IVA Worldwide Fund 2014 Annual Commentary

IVA Worldwide Fund

The IVA Worldwide Fund Class A, at net asset value, returned 8.00% over the one year period ending September 30, 2014 compared to the MSCI All Country World Index (Net)* (the "Index") return of 11.32% over the same period.

Over the period, our equities averaged a gain of 16.7% versus those in the Index gaining 11.4% as we benefited from solid results from our energy and Japanese stocks. Our energy stocks averaged a return of 14.1% versus those in the Index at 8.0%, and added 1.3% to our return led by strong performance from Devon Energy Corp. (DVN) (energy, U.S.). Security selection in health care was also a plus as our stocks averaged a return of 46.6% versus those in the Index at 24.9%, and added 1.4% to our return due to good performance from Astellas Pharma Inc. (TSE:4503) (health care, Japan). Our technology stocks underperformed those in the Index, averaging a gain of 19.2% versus 23.0%, respectively. Despite underperforming on a relative basis, returns from Microsoft Corp. (MSFT) (technology, U.S.) and Spansion Inc. Class 'A' (technology, U.S.) helped this sector contribute 1.9% to our return. There were no sectors that detracted from our return on an absolute basis.

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Our stocks in the U.S. added the most to our return, 5.0%, as they averaged a gain of 21.0% versus those in the Index at 18.5% with Berkshire Hathaway Inc. (BRK.A)(BRK.B) Classes 'A' and 'B' (holding company, U.S.) being one of the top U.S. stock's contributing to our return. Our Japanese stocks also performed well on an absolute and relative basis, averaging a return of 23.6% versus those in the Index at 0.6%, respectively, and added 1.8% to our return in U.S. dollars. Conversely, a few countries marginally detracted from our return this period. Our stocks in Hong Kong, South Africa, China and Singapore collectively detracted almost -0.1% from our return.

The top five individual detractors from return this period included: gold bullion (gold), Samsung Electronics Co., Ltd. (technology, South Korea), News Corp. Classes 'A' and 'B' (consumer discretionary, U.S.), Yahoo Japan Corp. (technology, Japan), and Expeditors International of Washington, Inc. (industrials, U.S.).

Our corporate bonds averaged a gain of 2.9% over the period, while our sovereign bonds averaged a return of -1.5%. Collectively, fixed income added 0.2% to our return.

Additionally, our forward foreign currency contracts, which are used to hedge currency risk, added about 0.9% to our return this period as our Fund benefited from the appreciation of the U.S. dollar, thereby prompting our flexible currency hedging policy to pay off.

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