United States: But Wait, There’s More–Names Rule FAQ

By: Thoreau A. Bartmann and Christine Mikhael

On 19 February 2026, the United States Securities and Exchange Commission (SEC) published additional FAQs regarding Rule 35d-1 of the Investment Company Act of 1940, as amended (Names Rule). As you may recall, the SEC adopted the Names Rule amendments in September 2023, extended the compliance date in March 2025, and have published multiple rounds of FAQs. In tandem with these new FAQs, the SEC has delayed compliance with certain N-PORT amendments that related to the Names Rule. More information on the N-PORT amendments can be found in our Blog Post.

The new FAQs provide welcome relief and address a variety of issues that funds have grappled with under the rule. In summary, the new FAQs address:

Nonmaterial Changes to Existing 80% Policy May Not Require Shareholder Notice

The SEC staff clarified that funds do not need to provide 60-day notice to shareholders when making non-material changes to, or when making more stringent, an existing 80% investment policy solely to comply with Names Rule.

Cash to Cover Unfunded Commitments Can Count Towards 80% Investment Policy

If a fund invests in private funds or special purpose vehicles (Portfolio Funds) and holds cash or cash equivalents to cover unfunded commitments to these Portfolio Funds, a fund may count these cash holdings toward its 80% investment policy—provided the Portfolio Fund investment itself qualifies for the 80% basket and the fund reasonably expects the cash to be called in the future. The SEC expects disclosure on this in the fund’s registration statement. 

Use of “Growth” or “Value” in Name, Especially When Paired With Other Modifying Terms

Generally, if a fund’s name includes “growth” or “value,” it must adopt an 80% investment policy focused on securities with those characteristics. However, if “growth” or “value” is paired with other terms that clearly indicate these are not the predominant investment focus (e.g., “income and growth”), an 80% investment policy may not be required for those terms.

Funds with “Merger” or “Merger Arbitrage” in Their Names Not in Scope

Funds with names including “merger” or “merger arbitrage” are generally not required to adopt an 80% investment policy for these terms as they imply an investment technique (like “hedged” or “long/short”) or a portfolio wide result (like “real return”).