market: a public place where buyers and sellers make transactions, directly or via intermediaries. Sometimes refers to markets where securities are traded, or to the New York Stock Exchange® in particular.
market capitalization: the total market value of a company, as calculated by multiplying the company’s outstanding shares by the current share price.
market timing: buying or selling securities based on economic factors such as the direction of interest rates or market indicators such as trends in stock prices and trading volume.
maturity: the date when a debt becomes due for payment. A bond due to mature on June 1, 2005, will return the bondholder’s principal and final interest payment on that date. Also refers to a company or sector of the economy that is well-established and has little room for significant growth.
maximum offering price (MOP): the price of a share or value of an investment that reflects sales charges that have been assessed, unlike the net asset value, which does not account for sales charges.
money market: the market for short-term debt securities, such as commercial paper, certificates of deposit and Treasury bills, with a maturity of one year or less. Typically, these are safe, highly liquid investments.
money market fund: a mutual fund that invests in money market securities such as commercial paper, certificates of deposit, Treasury bills and other highly liquid and safe securities. Money market funds typically have very low expense ratios and interest is credited monthly to shareholders. American Funds offers one money market fund — American Funds Money Market Fund®.
money market instruments: short-term debt securities, such as commercial paper, certificates of deposit and Treasury bills, with a maturity of one year or less. Typically, these are safe, highly liquid investments.
money purchase plan: a type of defined contribution plan in which employer contributions are mandatory and based on a percentage of employee compensation.
Morgan Stanley Capital International (MSCI) indexes: indexes maintained and produced by Morgan Stanley Capital International that track equity markets throughout the world. MSCI indexes are weighted by market capitalization and include various countries, regions and industries in both developed and emerging markets. The primary indexes are the MSCI EAFE Index and the MSCI World Index.
Morningstar®: a leading provider of data and analysis on mutual funds. Morningstar publishes reviews and commentary on mutual funds for individuals and corporations.
mortgage: a loan to finance the purchase of real estate, usually with specified payment periods and interest rates.
mortgage-backed security: a security backed by mortgages, such as those issued by Fannie Mae® and Freddie Mac®. Investors receive payments from the interest and principal on the underlying mortgages. The growth of mortgage-backed securities has helped keep mortgage money available for home financing. Also known as a pass-through security.
MSCI EAFE Index: acronym for the Europe, Australasia and Far East index produced by the Morgan Stanley Capital International (MSCI) group. Countries are represented in the index according to their approximate share of world market capitalization, and individual stocks are screened and weighted accordingly. The index is a widely-used benchmark for managers of international stock fund portfolios. See Morgan Stanley Capital International (MSCI) indexes.
MSCI World Index: an index of major world stock markets, including the U.S., produced by the Morgan Stanley Capital International (MSCI) group. Countries are represented in the index according to their approximate share of world market capitalization, and the weights are adjusted to reflect foreign currency fluctuations relative to the U.S. dollar. The index is a widely-used benchmark for managers of global stock fund portfolios. See Morgan Stanley Capital International (MSCI) indexes.
municipal bond: a bond issued by a state, city or local government to finance operations or special projects such as construction of public facilities. Interest on municipal bonds is often free of federal income taxes and/or state and local income taxes.
municipal bond fund: a mutual fund that invests in municipal bonds. Municipal bond funds are popular with investors who want to reduce their tax burden, because interest on municipal obligations is often free of federal income taxes and/or state and local income taxes. American Funds offers six municipal bond funds: American High-Income Municipal Bond Fund®, Limited Term Tax-Exempt Bond Fund of AmericaSM, The Tax-Exempt Bond Fund of America®, The Tax-Exempt Fund of California®, The Tax-Exempt Fund of Maryland® and The Tax-Exempt Fund of Virginia®. See also tax-exempt fund.
mutual fund: a fund operated by an investment company that invests in one or more categories of assets, including stocks, bonds and money market instruments. All shareholders share in the gains and losses generated by the fund on an equal basis, proportional to the amount initially invested. Investors can redeem mutual fund shares on demand at net asset value. Mutual funds offer investors diversification and professional money management. A management fee is charged for these services, and there are other expenses, such as 12b-1 fees. Funds with a sales charge sold through brokers are called load funds, while those sold to investors directly by the fund companies are called no-load funds.