastructure 5.125% 11/1/2011 (2) 3,400 3,659
Improvement Rev.
Puerto Rico Electric Power Auth. Rev. 5.25% 7/1/2017 (1) 3,200 3,396
Puerto Rico Electric Power Auth. Rev. 5.50% 7/1/2017 (1) 6,805 7,616
Puerto Rico GO 5.50% 7/1/2017 (10) 5,000 5,522
Puerto Rico GO 5.00% 7/1/2018 (1) 6,500 6,719
Puerto Rico GO 5.50% 7/1/2018 5,540 6,023
Puerto Rico GO 5.50% 7/1/2021 (1) 5,000 5,535
Puerto Rico Govt. Dev. Bank VRDO 0.97% 6/7/2004 (1) 1,700 1,700
Puerto Rico Highway & Transp. Auth. Rev. 5.50% 7/1/2019 (1) 3,000 3,347
28
- -------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------
Puerto Rico Highway & Transp. Auth. Rev. 5.50% 7/1/2020 (1) $ 4,200 $ 4,672
Puerto Rico Highway & Transp. Auth. Rev. 5.50% 7/1/2022 (4) 3,500 3,875
Puerto Rico Highway & Transp. Auth. Rev. 5.50% 7/1/2022 2,000 2,090
Puerto Rico Highway & Transp. Auth. Rev. 5.50% 7/1/2024 3,000 3,113
Puerto Rico Highway & Transp. Auth. Rev. VRDO 1.06% 6/7/2004 (2) 1,700 1,700
Puerto Rico Housing Finance Corp. Home Mortgage Rev. 5.30% 12/1/2028 2,885 2,911
Puerto Rico Muni. Finance Agency 5.25% 8/1/2019 (4) 5,000 5,318
Puerto Rico Muni. Finance Agency 5.50% 8/1/2019 (4) 2,000 2,159
Puerto Rico Public Buildings Auth. Govt. Fac. Rev. 5.50% 7/1/2014 5,000 5,489
Puerto Rico Public Buildings Auth. Govt. Fac. Rev. 5.50% 7/1/2015 4,150 4,539
Puerto Rico Public Buildings Auth. Govt. Fac. Rev. 5.50% 7/1/2016 3,000 3,269
Puerto Rico Public Buildings Auth. Govt. Fac. Rev. 5.75% 7/1/2017 2,000 2,222
Puerto Rico Public Finance Corp. 6.00% 8/1/2026 5,000 5,551
Puerto Rico Public Finance Corp. 5.50% 8/1/2029 4,385 4,464
- -------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $1,401,226) 1,470,214
- -------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.5%)
- -------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 26,507
Liabilities (4,059)
---------------
22,448
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%) $1,492,662
===================================================================================================================
oSee Note A in Notes to Financial Statements.
*Securities with a value of $2,476,000 have been segregated as initial margin
for open futures contracts. For key to abbreviations and other references, see
page 30.
29
- --------------------------------------------------------------------------------
AMOUNT
NEW JERSEY LONG-TERM TAX-EXEMPT FUND (000)
- --------------------------------------------------------------------------------
AT MAY 31, 2004, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
Paid-in Capital $1,421,934
Undistributed Net Investment Income --
Accumulated Net Realized Gains 2,125
Unrealized Appreciation (Depreciation)
Investment Securities 68,988
Futures Contracts (385)
- --------------------------------------------------------------------------------
NET ASSETS $1,492,662
================================================================================
Investor Shares--Net Assets
Applicable to 74,544,607 outstanding $.001 par value
shares of beneficial interest (unlimited authorization) $884,489
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--INVESTOR SHARES $11.87
================================================================================
Admiral Shares--Net Assets
Applicable to 51,256,834 outstanding $.001 par value
shares of beneficial interest (unlimited authorization) $608,173
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--ADMIRAL SHARES $11.87
================================================================================
See Note D in Notes to Financial Statements for the tax-basis components of net
assets.
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.
(11) CDC IXIS Financial Guaranty.
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.
30
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 JERSEY TAX-EXEMPT NEW JERSEY LONG-TERM
MONEY MARKET FUND TAX-EXEMPT FUND
-----------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
- --------------------------------------------------------------------------------
(000) (000)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Interest $9,536 $ 35,768
- --------------------------------------------------------------------------------
Total Income 9,536 35,768
- --------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 123 100
Management and Administrative
Investor Shares 1,113 544
Admiral Shares -- 201
Marketing and Distribution
Investor Shares 187 70
Admiral Shares -- 40
Custodian Fees 6 7
Shareholders' Reports
Investor Shares 7 7
Admiral Shares -- 1
Trustees' Fees and Expenses 1 1
- --------------------------------------------------------------------------------
Total Expenses 1,437 971
Expenses Paid Indirectly--Note C -- (8)
- --------------------------------------------------------------------------------
Net Expenses 1,437 963
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,099 34,805
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold 503 1,075
Futures Contracts -- 1,722
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) 503 2,797
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities -- (45,418)
Futures Contracts -- (232)
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) -- (45,650)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $8,602 $ (8,048)
================================================================================
31
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 JERSEY NEW JERSEY
TAX-EXEMPT LONG-TERM
MONEY MARKET FUND TAX-EXEMPT FUND
- --------------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MAY 31, 2004 NOV. 30, 2003 MAY 31, 2004 NOV. 30, 2003
(000) (000) (000) (000)
- --------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $8,099 $15,826 $34,805 $69,975
Realized Net Gain (Loss) 503 (76) 2,797 11,835
Change in Unrealized Appreciation (Depreciation) -- -- (45,650) 21,817
- --------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 8,602 15,750 (8,048) 103,627
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income
Investor Shares (8,099) (15,826) (20,592) (42,661)
Admiral Shares -- (14,213) (27,314)
Realized Capital Gain*
Investor Shares -- -- (6,021) (3,754)
Admiral Shares -- -- (3,992) (2,337)
- --------------------------------------------------------------------------------------------------
Total Distributions (8,099) (15,826) (44,818) (76,066)
- --------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--NOTE F
Investor Shares 110,054 116,763 (4,577) (53,688)
Admiral Shares -- -- 25,829 (4,247)
- --------------------------------------------------------------------------------------------------
Net Increase (Decrease) from
Capital Share Transactions 110,054 116,763 21,252 (57,935)
- --------------------------------------------------------------------------------------------------
Total Increase (Decrease) 110,557 116,687 (31,614) (30,374)
- --------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 1,874,218 1,757,531 1,524,276 1,554,650
- --------------------------------------------------------------------------------------------------
End of Period $1,984,775 $1,874,218 $1,492,662 $1,524,276
==================================================================================================
*Includes fiscal 2004 and 2003 short-term gain distributions by the Long-Term
Tax-Exempt Fund totaling $1,287,000 and $0, respectively. Short-term gain
distributions are treated as ordinary income dividends for tax purposes.
32
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 JERSEY TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED -----------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD MAY 31, 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .004 .009 .013 .028 .036 .028
Net Realized and Unrealized Gain (Loss)
on Investments -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Total from Investment Operations .004 .009 .013 .028 .036 .028
- ---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.004) (.009) (.013) (.028) (.036) (.028)
Distributions from Realized Capital Gains -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Total Distributions (.004) (.009) (.013) (.028) (.036) (.028)
- ---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===============================================================================================================
TOTAL RETURN 0.42% 0.87% 1.29% 2.80% 3.68% 2.86%
===============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,985 $1,874 $1,758 $1,549 $1,427 $1,263
Ratio of Total Expenses to Average Net Assets 0.15%* 0.17% 0.17% 0.18% 0.18% 0.20%
Ratio of Net Investment Income to Average Net Assets 0.84%* 0.87% 1.28% 2.74% 3.62% 2.82%
===============================================================================================================
*Annualized.
33
NEW JERSEY LONG-TERM TAX-EXEMPT FUND INVESTOR SHARES
- --------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED -----------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD MAY 31, 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.27 $12.06 $11.91 $11.52 $11.19 $11.98
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .274 .549 .575 .581 .599 .590
Net Realized and Unrealized Gain (Loss)
on Investments (.319) .257 .174 .390 .330 (.738)
- ---------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.045) .806 .749 .971 .929 (.148)
- ---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.274) (.549) (.575) (.581) (.599) (.590)
Distributions from Realized Capital Gains (.081) (.047) (.024) -- -- (.052)
- ---------------------------------------------------------------------------------------------------------------
Total Distributions (.355) (.596) (.599) (.581) (.599) (.642)
- ---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.87 $12.27 $12.06 $11.91 $11.52 $11.19
===============================================================================================================
TOTAL RETURN -0.41% 6.81% 6.42% 8.55% 8.57% -1.31%
===============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $884 $920 $598 $954 $1,235 $1,155
Ratio of Total Expenses to Average Net Assets 0.15%* 0.17% 0.18% 0.20% 0.19% 0.19%
Ratio of Net Investment Income to Average Net Assets 0.49%* 4.49% 4.78% 4.89% 5.33% 5.06%
Portfolio Turnover Rate 7%* 14% 15% 8% 14% 11%
===============================================================================================================
*Annualized.
NEW JERSEY LONG-TERM TAX-EXEMPT FUND ADMIRAL SHARES
- -----------------------------------------------------------------------------------------------
YEAR ENDED
SIX MONTHS NOVEMBER 30, MAY 14* TO
ENDED -------------------- NOV 30,
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD MAY 31, 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.27 $12.06 $11.91 $11.76
- -----------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .278 .557 .582 .318
Net Realized and Unrealized Gain (Loss) on Investments (.319) .257 .174 .150
- -----------------------------------------------------------------------------------------------
Total from Investment Operations (.041) .814 .756 .468
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.278) (.557) (.582) (.318)
Distributions from Realized Capital Gains (.081) (.047) (.024) --
- -----------------------------------------------------------------------------------------------
Total Distributions (.359) (.604) (.606) (.318)
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.87 $12.27 $12.06 $11.91
===============================================================================================
TOTAL RETURN -0.38% 6.87% 6.48% 4.00%
===============================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $608 $604 $597 $476
Ratio of Total Expenses to Average Net Assets 0.09%** 0.11% 0.12% 0.15%**
Ratio of Net Investment Income to Average Net Assets 4.55%** 4.55% 4.82% 4.84%**
Portfolio Turnover Rate 7%** 14% 15% 8%
===============================================================================================
*Inception.
**Annualized.
34
NOTES TO FINANCIAL STATEMENTS
Vanguard New Jersey Tax-Exempt Funds comprise the New Jersey Tax-Exempt Money
Market Fund and the New Jersey 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 Jersey.
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: Dividends 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
35
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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) and shareholder reporting. 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 May 31, 2004, the funds had contributed
capital to Vanguard (included in Other Assets) of:
- --------------------------------------------------------------------------------
CAPITAL CONTRIBUTION PERCENTAGE PERCENTAGE OF
TO VANGUARD OF FUND VANGUARD'S
NEW JERSEY TAX-EXEMPT FUND (000) NET ASSETS CAPITALIZATION
- --------------------------------------------------------------------------------
Money Market $288 0.01% 0.29%
Long-Term 223 0.01 0.22
- --------------------------------------------------------------------------------
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. For the six months ended May 31, 2004, these
arrangements reduced the Long-Term Tax-Exempt Fund's management and
administrative expenses by $8,000.
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 funds' tax-basis capital gains and losses are determined
only at the end of each fiscal year.
The Long-Term Tax-Exempt Fund had realized losses totaling $824,000 through
November 30, 2003, which are deferred for tax purposes and reduce the amount of
unrealized appreciation on investment securities for tax purposes
At May 31, 2004, net unrealized appreciation of Long-Term Tax-Exempt Fund
investment securities for tax purposes was $68,164,000, consisting of unrealized
gains of $77,714,000 on securities that had risen in value since their purchase
and $9,550,000 on securities that had fallen in value since their purchase.
36
At May 31, 2004, the aggregate settlement value of open futures contracts
expiring through September 2004 and the related unrealized appreciation
(depreciation) were:
- ----------------------------------------------------------------------------------------
(000)
---------------------------
NUMBER OF AGGREGATE UNREALIZED
LONG (SHORT) SETTLEMENT APPRECIATION
NEW JERSEY TAX-EXEMPT FUND/FUTURES CONTRACTS CONTRACTS VALUE (DEPRECIATION)
- ----------------------------------------------------------------------------------------
Long-Term/
10-Year U.S. Treasury Note (400) $43,350 $(214)
30-Year U.S. Treasury Bond (180) 18,939 (171)
- ----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on open futures contracts is required to
be treated as realized gain (loss) for tax purposes.
E. During the six months ended May 31, 2004, the Long-Term Tax-Exempt Fund
purchased $90,309,000 of investment securities and sold $53,795,000 of
investment securities, other than temporary cash investments.
F. Capital share transactions for each class of shares were:
- -----------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2004 NOVEMBER 30, 2003
- -----------------------------------------------------------------------------------------------
AMOUNT SHARES AMOUNT SHARES
NEW JERSEY TAX-EXEMPT FUND (000) (000) (000) (000)
- -----------------------------------------------------------------------------------------------
MONEY MARKET
Issued $885,371 885,371 $1,383,762 1,383,762
Issued in Lieu of Cash Distributions 7,784 7,784 15,276 15,276
Redeemed (783,101) (783,101) (1,282,275 (1,282,275)
-------------------------------------------------
Net Increase (Decrease) 110,054 110,054 116,763 116,763
- -----------------------------------------------------------------------------------------------
LONG-TERM
Investor Shares
Issued $98,237 8,019 $179,119 14,622
Issued in Lieu of Cash Distributions 20,567 1,689 35,052 2,861
Redeemed (123,381) (10,139) (267,859) (21,902)
-------------------------------------------------
Net Increase (Decrease)--Investor Shares (4,577) (431) (53,688) (4,419)
-------------------------------------------------
Admiral Shares
Issued 82,437 6,735 151,666 12,436
Issued in Lieu of Cash Distributions 13,901 1,141 22,228 1,814
Redeemed (70,509) (5,826) (178,141) (14,538)
-------------------------------------------------
Net Increase (Decrease)--Admiral Shares 25,829 2,050 (4,247) (288)
- -----------------------------------------------------------------------------------------------
37
INVESTING IS FAST, EASY, AND SECURE ON VANGUARD.COM
If you're like many Vanguard investors, you believe in planning and taking
control of your own investments. Vanguard.com was built for you--and it keeps
getting better.
RESEARCH AND PLAN YOUR INVESTMENTS WITH CONFIDENCE
Use our Planning & Advice and Research Funds & Stocks sections to:
* Determine what asset allocation might best suit your needs--by taking our
Investor Questionnaire.
* Find out how much to save for retirement and your children's college
education-- by using our planning tools.
* Learn how to achieve your goals--by reading our PlainTalk(R) investment
guides.
* Find your next fund--by using the Compare Funds, Compare Costs, and Narrow
Your Fund Choices tools.
* Look up fund price, performance history, and distribution information--in a
snap.
INVEST AND MANAGE ACCOUNTS WITH EASE
Log on to Vanguard.com to:
* See what you own (at Vanguard and elsewhere) and how your investments are
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* Elect to receive online statements, fund reports (like this one),
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Find out what Vanguard.com can do for you. Log on today!
38
CAPITALIZE ON YOUR IRA
Are you taking full advantage of your individual retirement account? You really
should be. These tax-deferred accounts are powerful options for retirement
savers.
Here's how you can exploit your IRA--and improve your chances of having the
retirement of your dreams.
CONTRIBUTE THE MAXIMUM AMOUNT EACH YEAR
It may be an obvious point, but if you invest as much in your IRA as the law
allows--currently $3,000 per tax year if you are under age 50 and $3,500 if you
are age 50 or over--you will increase the odds of meeting your retirement goals.
"Max out" every year you can.
MAKE IT AUTOMATIC
Put your IRA on autopilot by taking advantage of Vanguard's Automatic Investment
Plan. Your IRA contributions will be deducted from your bank account on a
schedule of your choosing, making retirement investing a healthy habit.
CONSIDER COST
The owners of low-cost investments keep a larger portion of their gross returns
than the owners of high-cost investments. Over the long term, avoiding costlier
mutual funds and brokerage commissions could significantly boost your retirement
savings. Our low costs are one reason a Vanguard IRA(R) is such a smart choice.
REQUEST A DIRECT ROLLOVER WHEN YOU CHANGE JOBS
Don't spend your retirement assets before you've retired. When you change jobs,
roll your 401(k) or other employer-sponsored retirement plan assets directly
into your IRA.
If you have questions about your IRA, want to transfer an IRA from another
institution to Vanguard, or need help with any other IRA transaction, call our
Retirement Resource Center at 1-800-205-6189 or visit Vanguard.com. You can open
or fund your IRA on our website and have a confirmation in your hand within
minutes.
39
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
(129)
- ---------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
CHARLES D. ELLIS Trustee The Partners of '63 (pro bono ventures in education); Senior Advisor
(1937) (129) 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) (129) Chairman (January-September 1999), and Vice President (prior to
December 2001 September 1999) of Rohm and Haas Co. (chemicals); Director of Technitrol,
Inc. (electronic components), and Agere Systems (communications
components); Board Member of the American Chemistry Council; Trustee of
Drexel University.
- ---------------------------------------------------------------------------------------------------------------------
JOANN HEFFERNAN Trustee Vice President, Chief Information Officer, and Member of the
HEISEN (129) 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 Malkiel C
(1932) (127) 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).
- ---------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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) (129) 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) (129) (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) (129) 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) (129) 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.
VANGUARD SHIP LOGO
THE VANGUARD GROUP(R)
POST OFFICE BOX 2600
VALLEY FORGE, PA 19482-2600
VANGUARD, THE VANGUARD GROUP, VANGUARD.COM, VANGUARD IRA, ADMIRAL, PLAINTALK,
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 fund's 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 fund 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.
You can obtain a free copy of Vanguard's proxy voting guidelines by visiting our
website, www.vanguard.com, and searching for "proxy voting guidelines," or by
calling 1-800-662-2739. They are also available from the SEC's website,
www.sec.gov.
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.
Q142 072004
Item 2: Not applicable.
Item 3: Not applicable.
Item 4: Not applicable.
Item 5: Not applicable.
Item 6: Not applicable.
Item 7: Not applicable.
Item 8: Not applicable.
Item 9: Not applicable.
Item 10: 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 Controls. There were no significant changes in Registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Item 11: Exhibits.
(a) 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 JERSEY TAX-FREE FUNDS
BY: (signature)
----------------------------------------
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: July 23, 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 JERSEY TAX-FREE FUNDS
BY: (signature)
----------------------------------------
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: July 23, 2004
VANGUARD NEW JERSEY TAX-FREE FUNDS
BY: (signature)
----------------------------------------
(HEIDI STAM)
THOMAS J. HIGGINS*
TREASURER
Date: July 23, 2004
*By Power of Attorney. See File Number 2-57689, filed on December 26, 2002.
Incorporated by Reference.