Just because a fund is called "XYZ Gold and American Energy" for instance, doesn't mean that is where all the money will be invested. A whole bunch could be invested bonds, foreign technology companies, or even jelly beans.

Until 2002, only 65% of a fund's investments had to match the fund's name or stated objectives. Now they are only allowed a maximum of 20% for discretionary investments.

You would think a mutual fund called the “Janus 20” would invest in 20 companies. Nope, they currently have 34 in this fund’s portfolio.

Then there is the Van Wagoner Mid-cap Growth Fund. You would think from the name that they pick stocks from mid-size growing companies. They recently had 94% of their customer’s money invested in technology companies, from tiny small-caps to the huge Intel and Microsoft.

Many “value” funds are loaded with stocks that most would consider to be “growth”, and growth funds routinely have value stocks. There are no regulations governing funds that have the terms “growth” or “value” in their names, since this is really a matter of a manager’s personal investing style and strategy.

The only way to judge how a fund’s money is invested is to read the prospectus.

Other Stock Market Basics Topics:

1. Mutual Fund Advantages
2. History of Mutual Funds
3. NAV
4. Dollar Cost Averaging
5. General advice about choosing a fund
6. Mutual Fund Ratings
7. Evaluating Mutual Fund Investment Risk
8. Mutual Fund Share Classes
9. Mutual Fund Fees
10. The Mutual Fund Prospectus
11. How important is the manager's length of experience?
12. Why is the prospectus hard to understand?
13. Mutual Fund Annual Report
14. Comparing your fund to the competition
15. Comparing funds on an after-tax basis
16. Average Return on Investment
17. How Not to Pick a Mutual Fund
18. Cashing in Your Fund
19. When to Sell Your Fund
20. Mutual Funds and Asset Allocation
21. When to get started with a mutual fund
22. Types of Mutual Funds
23. Value Stock Funds
24. Growth Stock Funds
25. Small and Micro-cap Stocks
26. Mid Cap
27. Large Cap Companies
28. Income Stock Funds
29. Mutual Fund Index
30. Enhanced Index Funds
31. Sector Mutual Funds
32. Stock Market Sectors
33. Defensive Stocks
34. International Funds
35. Real Estate Mutual Funds
36. Socially Responsible Funds
37. Balanced Funds
38. Tax-Efficient Funds
39. Bond Convertible Funds
40. Junk Bond Funds
41. Mixtures of stock types
42. Closed End Funds
43. Exchange Traded Funds (ETF’s)
44. Stock Picking Strategy - Picking your own stocks?
45. Fund names, and what they really invest in
46. How to get started
47. Where can I start investing with no money?