Pretax Return
See the trailing total returns definition.
Tax-adjusted Return
Tax-adjusted return shows a fund's annualized after-tax total return for the 3, 5, and 10-year periods, excluding any capital-gains effects that would result from selling the fund at the end of the period. To determine this figure, all income and short-term capital gains distributions are taxed at the maximum federal rate of 39.6% at the time of distribution. Long-term capital gains are taxed at a 28% rate. 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.
% Rank in Category
This is the fund's tax-adjusted total-return percentile rank for the specified time period relative to all funds that have the same Morningstar category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category always receives a rank of 1. Percentile ranks within categories are most useful in those categories that have a large number of funds.
Tax Efficiency Ratio
This statistic (which excludes additional gains, taxes, or tax losses incurred upon selling the fund) is derived by dividing after-tax returns by pretax returns. The highest possible score would be 100%, which would apply to a fund that had no taxable distributions whatsoever (many municipal-bond funds meet this criterion).
While it might seem that the lowest possible score would be 100% minus the average tax rate (roughly 60%), supposing all of a fund's total returns were paid out in distributions, funds that pay out high income at the expense of capital can score even lower as their taxable income distributions actually exceed their total returns.