Pear Tree Essex Environmental Opportunities Fund

The PEAR TREE ESSEX ENVIRONMENTAL OPPORTUNITIES FUND operates at the nexus of environment and finance, investing in companies that enable greater natural resource and energy efficiency.

Investment Process

The Fund invests in companies the management team believes solve environmental and related social challenges, seeking to provide attractive financial and social impact returns. The Fund is fossil fuel free, investing in public equities will full alignment to the U.N. Sustainable Development Goals. Investments are made across nine environmental themes, providing clean technology diversification in companies with revenue and earnings growth greater than the broad equity market, in companies exhibiting effective capital allocation and strong profitability.

Buy and Sell Discipline

The Fund is concentrated, typically owning 35-45 equity holdings, in growth companies which provide solutions to the world's environmental challenges. Stock selection is based on rigorous fundamental company analysis and a valuation process that is informed by the portfolio management team’s thematic industry assessment. The Fund is generally lower turnover, with half from existing positions. Position sizes average 2-3%, and are diversified across themes, geographies and industries. Risk management and assessment is integral to portfolio construction, with position sizes determined by industry maturity, liquidity, individual security volatility and the management of price and profit expectations.

Portfolio Management

The Fund is managed by William Page and Robert Uek of Essex Investment Management, LLC. Essex is an independent, employee-owned firm with over a 40-year history of growth equity investing. Page and Uek have almost 60 years of combined institutional investment experience. The portfolio management team has been managing clean technology portfolios for over 16 years, with the first listed impact strategy in North America.

Fund Overview

YTD RETURN*
-25.83%

NAV*
$6.23

INCEPTION
September 1, 2021

MINIMUM INVESTMENT
$100,000

CUSIP
70472Q690

BENCHMARK
MSCI WORLD

NET EXPENSE RATIO(1)
0.95%

GROSS EXPENSE RATIO(2)
2.08%

 

*as of 9/28/2022

Investment Professionals

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Sub-Advisor

Essex Investment Management Co., LLC

Essex Investment Management Company, LLC. follows an investment philosophy based on the early identification of growth, wherever growth exists.

Portfolio Managers

Robert Uek, CFA
William Page

Performance

YTD
As Of 9/28/2022
Quarterly
As Of 6/30/2022
1 Year
As Of 6/30/2022
3 Years
As Of 6/30/2022
5 Years
As Of 6/30/2022
10 Years
As Of 6/30/2022
Since Inception As Of
6/30/2022
Total Gross Expense Ratio(1) Total Net Expense Ratio(2)
-25.83% -22.12% N/A N/A N/A N/A N/A 2.08% 0.95%

Calendar Year

2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
-4.29% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Portfolio

as of June 30, 2022

Top Ten Holdings

Percentage Of Total Net Assets 35.10%
SolarEdge Technologies, Inc. 4.50%
Energy Recovery, Inc. 4.40%
Enphase Energy, Inc. 4.20%
Hannon Armstrong Sustainable Infrastructure Capital, Inc. 3.40%
Badger Meter, Inc. 3.30%
Generac Holdings Inc. 3.20%
SunOpta Inc. 3.20%
Watts Water Technologies, Inc. 3.00%
Kingspan Group plc 3.00%
Cognex Corporation 2.90%

Sector Weightings

Percentage Of Total Net Assets 100.0%
Information Technology 34.30%
Industrials 30.30%
Materials 9.20%
Financials 3.40%
Consumer Staples 3.20%
Utilities 2.70%
Consumer Discretionary 1.90%
Cash and Other Assets (Net) 15.00%

Top Ten Country Allocations

Percentage Of Total Net Assets 100.00%
United States 55.10%
Israel 6.70%
Germany 6.50%
Ireland 4.80%
Japan 4.40%
Switzerland 2.70%
Denmark 2.70%
Sweden 2.10%
Cash and Other Assets (Net) 15.00%

Portfolio Characteristics

Net Assets $64,631,936
Number Of Holdings 33
Percentage in Top 10 Holdings 35.10%
Weighted Average Market Cap (Mil) $11,642.80
Annual Turnover 9.00%

Portfolio Allocation

Percentage of Portfolio 100.0%
Equity Securities 85.00%%
Cash and Other Assets (Net) 15.00%%

FOR THE QUARTER ENDED JUNE 30, 2022

The Pear Tree Essex Environmental Opportunities Fund’s Ordinary Shares (the “Fund”) underperformed its benchmark, MSCI World Index (the “Index”). The Fund achieved a return of (22.07%) at net asset value compared to (16.05%) for the Index.¹

Market Conditions and Investment Strategies

The first half market correction of 2022 can now be measured as the most extreme in over fifty years. The negative capital
markets environment has been driven by the profound spike of inflation, the compound result of years of accommodative Federal
Reserve policy coupled with the disruptions of the pandemic and the Ukrainian crisis. Since 2008, all facets of our economy have
had access to cheap capital, from mortgages to commercial bank financing. Given the rapid rise in interest rates and resulting
equity market correction, we are now, in the words of Warren Buffett, seeing who swims naked as the tide goes out. The pandemic
has exacerbated inflation as nations compete for all inputs to economic growth, from labor to materials such as commodities and
semiconductors. On shoring plans abound, the result of global supply chain disruption, trade tariff disputes, and commodity price
pressures. For example, as automotive manufacturers move production to electric cars, all are forming joint ventures not only with
battery manufacturers but are also linking collaborative efforts with each other to ensure access to materials and technology.
At the end of the quarter, inflationary pressures and resultant Fed action did result in some declines in consumer sentiment and
demand, as well as price declines for commodities from copper to wheat. Whether this signal points to full recession or temporary
slowdown remains to be seen. We believe that this is a cycle where above market growth will be had with differentiated business
models such as we assess for our GEOS holdings.

For second quarter transactions, we initiated a position in Itron, the smart meter company with primary exposure to optimizing our
electrical grid, while also serving water and natural gas utilities. We sold Itron from the portfolio last October, yet we repurchased
a 2.0% position in early May as the stock has fallen meaningfully from where we sold it and the company is finally executing on
electrical grid services offerings, which enable higher margins, while orders are expanding as utilities seek more efficient and
reliable ways to deliver electricity. We also added a new position with NIBE Industrier, the Stockholm-based heat pump provider.
The heat pump industry is positioned we believe for significant growth, with primary initial catalysts in the EU, backed by significant
broad EU and specific country mandates for decarbonization and enhanced electrification. NIBE has primary exposure to the EU,
the Nordics and Asia, yet is expanding in North America. Currently, Germany and the U.K. are its fastest growing markets. Cognex,
a long-standing GEOS holding provides vision systems for industrial robotics and manufacturing equipment, enhancing worker
safety, while enabling greater productivity. Cognex shares have underperformed amidst a strong case-for their solutions, leading
to our increasing the weight to 3.5% early in May. Kornit Digital also enables much greater productivity, while limiting water use
with no contaminants for the garment industry. Kornit offers advanced digital screen-printing technology, a disruptive offering for
the fashion industry whose styles can change on a dime. We increased our weight in Kornit to 2.5% mid-quarter. For the source of
funds, Iteris was sold early in May, given low share liquidity, and Array Technologies was sold given our concerns with profitability
for utility scale solar. Late in May, we trimmed our lithium positions, Albemarle and Livent given very strong recent performance.
In June, we sold our position in Umicore, the battery cathode company given concerns about continued declines in profitability and
earnings growth.

Attribution (Second Quarter 2022)
Top contributors:

SunOpta (STKL): (+55.0%) is in the GEOS low carbon commerce theme and is a leading provider of plant-based milk for private
label distribution. Oat based milk is projected to grow at 50% to 2026, the greatest rate among alternative milk products as
consumers embrace health and environmental benefits.

NIBE Industrier AB (NIBEB SS): (+0.7%) is a new position added late in the quarter, providing heat pumps globally for residential
and commercial use. NIBE is based in Sweden, with a 70-year history making heat pumps and heating elements. Heat pumps use
vapor compression to transfer heat through a heat exchanger, providing heat in the colder months, and, when reversed, cold air for
the cooling season. We believe the heat pump industry is positioned for significant growth, with primary initial catalysts in the E.U.,
backed by broad country mandates for decarbonization and enhanced electrification.

SMA Solar Technology (S92 GR): (-2.7%) is in the GEOS power technology theme, providing solar power and battery inverters,
electric vehicle (EV) chargers, and software management systems for residential and commercial distributed energy systems. SMA
is based in Germany and is we believe well positioned for the EU’s aggressive decade+ goals for solar systems.

Enphase Energy (ENPH): (-3.2%) is also providing power technology solutions to the solar and battery storage markets, resting in
the GEOS power technology theme. Enphase generated over 80% sales growth last year, and we believe can post near 35% growth
in 2022. Enphase is experiencing strong end market demand for their solutions amidst edge of the network applications such as
stationary power storage and bidirectional electric vehicle (EV) charging.

Kurita Water Industries (6370 JP): (-3.5%) is a Tokyo-based water management company, residing in the GEOS water theme.
Kurita’s solutions allow for 100% of an industrial plant’s wastewater to be completely recycled. For 2021, Kurita solutions saved
their customer base almost 97 million cubic meters of water.

Underperformers:

Aspen Aerogels (ASPN): (-71.4%) is in the GEOS clean tech & efficiency theme, producing highly efficient and safe insulating foam
and gel products for industrial applications. The materials have been used in the energy industry, and ASPN is now focused on
the electric vehicle and power storage markets, which we forecast will lead to a doubling in revenue by 2023. Aspen attempted a
capital raise late in the quarter, which was retracted given current market conditions. While Aspen will have a financing overhang
in the near term, we believe capital raising will be better received as market fundamentals continue for the legacy energy business,
and new orders for the automotive segment are announced.

Amyris (AMRS): (-57.6%) rests in the GEOS low carbon commerce theme, providing healthy, plant-based personal care products
through a proprietary synthetic biology platform. Their cane-based squalene ingredient is used for skin care, negating the use of
olives or shark livers, the other ingredient sources for squalene. Sugar cane requires 600 times less land than olive groves, for the
same product output.

Kornit Digital (KRNT): (-55.6%) is in the GEOS clean tech & efficiency theme, providing automated production equipment to the
garment industry. Kornit’s expanding portfolio spans from digital screen printing to non-toxic ink consumables. Kornit systems use
95% less water and energy than traditional garment printing technologies – a key environmental success given garment production
is responsible for an estimated 20% of global wastewater according to the United Nations.

Wolfspeed (WOLF): (-44.3%) resides in the GEOS power technology theme, providing silicon carbide and gallium nitride (GaN)
solutions for high power applications, from stationary power storage to EV and wind turbines. Silicon carbide provides very highpower density, and can operate in harsh environments, providing incredible reliability and efficiency.

MP Materials (MP): (-44.1%) is in the GEOS clean tech and efficiency theme, producing rare earth materials in North America. As
the world moves to electrification in the form of vehicles and wind turbines, more magnet technology will be needed at great scale.
In the throes of increased global trade disputes, U.S. domestic rare earth supplies are increasingly recognized as of paramount
importance as we seek to lead the new energy revolution. MP’s production process recycles over 95% of water, is fully closed loop
and zero discharge, in the most advanced rare earth processing facility in the world.

Social Impact Management Update

In recent months, the Securities and Exchange Commission (“SEC”) proposed a series of ESG-related rules that are relevant to
GEOS. The first rule focuses on climate-related financial disclosures from public companies. The proposed rule aims to provide
investors with standardized and comparable climate-related information to use in investment analysis and proxy voting decisions. If
the proposal become a rule, companies will be required to disclose information on topics such as climate governance, quantitative
greenhouse gas emissions, actual and potential physical risks (physical climate impacts on company operations like flooding,
drought, wildfires), transition risks (risks associated with low-carbon transition such as lost revenue, stranded assets, regulation),
and climate-related business opportunities.

Essex submitted a comment letter to the SEC expressing our support for the rule, along with recommendations for improvement.
Our most significant recommendation is to change the requirement pertaining to disclosure of scope 3 emissions, or emissions
not directly controlled by a company in their value chain. Scope 3 emissions are less commonly disclosed by companies due to
immature calculation methodologies, but they frequently constitute more than 80% of a company’s total emissions footprint. It
is unclear whether the final rule will be expanded to mandate scope 3 disclosures, especially since the SEC has faced significant
pushback from critics who question the SEC’s authority to mandate climate-related financial disclosures.

The SEC also proposed a rule that would require greater ESG disclosure requirements for registered funds. Currently, there is
considerable confusion among investors as to how asset managers are utilizing ESG factors in their investment decisions. The
proposed rule aims to reduce confusion and provide greater market transparency by mandating that asset managers provide
certain disclosures about how ESG factors are used in the investment process. One key aspect of the rule is the SEC’s grouping
of different ESG funds: ESG Integration, ESG Focused, and ESG Impact. Disclosure requirements vary based on how a fund is
classified, with more strenuous requirements for ESG Impact funds versus ESG Integration funds.

Ultimately, we believe the proposed rule will help reduce market confusion about ESG investing and reduce the risk of
greenwashing. There is currently a misconception among investors that all ESG funds follow the same approach to ESG, when in
fact they may differ substantially (negative/positive screening, third-party ratings, integration, thematic, etc.). This misconception
has partially fueled the recent backlash against ESG investing, with investors calling out ESG funds for holding oil and gas
companies or investing in Russian companies prior to the invasion of Ukraine. By requiring asset managers to describe how ESG
factors are used in the investment process, prospective investors will have a better understanding of how ESG factors impact
portfolio management and security selection. We believe that GEOS is well differentiated amidst these headlines and proposed
changes, given our long-standing focus on environmental solutions, and our consistently executed investment objective, philosophy
and process.

On the company side, GEOS water holding Watts Water Technologies released their 2021 Sustainability Report in June. Watts
stated that “more than 93% of revenue is derived from the sale of “clean tech” products and services, which are designed to
help customers achieve their sustainability goals.” In addition, Watts achieved significant progress throughout the year on their
operational ESG performance. The company appointed their first Chief Sustainability Officer and completed their first ESG
materiality assessment to guide the company’s ESG strategy. Finally, Watts outlined their diversity, equity, and inclusion roadmap to
increase representation of female and racially diverse groups. The ESG progress accomplished by Watts in 2021 demonstrates the
company’s commitment to material ESG issues and complements Watts’ strong focus on sustainable water solutions.

Outlook

We are amidst unprecedented times, and it is difficult to compare this period to any point in the past. The inflationary spike this
year was more severe than the 1970s and was only matched by the World Wars. This may be apropos, given the pandemic and
Ukrainian crisis. Both events have caused massive dislocation of resources – the very engines for economic growth and social
stability. Energy and food supplies are completely disrupted, forcing adjustments across the globe to reconfigure systems on the
fly. Aside from resource shocks, global economies are in flux given central bank responses to this inflation and the possibilities
for resultant recessions. The degree of our Federal Reserve’s late and forceful response to inflation is also unprecedented and led
to very sudden drops in consumer sentiment and commodity prices at the end of the quarter. We are particularly taken with the
degrees of volatility our markets are experiencing, from commodity prices to interest rates and near-term sentiment measures such
as purchasing manager indices. The volatility is the result of the concurrent and varying economic signals, leading to waxing and
waning sentiment on the degree the Fed’s action will have on our economy. As well, global economies are still resetting from the
pandemic, and issues such as supply chain disruption and labor woes compound the complexities. All the while, climate change is
exacerbating pressures on energy and food, with severe heat and drought limiting electricity and food output in every global region.

There is a strong probability that global central bank actions will slow inflation, suppressing economic growth. We believe capital
will be scarcer, placing emphasis on differentiated business models and execution. Key considerations in our GEOS investment
process are the business stability of a company, sources of growth capital and returns on investment. Our holdings are generally
profitable or are on the path to profitability. Most importantly, our very investment objective addresses these global problems, from
inflation to energy and food. Lately, we believe the equity markets wax and wane, solely focused on near-term data. We believe
this is an opportunistic time as there is a disconnect between stock prices and business fundamentals, the degree to which is
unprecedented.

Distributions

Dividend Short-Term Capital Gain Long-Term Capital Gain
2021 $0.0000 $0.2301 $0.9761
2020 N/A N/A N/A
2019 N/A N/A N/A

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost.

Before investing, carefully consider the Fund's investment objectives, risks, charges and expenses. For this and other information obtain the Fund's prospectus or, if available, the Fund's summary prospectus by calling (800) 326-2151 or by clicking the Literature and Forms section of this website to view or download a prospectus or, if available, a summary prospectus. Please read the prospectus carefully before you invest or send money.

1, 3, 5, and 10Yr performance numbers quoted are average annual total returns. Performance numbers quoted under one year are cumulative.

Polaris Capital began subadvising the Pear Tree Small Cap Fund on January 1, 2015.

Axiom International Investors began subadvising the Pear Tree Axiom Emerging Markets World Equity Fund December 8, 2018.

The Pear Tree Essex Environment Opportunities Fund (the “Fund”) is the successor to the investment performance of the Essex Environmental Opportunities Fund (“Predecessor Fund”) as a result of the reorganization of the Predecessor Fund into the Environmental Opportunities Fund on September 1, 2021. Performance information shown prior to the close of business on August 31, 2021 is that of the Predecessor Fund’s for the Fund’s Ordinary Shares and Institutional Shares.

Expense Ratios Disclosure

1. Expense Ratio (Gross)
The gross expense ratio is the total operating expense from the class of shares of the fund stated as a percent of the fund's total net assets as disclosed in the fund’s most recent prospectus before waivers or reimbursements.

2. Expense Ratio (Net)
Net Expense Ratio is the total annual operating expense from the class of shares of the funds stated as a percent of the fund's total net assets as disclosed in the fund’s most recent prospectus after any fee waiver and/or expense reimbursements that will reduce any fund operating expenses until July 31, 2023.

Risk Disclosure

Pear Tree Polaris Foreign Value
Pear Tree Polaris Foreign Value Small Cap
Pear Tree Polaris International Opportunities
Pear Tree Polaris Small Cap
Pear Tree Axiom Emerging Markets World Equity
Pear Tree Essex Environmental Opportunities

Foreign and Emerging Market Risk. Foreign markets, particularly emerging markets, can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market, or economic developments and can perform differently from the U.S. market. Emerging markets can be subject to greater social, economic, regulatory, and political uncertainties and can be extremely volatile.

Small Cap Investing. The value of securities of smaller, less well-known issuers can perform differently from the market as a whole and other types of stocks and can be more volatile than that of larger issuers.