The Fund will be fully exposed to the fluctuating values of foreign currencies, as there will not be any hedging of foreign currencies 
to the Australian dollar.

The Fund seeks to track the return of the MSCI World ex-Australia Small Cap Index (with net dividends reinvested) in Australian dollars before taking into account fees, expenses, and tax. Vanguard International Small Companies Index Fund Product Disclosure Statement 5. The MSCI World ex-Australia Small Cap Index comprises securities (shares) listed on the exchanges of the world’s major developed economies. 

Benefits of investing in the Vanguard International Small Companies Index Fund

The significant features and benefits of investing in the Fund include:

• Competitive long-term performance - Vanguard's investment approach provides investors with an efficient way to capture long- term market performance.

• Diversification - The Fund provides exposure to a diversified portfolio of securities, which means the Fund is less exposed to the performance fluctuations of individual securities. This moderates the volatility of the portfolio and smooths out' investment returns over time. The Fund provides exposure to a wide selection of available securities in the relevant index, generally holding significantly more securities than most active funds with the same benchmark. From time to time, however, the number of securities in a given index may reduce due to factors such as index rebalancing.

• Tax efficiency - Vanguard's buy and hold strategy means that securities are generally held within a portfolio over a long period of time. If certain securities are held for more than 12 months, any capital gain (if applicable) on the disposal of those securities may be reduced under the capital gains tax discount rules - a tax efficient outcome for eligible investors.

• Low cost investing - The Fund has low ongoing fees as we strive to minimise the costs of managing and operating the Fund. The Fund typically has low portfolio turnover resulting in low trading costs such as brokerage and other transaction costs.

Risk level

High

Investor suitability

Buy and hold investors seeking long-term capital growth, international diversification, and with a higher tolerance for the risks associated with share market volatility.

Buy and hold investors seeking long-term capital growth, international diversification, and with a higher tolerance for the risks associated with share market volatility.

Fund overview

The Fund provides exposure to small companies listed in major developed countries. It offers low-cost access to a broadly diversified range of securities that allows investors to participate in the long-term growth potential typical of the international small companies sector. The Fund is exposed to the fluctuating values of foreign currencies, as there will not be any hedging of foreign currencies to the Australian dollar.

The significant features and benefits of investing with Vanguard include:

• Stability and experience - The Vanguard Group, Inc. established the world's first index mutual fund for individual investors in 1976 and has been a leader in low cost index investing ever since. In Australia, Vanguard leverages the scale, experience and resources of our established global business. Investing in the Fund allows you to access the knowledge and skill of Vanguard as a specialist investment manager.

• Client focus - The Vanguard Group, Inc. was founded on a simple but revolutionary idea - that an investment company should manage the funds it offers in the sole interest of its clients. From rigorous risk management to transparent pricing to plain talk communications, we put our clients' interest first.

• Low costs - Investors can't control the markets, but they can control the costs of investing. Providing low cost investments isn't a pricing strategy for us. It's how we do business. Vanguard's scale also helps to keep costs low.

How we invest your money

Investment strategy

The Fund seeks to track the return of the MSCI World ex-Australia Small Cap Index (with net dividends reinvested) in Australian dollars before taking into account fees, expenses, and tax.

The MSCI World ex-Australia Small Cap Index comprises securities (shares) listed on the exchanges of the world's major developed economies. The Fund will hold most of the securities in the index, allowing for individual security weightings to vary marginally from the index from time to time. The Fund may hold securities that have been removed from or are expected to be included in the index. The Fund will be fully exposed to the fluctuating values of foreign currencies, as there will not be any hedging of foreign currencies to the Australian dollar.

The Fund may engage in securities lending. Securities lending is a common practice where holders of securities make short term loans of shares in return for a fee, to incrementally increase returns to investors.

Strategic asset allocation*

• International small companies: 100%

*This is a targeted strategic asset allocation. In addition, cash or cash-equivalent instruments may be held (directly or through investing in a Vanguard fund) for the purposes of liquidity management and derivatives may be used to manage market exposure.