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 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.
Asset-backed Security: A security that pools loans, such as credit card, auto, or home equity loans. Principal and interest payments are collected and passed through to investors.

Blue Sky: A state law that regulates the offering and sale of securities.
Bonds: Investments that pay interest (often a fixed amount) to investors. Typical issuers include corporations, federal or state governments, and entities sponsored by or associated with governments. A bond is essentially an IOU. It represents a debt owed by the issuer (as opposed to stocks, which represent shares of ownership in the issuer). In the event that an issuer goes bankrupt or otherwise encounters financial difficulties, its bondholders generally have priority over stockholders.
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 (typically to meet short-term financial needs) that normally must be paid back within 270 days.
Current income: Money paid out to investors, such as bond interest.

Derivative: In general, a financial contract whose value is based on the value of underlying assets, instruments, or indexes (such as futures, options, and swaps).
Distributor: A registered broker/dealer that assists a mutual fund in selling its shares to the general public.
Dividends: Money paid by a mutual fund or by a stock-issuing company to the investors who own shares of a fund or of the company's stock. Stock dividends are generated by the issuing company's business operations. Mutual fund dividends are generated by interest or dividends the fund receives from investments it owns.
Dividend reinvestment: Using dividends to buy additional shares of the investment paying the dividend, instead of taking the money as a cash payment.

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

Fair value: A value that an owner might reasonably expect to receive upon current sale.
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, AARP Income Fund, and AARP Money Market Fund, the series of AARP Funds.

Good order: A purchase, exchange or redemption order is in "good order" when a fund, or its agent, receives all required information, including properly completed and signed documents.
Growth of capital: With mutual funds, the growth in value of an investment through an increase in a fund's share price, which is based in turn on a net increase in the value of the fund's holdings.

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 or bonds in an index in an attempt to duplicate that index's performance before fees are assessed.
Interest: Money paid by a bond issuer to investors who, in effect, have 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 a market where that security is bought and sold.
Medallion signature: A stamp or seal from an approved financial institution that guarantees your signature is authentic.
Medallion signature guarantee: A stamp or seal from an approved financial institution that participates in one of the three recognized Medallion programs. The stamp or seal guarantees that your signature is authentic. See also page 31 of the Prospectus.
Money market instruments: Short-term, liquid investments that usually mature within 13 months. Examples of money market instruments are U.S. Treasury bills, bank certificates of deposit, repurchase agreements, commercial paper, and bankers' acceptances.
Mortgage-backed security: A security of an issuer that pools mortgages. Principal and interest payments on the mortgages are collected and passed through to investors.

Net asset value per share (NAV): The price of a single share of a mutual fund.

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: The preservation of the value of an investor's investment.

Real estate investment trust (REIT): A security that is issued by a company that invests in real estate (either by owning property directly or through mortgages) and that trades on a stock exchange.
Rebalance: To maintain a target mix of stocks, bonds, and other assets.

Securities and Exchange Commission (SEC): The SEC has primary responsibility for enforcing the federal securities laws and regulating the U.S. securities industry and markets.
Series 6: An exam administered by FINRA that licenses those who pass to sell certain securities, including mutual funds and variable annuities.
Share price: See "net asset value per share."
Small company stock: Generally, stock of a company whose total market value 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 in response to supply and demand. 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: The amount of income (meaning interest or dividends) earned by an investment, expressed as a percentage of the 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.

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