SEC Staff Publishes Additional Names Rule FAQs, SEC Proposes N-PORT Amendments

The US Securities and Exchange Commission Staff recently published new frequently asked questions regarding the Names Rule while the Commission in parallel proposed related amendments to Form N-PORT. To help navigate the multitude of changes to the Names Rule over the last two-and-a-half years, this LawFlash provides a brief historical background of the Names Rule and a summary of the current obligations of registered funds.

On February 18, 2026, the Staff of the US Securities and Exchange Commission (SEC) published four new frequently asked questions (FAQs) providing further guidance on the 2023 amendments to Rule 35d-1 (Names Rule) under the Investment Company Act of 1940. On the same day, the SEC extended the compliance date for Names Rule–related Form N-PORT reporting requirements and proposed a series of targeted amendments to Form N-PORT (the Proposal), which would, among other things, eliminate the Names Rule–related reporting requirements adopted in 2023.

NAMES RULE

Background: How Did We Get Here?

Section 35(d) of the 1940 Act, as amended in October 1996 by the National Securities Markets Improvement Act, prohibits a registered fund from using a name that the SEC finds by rule to be materially deceptive or misleading.[1]

Rule 35d-1 was originally adopted in 2001 to address concerns (including on the part of Congress) that an investment company’s name could mislead investors about a fund’s investments and risks. The original Names Rule required a fund whose name suggests a focus in a particular investment type, industry, or country/geographic region to adopt a policy to invest, under normal circumstances, at least 80% of the value of its assets in a manner consistent with the fund’s name (an “80% Policy”). A fund could generally choose to make the 80% Policy a fundamental policy (which requires a shareholder vote to change) or a non-fundamental policy (which does not require a shareholder vote to change).[2] If a fund’s 80% Policy is non-fundamental, the fund must provide shareholders with 60 days’ written notice prior to any change. Following the adoption of the original Names Rule, the SEC Staff published FAQs that provided practical guidance to issuers with respect to the then-new Names Rule. Aside from market interpretations and practices that developed over time and periodic interpretive positions taken by the SEC Staff through the disclosure review process, the registered funds industry proceeded on the basis of that original version of the Names Rule and those initial FAQs for many years.

Then, on September 20, 2023—more than 20 years after the original adoption of the Names Rule—the SEC adopted amendments to the Names Rule (2023 Amendments).[3] A purported impetus for these amendments was the emergence of retail funds that focused on impact investing and a potential lack of consistency around environmental, social, and governance (ESG) investing terms that could mislead investors.  The 2023 Amendments expanded the scope of the original Names Rule by requiring funds to adopt an 80% investment policy when a fund’s name suggests not only a focus on a particular type of investment, industry, or country/geographic region, but also a focus on investments that have, or investments whose issuers have, “particular characteristics” (e.g., “growth,” “value,” and ESG-related terms). In January 2025, the SEC Staff published additional Names Rule FAQs to address interpretive questions about the 2023 Amendments and announced the withdrawal of certain 2001 FAQs.[4] The original compliance deadline for the 2023 Amendments was December 11, 2025 for large fund groups, and June 11, 2026 for smaller fund groups.

On March 20, 2025, in response to comments from the industry regarding challenges in implementing the 2023 Amendments, then Acting Chairman Mark Uyeda announced a six-month extension to the Names Rule compliance deadlines.[5] In addition to the extension of the compliance deadlines, the SEC clarified that the compliance dates would be based on a fund’s fiscal year-end. Accordingly, existing funds are now required to comply with the 2023 Amendments at the time of the effective date of their first “on-cycle” annual prospectus update filed on or following June 11, 2026 for large fund groups or December 11, 2026 for smaller fund groups.

What’s Changing Now?

On February 18, 2026, the SEC Staff issued four new Names Rule FAQs providing further guidance in an effort to reduce confusion and promote consistency in the application of the Names Rule, as summarized below.

• Notice requirements: The 2026 FAQs clarify when a change to an 80% Policy would not require 60 days’ notice to shareholders. In particular, the Staff will not object if a fund does not provide shareholders with 60 days’ notice for non‑material changes to an existing non‑fundamental 80% Policy made solely to comply with the 2023 Amendments or to make an existing 80% Policy more stringent in light of the name’s treatment under the amended rule (e.g., a large-cap growth fund amending its 80% Policy to include growth investments as part of the policy).
• Treatment of cash holdings related to commitments to invest in certain private funds or special purpose vehicles: A fund that commits to invest in a private fund or special purpose vehicle (SPV) owning private assets may hold cash and cash equivalents to cover these unfunded commitments. To the extent the private fund or SPV is or will be included in the fund’s 80% Policy, the 2026 FAQs confirm the fund may count such cash and cash equivalents towards the 80% Policy. The 2026 FAQs note the fund should include explanatory disclosure regarding its intention to take this approach in its registration statement.
• Further guidance on “growth” or “value” in a fund’s name: The 2023 Amendments specifically state the terms “growth” and/or “value” in a fund’s name suggest the fund focuses on investments with particular characteristics and, therefore, require an 80% Policy. The 2026 FAQs, however, indicate an 80% Policy is not required in limited circumstances where these terms are paired with a modifying term that clearly indicates “growth” or “value” investments are not predominant components of the fund’s portfolio.The Staff provides the term “income” when paired with “growth” as an example, noting these terms, when paired together, generally indicate the fund seeks to achieve a portfolio-wide outcome of growth of capital, along with current income.
• Treatment of “merger” or “merger arbitrage” in a fund’s name: The 2026 FAQs confirm the terms “merger” or “merger arbitrage” in a fund’s name suggest an investment technique or portfolio‑level result and do not, by themselves, require an 80% Policy under the Names Rule.

FORM N-PORT UPDATES

Background

N-PORT is an SEC reporting form that was first adopted in 2016 and is used by registered funds (other than money market funds) to report and file monthly portfolio holdings and other investment information on a quarterly basis, subject to a 60-day delay. The 2023 Amendments also included changes to Form N-PORT reporting for registered funds. In order to assist in monitoring compliance with the Names Rule, the SEC adopted amendments requiring registered funds to disclose on N-PORT: (1) definitions of terms used in the fund’s name; (2) the value of the fund’s 80% basket, as a percentage of the value of the fund’s assets; and (3) whether each investment in the fund’s portfolio is in the fund’s 80% basket.[6]

Further, on August 28, 2024, the SEC adopted additional amendments to Form N-PORT (2024 Amendments) to require more frequent reporting of monthly portfolio holdings and related information and modify reporting requirements related to entity identifiers.[7] The 2024 Amendments were intended to provide the Staff and investors with more timely information about funds’ portfolio investments, enabling more comprehensive oversight by the Staff and increased transparency to investors. At the time of the 2024 Amendments, many industry participants articulated a concern that the additional reporting could subject funds to front-running risk.

Extended Compliance Date

On February 18, 2026, the SEC extended the compliance dates for the Form N-PORT Names Rule requirements.  Effectively, this extended compliance date will allow registered funds to avoid costs and operational burdens in complying with regulatory requirements the SEC has proposed to eliminate (as discussed below).

The new compliance date for large fund groups is now November 17, 2027. The compliance date for smaller fund groups is now May 18, 2028.[8] If the Proposal is not adopted, funds would be required to file N-PORT reports incorporating Names Rule requirements as of the first fiscal-quarter-end month after the compliance date. Importantly, these extended compliance dates do not affect the compliance dates appliable to the Names Rule.

Proposed Amendments

On February 19, 2026, the Staff proposed several amendments to Form N-PORT, designed to reduce reporting burdens and increase efficiency in disclosure requirements, as discussed below.

• Elimination of Names Rule–related Reporting and Other Requirements: The Staff proposed eliminating the Names Rule–related N-PORT requirements adopted with the 2023 Amendments. The Proposal would also eliminate other requirements, including (1) explanations by open-end funds of the reasons for reporting multiple liquidity classifications for an investment, (2) certain disclosures with respect to convertible securities, and (3) removal of payoff profile reporting (i.e., the classification of non-derivative positions held by a fund as long or short).
• Filing Timeframe and Publication Frequency: The deadline for filing monthly reports would be extended from 30 days after the end of the month to 45 days, allowing an additional 15 days to file monthly reports. The publication of portfolio holdings would shift back to quarterly reporting, mirroring the publication frequency prior to the 2024 Amendments.
• Portfolio Level Risk Metrics: Funds are currently required to provide portfolio level risk metrics if the average value of a fund’s debt securities for the previous three months, in the aggregate, exceeds 25% of the fund’s net asset value. The Proposal would raise this threshold to 50%. Additionally, funds would be required to report risk metrics in US dollars. In an effort to streamline reporting, the Staff is also proposing simplifying the information required with respect to interest rate and credit rate risk metrics.
• Return Information: Under the Proposal, funds would be required to report their returns without deducting sales load and redemption fees. In light of the proposed quarterly publication frequency, each report would cover the preceding three months in the quarter. Further, multi-class funds would report monthly returns for a single representative class, rather than separately for each class as currently required. In addition to class identification numbers, funds would also be required to report ticker symbols and class names for class-level returns.
• ETF Share Class Reporting: In response to recently issued exemptive relief for fund sponsors seeking the ability to offer exchange-traded fund (ETF) share classes, the Proposal includes disclosure requirements for multi-class funds that offer an ETF share class to separately report net assets and flow information.

CONCLUSION

The new Names Rule FAQs provide some helpful clarifications as to the applicability of the Names Rule and shareholder notice requirements, but leave room for further clarifications by the Staff, likely through the disclosure review process, on a variety of interpretive questions raised by the industry to date. In the meantime, registered funds that are subject to the Names Rule (as modified by the 2023 Amendments) will need to continue to plan for compliance. Larger fund groups will need to comply with the Names Rule, as amended, by June 11, 2026 and smaller fund groups will have until December 11, 2026, although the actual compliance date is as of the next “on-cycle” registration statement update for open-end funds, or shareholder report for closed-end funds, required to be filed after such dates.

Prior to reflecting revised compliance-related changes in registration statements and shareholder reports, funds should be mobilizing for compliance by ensuring they have all necessary board approvals related to, for example, new 80% investment policies and updated policies and procedures, and sufficient time to provide shareholders with 60 days’ notice of new or amended 80% investment policies, if necessary. Advisers and fund administrators will also need time to make adjustments to portfolio compliance testing processes that take into account new or amended 80% investment policies, which may also alter how certain instruments are categorized for purposes of compliance testing, and recordkeeping practices.

Given that the 2023 Amendments seem to be here to stay, industry participants will likely be revisiting various interpretative questions that were paused in response to the delayed compliance date. Accordingly, we may begin to see certain practice norms take shape as the compliance date gets closer.

Similar to how many registered funds had slowed their compliance plans for the Names Rule in the hopes that the 2023 Amendments would be undone entirely, funds and fund administrators may now want to pause changes to N-PORT reporting in case the proposed amendments move forward—and the extended compliance dates for N-PORT reporting will give registered funds some breathing room to do so.