iShares is changing the way the investment strategy of the iShares Core MSCI EAFE IMI Index ETF (XEF) is implemented.
XEF will commence implementing its investment strategy by investing primarily in equity securities of companies from Europe, Australia and the Far East that are included in the MSCI EAFE Investable Market Index (the XEF Index), such that the resulting portfolio will have characteristics that closely match the characteristics of the XEF Index.
This direct investment strategy will be a change from how XEF currently implements its investment strategy by investing in shares of iShares Core MSCI EAFE ETF, a US iShares fund that itself invests in a portfolio of international equity securities included in the XEF Index.
The change is being implemented in accordance with XEF's current prospectus disclosure. The investment objective of XEF and the XEF Index will remain unchanged.
As a result of this change in investment strategy implementation, XEF will generally no longer be subject to US withholding taxes. While foreign withholding taxes will continue to apply to dividends paid on certain international equity securities included in the XEF Index, it is expected that the change in investment strategy implementation will reduce the overall amount of withholding taxes borne directly or indirectly by XEF.
BlackRock Canada expects that the changes in XEF's portfolio that reflect this change in investment strategy implementation will take place during the three-week period ending on 12 September 2014. BlackRock Canada's current expectation is that XEF will realise capital gains as a result of the changes to XEF's portfolio. The amount of any capital gains from the changes in XEF's portfolio and other investment activities will be disclosed and distributed to unitholders of XEF during the fourth quarter of 2014.