Glossary

Confidence comes with understanding.

Every industry invents its own jargon — investing is no exception. You'll find definitions of all the commonly used expressions and abbreviations from this site here. But if you're confused about anything, give a Financial Advisor a call at 1-866-218-6142, Monday - Friday, 8:00 a.m. - 6:00 p.m. (EST).

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

AARP Financial Inc.: Founded in 2005, AARP Financial, Inc. is a wholly owned taxable subsidiary of AARP Services. AARP Financial is dedicated to helping people age 50 and over understand the financial aspects of planning for and living in retirement by offering products and services in an informative and comprehensive manner.
AARP Funds: The entity housing the funds offered by the prospectus.
AARP Portfolios: The entity housing the portfolios the funds invest in.
ALPS Distributors, Inc.: ALPS Distributors, Inc. is the funds' distributor.

Bonds: Investments that pay interest (often a fixed amount) to investors. They are typically issued by a corporation, government or government agency. Essentially, bondholders have an IOU from the issuer, but no corporate ownership privileges, as stockholders do. Bonds are also called debt or fixed income securities.
Business day: Every day the New York Stock Exchange is open for business. The NYSE is normally open for business every week, Monday through Friday, except the following holidays: New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Funds may suspend redemptions or postpone payment dates on days when the NYSE is closed (other than weekends and holidays), when trading is restricted or as otherwise permitted by the SEC. If the New York Stock Exchange closes early, the Funds will calculate their net asset values as of the time the New York Stock Exchange closes.

Capital appreciation: The growth in value of your investment when the price of your stocks or bonds increases.
Capitalization: A company's outstanding shares of stock multiplied by the per-share price. Can also be known as market capitalization.
Commercial paper: A debt instrument issued by a corporation that normally must be paid back in 270 days or less. Corporations typically use commercial paper to meet their short-term financial needs. They are not registered as securities with the SEC.
Current income: Money that is paid out to investors, such as stock dividends and bond interest.

Distributor: A registered broker/dealer that assists a mutual fund in selling its shares to the general public.
Dividends: Payments to shareholders from income generated by a fund's investments.
Dividend reinvestment: Using your dividends to buy additional shares of a stock or mutual fund, instead of taking the money as a cash payment.

Emerging market: A country whose stock or bond market is still developing, typically in Asia, Latin America, Eastern Europe or Africa.
Expense ratio: The portion of a mutual fund's assets that is deducted to pay expenses.

Fair value: A reasonable price for a security that buyers and sellers would accept in the market where the security usually trades.
FINRA: Financial Industry Regulatory Authority. It is the largest non-governmental regulator for all securities firms doing business in the U.S.
Fund: AARP Conservative Fund, AARP Moderate Fund, AARP Aggressive Fund, and AARP Money Market Fund, the series of AARP Funds.

Indexing: A style of investing that tries to match the returns of a stock or bond index before deducting expenses. This is typically done by holding all — or a representative sample of — the securities in that index.

Index Fund: A fund that holds most, or all, of the stocks in an index in an attempt to duplicate that indexes performance before fees are assessed.
Interest: Money paid by a bond issuer to investors who, in effect, loaned the issuer money by buying its bonds.
Investment adviser: A person or entity who is paid to manage a portfolio of securities, such as a mutual fund.
Investment sub-adviser: A person or entity who is hired by an investment adviser to make day-to-day investment decisions for a portfolio of securities, such as a mutual fund.

IRA: Individual Retirement Account. A special account that lets people save more for retirement by not charging tax on profits from the investments until they are withdrawn during retirement.

Managed Funds: A managed fund is one where fund managers actively trade securities in an effort to create higher returns. The extra work in research and trading usually results in higher management fees, without guaranteeing better results.
Market price: The last reported price of a security on the market where it is bought and sold.
Medallion signature: A stamp or seal from an approved financial institution that guarantees your signature is authentic.
Money market instruments: Short-term, liquid investments (usually with a maturity of 13 months or less) which include U.S. Treasury bills, bank certificates of deposit, repurchase agreements, commercial paper and bankers' acceptances.

Net asset value (NAV): The price of a single share of a mutual fund. It is calculated daily by adding the value of all the fund's assets, subtracting the fund's liabilities, and dividing that by the total number of fund shares.

Omnibus account: A single account held by an investment professional on behalf of many investors.

Portfolio: U.S. Bond Market Portfolio, U.S. Stock Market Portfolio, International Stock Market Portfolio, and State Street Money Market Portfolio, the series of AARP Portfolios.
Preservation of capital: Safeguarding the value of your investment.

Real estate investment trust: A security that invests directly in real estate trust (either by owning property or through mortgages) and is bought and sold like a stock on a stock exchange.
Rebalance: To maintain a target mix of stocks, bonds and other assets by buying or selling securities that have increased or decreased in value.

SEC: The Securities and Exchange Commission.
Series 6: An exam administered by FINRA that licenses those who pass to sell certain securities, including mutual funds and variable annuities.
Small company stock: Generally, stock in a company whose total invested capital is between $250 million and $1 billion.
SSgA FM: SSgA Funds Management, Inc., the Funds' and Portfolios' sub-adviser.
State Street: State Street Bank and Trust Company, the Funds' sub-administrator, custodian and transfer agent.
State Street Master Funds: The entity housing the Portfolio the AARP Money Market Fund invests in.
Stocks: Investments that represent a share of ownership in a company. Stocks are traded on markets or exchanges where their prices can go up or down. Some stocks also pay dividends.

Tax deferred: Taxes on profits are not collected at the time the profits are made, but at the time they are withdrawn from the account.
Total return: The total gain or loss of a mutual fund, including all dividends, interest and capital gains. It is expressed as a percentage of the original investment, and reflects the reinvestment of dividends and interest.
Tracking error: The amount the performance of an index fund differs from the index it tries to match.
Transfer agent: An independent third-party firm who facilitates purchases, sales and exchanges on behalf of a mutual fund company.

Yield: Income (interest or dividends) earned by an investment, expressed as a percentage of an investment's price.

The mutual funds described in this site are sold only to U.S. residents.

An Investment in the Funds involves risk, including possible loss of principal. Please consider the investment objectives, risks, charges and expenses of the AARP Funds carefully before investing. The prospectus contains this and other important information about the Funds. To get a prospectus containing this and other information, click here (PDF) or call 1-866-218-6142. Read it carefully before you invest.

While AARP has licensed the use of its name to AARP Funds and endorses the services provided by AARP Financial Inc., AARP does not offer financial products or services itself and cannot recommend that you or any specific individual should purchase any particular product or service. AARP Financial Inc. is an investment adviser and a subsidiary of AARP.

The Financial Advisors are registered representatives of ALPS Distributors, Inc., a registered broker-dealer, and as investment adviser representatives of AARP Financial Inc., an investment adviser. AARP Financial Inc. offers investment advisory services and is not affiliated with ALPS Distributors, Inc.

AARP Funds are distributed by ALPS Distributors, Inc.