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How much of the Federal Fund is state/local tax exempt?

Depends on the laws of your state. In some states, the exemption percentage is the average daily percentage of the NAV that is due to ownership of Treasurys. In others, the exemption percentage is the percentage of annual income produced by Treasurys. (Vanguard provides both numbers.) An additional wrinkle is that in some states, if the percentage is more than __% then all the income is tax-exempt.

We won't know the numbers for 2005 until Vanguard releases them. The numbers for 2004 are here:

(change the number after "flagship" to 1, 2, 3, 4 if it doesn't work)

In addition, if the fund has capital gains distributions due to Treasurys, different states tax those differently too. (This is what Vanguard is referring to with the "NJ Qualified Fund" language.)
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