Pear Tree Polaris Foreign Value Fund

The PEAR TREE POLARIS FOREIGN VALUE FUND provides investors with the opportunity to participate in the growth potential of companies predominantly located in developed foreign countries.

Investment Process

The Fund will generally own stocks of 50 to 125 non-U.S. companies located in the countries comprising the Morgan Stanley Europe, Australasia and Far East (EAFE) Index. In addition, the Fund may also invest a portion of its assets in emerging markets. The diversification within the Fund, coupled with the fact that the operation of the Fund’s investment model will generally lead the Fund to be invested in 15 or more countries, reduces the likelihood that performance of a single country will significantly impact the Fund’s return.

Buy and Sell Discipline

The investment process for the Fund combines both quantitative and fundamental techniques. The Fund’s approach is primarily “bottom up,” searching for individual stocks with strong, undervalued cash flows, regardless of location or industry. The Fund uses proprietary models to rank countries and industries on the basis of value and to narrow a universe of 40,000 companies down to 300 to 500 for further considerations. The Fund supplements the screening process by performing in-depth financial and fundamental analysis.

Portfolio Management

The Fund is managed by Polaris Capital Management, LLC, a Boston, Massachusetts money manager that specializes in the management of global, international, and domestic equity portfolios. Polaris brings over 35 years of investment experience to the Fund.

Fund Overview

YTD RETURN*
3.76%

NAV*
$23.16

INCEPTION
December 18, 1998

MINIMUM INVESTMENT
$1,000,000

CUSIP
70472Q807

BENCHMARK
MSCI EAFE

NET EXPENSE RATIO(1)
1.03%

GROSS EXPENSE RATIO(2)
1.25%

 

*as of 11/29/2021

Investment Professionals

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Sub-Advisor

Polaris Capital Management, LLC

Polaris is a leading global value equity manager, serving the investment needs of institutions and individuals since 1995. At Polaris Capital Management, we have a disciplined approach to investing in undervalued companies around the world, regardless of country, industry or market capitalization.

Portfolio Managers

Bernard R. Horn, Jr.
Sumanta Biswas, CFA
Bin Xiao, CFA
Jason Crawshaw

Performance

YTD
As Of 11/29/2021
Quarterly
As Of 09/30/2021
1 Year
As Of 09/30/2021
3 Years
As Of 09/30/2021
5 Years
As Of 09/30/2021
10 Years
As Of 09/30/2021
Since Inception As Of
09/30/2021
Total Gross Expense Ratio(1) Total Net Expense Ratio(2)
3.76% -2.11% 37.21% 4.34% 7.58% 8.87% 7.66% 1.25% 1.03%

Calendar Year

2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
3.10% 18.30% -12.93% 25.69% 4.78% -0.37% -5.00% 27.92% 27.24% -15.35% 20.34%

Portfolio

as of September 30, 2021

Top Ten Holdings

Percentage Of Total Net Assets 22.10%
Jazz Pharmaceuticals plc 2.80%
LG Electronics Inc. 2.50%
Publicis Groupe 2.40%
Popular, Inc. 2.40%
Methanex Corporation 2.10%
DNB Bank ASA  2.10%
SpareBank 1 SR-Bank ASA 2.00%
Kia Motors Corporation 2.00%
Bellway plc 1.90%
Magna International Inc. 1.90%

Sector Weightings

Percentage Of Total Net Assets 100.0%
Financials 20.70%
Consumer Discretionary 20.60%
Materials 16.70%
Industrials 11.10%
Communication Services 8.90%
Information Technology 8.20%
Consumer Staples 5.10%
Health Care 5.10%
Real Estate 1.50%
Cash and Other Assets (Net) 2.10%

Top Ten Country Allocations

Percentage Of Total Net Assets 79.30%
United Kingdom 16.20%
South Korea 12.80%
Japan 12.80%
Germany 7.90%
Canada 6.50%
France 6.40%
Norway 6.30%
Sweden 4.00%
Ireland 3.90%
Belguim 2.50%

Portfolio Characteristics

Net Assets $4,308,724,424
Number Of Holdings 70
Percentage in Top 10 Holdings 22.10%
Weighted Average Market Cap (Mil) $34,455.50
Annual Turnover 23.00%

Portfolio Allocation

Percentage of Portfolio 100.0%
Equity Securities 97.90%
Cash and Other Assets (Net) 2.10%

FOR THE QUARTER ENDED JUNE 30, 2021

The Pear Tree Polaris Foreign Value Fund’s Ordinary Shares (the “Fund”) underperformed its benchmark, the MSCI EAFE Index (the “Index”). The Fund had a return of (2.19%) at net asset value compared to (0.35%) for the Index.

Market Conditions and Investment Strategies

While markets tilted towards value stocks in September, performance from high-growth oriented companies still dominated the index for the majority of the quarter, led by Information Technology (IT) and Health Care; the portfolio was underweight and underperformed in these sectors. The portfolio outperformed in traditional value sectors, including Financials, Real Estate and Materials, which comprise almost 40% of the portfolio. From a country perspective, strong returns were noted in Japan, Belgium, France and out-of-benchmark regions, including Colombia, Thailand and India. However, this was offset by underperformance in Ireland, South Korea, Switzerland, Austria, Italy and the Nordic region.

Among Financials, Siam Commercial, Sumitomo Mitsui Trust and Bancolombia posted double-digit returns. Siam Commercial Bank was up nearly 18% after the company converted into a holding company, with the bank separated from its fintech subsidiaries. Macroeconomic recovery in Colombia boosted the share price of its dominant banking institution, Bancolombia. Communication, Services was the second largest sector contributor, led by Publicis Groupe SE and KDDI Corporation. Daito Trust Construction Co., the Fund’s sole real estate holding, was up as the company reported strong orders and higher real estate rental housing occupancy.

Substantial gains from Canadian methanol producer, Methanex Corp., counterbalanced losses elsewhere in the Materials sector. Methanol prices rose nearly 10% from last quarter, an outcome of supply/demand constraints. Methanex was a prime beneficiary, even though one of its own plants in New Zealand contributed to the supply shortage. By contrast, HeidelbergCement and Lundin Mining Corp. declined. Lundin reduced guidance for its Candelaria copper-gold mine in Chile.

The largest sector detractor was Consumer Discretionary, where the portfolio was overweight and underperformed. Strong gains from Sony Group Corp. and D’Ieteren Group couldn’t overcome sector decliners including Magna International, Kia Corp. and Hyundai Mobis. Health Care was hampered by Jazz Pharmaceuticals. The Irish company launched Xywav in 2020, and has outperformed estimates for four consecutive quarters. A “product of its own success”, Jazz now faces near-term competition from authorized generics ahead of the slated 2023 timeframe.

Portfolio Changes

The Fund exited Germany’s diversified chemical company, Lanxess AG, and Finnish pulp machinery maker Valmet as each met or exceeded Polaris’ valuation targets. Grupo Aeroportuario Del Centro Norte was also sold to make room for new buys, including LG Electronics, a global leader in home appliances. Other new purchases included: Tisco Financial, a Thai bank specializing in auto title loans; and Alrosa PJSC, a low-cost producer of rough diamonds.

Outlook

We are cautiously optimistic about the global economy, challenges notwithstanding. Ongoing waves of COVID-19 may cause headwinds, but we believe that rising vaccination rates should dull the impact. People are returning to the workforce, which should ease the supply chain bottlenecks currently faced. In the interim, supply/demand constraints will continue to tax companies reliant on raw materials; we expect the winners will be Materials, Industrials, chemicals and oil refiners that can charge higher commodity prices. We believe many companies in our portfolio will be able to leverage this short-term demand.

Distributions

Dividend Short-Term Capital Gain Long-Term Capital Gain
2020 $0.3544 $0.0000 $0.0000
2019 $0.2522 $0.0000 $0.0000
2018 $0.1094 $0.0000 $0.0780

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, 2022 for all funds and share classes except Pear Tree Essex Environmental Opportunities Fund. Fee waivers and/or expense reimbursement for Pear Tree Essex Environmental Opportunities Fund and its share classes are in effect through August 31, 2022.

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.