SEC Issues Additional Names Rule FAQs


On February 18, the SEC staff published four new frequently asked questions relating to the 2023 updates to Rule 35d-1 under the 1940 Act (the “Names Rule”). The new FAQs are an addition to the previously announced FAQs the Commission Staff first issued in January 2025. The new FAQs provide the following guidance:

FAQ 2: Notice requirements for non-material changes or to make an existing 80% policy more stringent

  • The new FAQ notes that the SEC staff will not object if a fund does not provide 60 days’ notice for non-material changes to an existing 80% names rule policy made only to comply with the 2023 amendments or to make an 80% policy more stringent (such as if a large-cap growth fund amends its policy to include growth investments as part of the policy).

FAQ 3: Cash holdings for private fund or SPV coverage

  • If a fund includes a private fund or SPV in its 80% policy, the new FAQ provides that cash and cash equivalents held by a fund to cover those unfunded commitments can be counted as cash and cash equivalents under the fund’s 80% policy. Funds that intend to use this approach must include explanatory disclosure in their registration statement.

FAQ 10: Funds with ‘Growth’ or “Value’ in their name

  • This FAQ specifies that an 80% policy is not required in certain circumstances when these terms are combined with a term that makes it clear that ‘growth’ or ‘value’ are not predominant components of the fund’s portfolio.  The SEC provided an example of this in the FAQ, noting that  the term “income,” when paired with “growth,” signals a different meaning to investors than what “growth” would convey on its own, in particular noting the term “income” in a fund’s name generally suggests that the fund emphasizes the achievement of current income as a portfolio-wide result.

FAQ 11: Funds with ‘Merger’ or ‘Merger Arbitrage’ in their name

  • This FAQ confirms that these terms do not require an 80% names rule policy because they reflect an investment technique or intended portfolio-level result.

Fund directors that oversee funds that may be impacted by the new FAQs may wish to consult with counsel to confirm that applicable Rule 35d-1 fund names rule policies and disclosure are consistent with the new guidance.

Click here to read the SEC’s Names Rule FAQ.

Click here to read a client alert from Morgan Lewis.