IVA International Fund 2014 Annual Commentary

IVA International Fund (Trades, Portfolio)

The IVA International Fund (Trades, Portfolio) Class A, at net asset value, returned 7.05% over the one year period ending September 30, 2014 compared to the MSCI All Country World (ex-U.S.) Index (Net)* (the "Index") return of 4.77% over the same period.

Over the period, our equities averaged a gain of 12.5% versus those in the Index averaging a return of 4.9% as we benefited from strong stock picking within consumer discretionary, Japan, and France. Our consumer discretionary stocks averaged a return of 8.7% versus those in the Index down -0.7%, and they contributed 1.2% to our return, led by good performance from Clear Media Ltd. (HKSE:00100) (consumer discretionary, China) and Hi-Lex Corp. (consumer discretionary, Japan). Security selection in health care was also a plus as our stocks averaged a gain of 40.9% versus 20.4%, respectively, and added 2.0% to our return due to a solid return from Astellas Pharma Inc. (TSE:4503) (health care, Japan). Additionally, the fund's holdings in the consumer staples sector were also key contributors, collectively adding 1.2% to our return. Conversely, select holdings within technology led to underperformance versus the Index, in particular, Samsung Electronics Co., Ltd. (technology, South Korea) and Yahoo Japan Corp. (TSE:4689) (technology, Japan). Our technology stocks averaged a return of -2.9% versus those in the Index up 12.2%, and detracted -0.2% from our return. This was the only sector to detract from our return.

By country, our stocks in Japan added the most to our return, 3.1% in U.S. dollars, as they averaged a gain of 19.2% versus those in the Index at 0.6%, helped by strong performance from Miura Co., Ltd. (TSE:6005) (industrials, Japan), which was one of our top five individual contributors to return. Furthermore, the Fund's holdings and overweight positioning to France benefited our return this period. Our stocks in France averaged a return of 12.0% versus those in the Index at ! 1.7%, and added 2.0% to our return in U.S. dollars led by good performance from Fimalac SA (XPAR:FIM) (financials, France). On the other hand, the U.S. detracted about -0.2% from our return due to poor performance from News Corp. Classes 'A' and 'B' (consumer discretionary U.S.). Additionally, South Africa detracted -0.02% from our return.

Other top individual detractors from return include: gold bullion (gold) an