New Rule Makes Regional Funds More Focused Some adjust to SEC regulation by changing their names, objectives.(MAKING MONEY IN MUTUALS)(INVESTMENT TRENDS)

Byline: Claire Mencke

The few funds that focus on companies based in one part of the country -- some of them top-notch funds -- face a new issue this year: the Securities and Exchange Commission's investment company name rules.

The rule dictates that to keep from misleading investors, funds with names that imply certain types of investments must put at least 80% of assets in vehicles suggested by their names. And the rules cover geographic terms.

Bringing funds into compliance with the rules could affect performance and style. Even though their names suggest a tight focus on a small region, many funds are diversified across many industries as well as areas.

"A fund's having a geographic name doesn't necessarily mean the rule applies to it," said David Thomas. He's a lawyer with Kirkpatrick & Lockhart LLP, in Washington, D.C. Previously, he worked for the SEC on this rule change.

A fund merely named for a region may not be covered. The rule applies to a fund only if its prospectus commits it to investing in that region.

Take the $12 million Cincinnati Fund, run by Gateway Investment Advisers. It invests at least 65% of its assets in stocks issued by two kinds of companies, its prospectus states: Firms headquartered in the Cincinnati area, and the 25 largest publicly held employers in that area.