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Finance Dictionary and Glossary of Investment Terms
Tax-Adjusted Return (3, 5 and 10 Year)
Definition 1.
Tax-adjusted return shows a fund''s annualized after-tax total return for the three-, five- and 10-year periods, excluding any capital-gains that would result from selling the fund at the end of the period. To determine this figure, it''s assumed that all income and short-term capital gains distributions are taxed at the maximum federal rate of 39.6% at the time of distribution. The after-tax portion is then reinvested in the fund. State and local taxes are ignored, and only the capital gains are adjusted for tax-exempt funds, as the income from these funds is nontaxable.
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