This excerpt taken from the EFA DEF 14A filed May 24, 2005.
Discussion of Proposed Modification. The proposed modification is intended to simplify and conform the Funds investment restrictions, and is not expected to have a material impact on the operation of the Funds.
The proposed investment restriction permits each Fund to lend its underlying portfolio securities to the extent permitted by the 1940 Act or SEC interpretation. Current staff interpretations limit loans of a Funds securities to one-third of the Funds assets, including any collateral received from the loan, provided that borrowers provide collateral that is maintained in an amount at least equal to the current market value of the securities loaned. The Funds current restrictions are consistent with this limitation. Should the SEC staff modify the requirements governing a Funds ability to loan its securities in the future, under the proposed restriction, each Fund would be able to take advantage of that increased flexibility without requiring further shareholder action. Further, it is not anticipated that the proposed change would affect any Funds securities lending activities in the near term.