Pear Tree Polaris Foreign Value Fund

For the Quarter ended December 31, 2024

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 (9.14%) at net asset value compared to (8.07%) for the Index.

Market Conditions and Investment Strategies

Outperformance was noted in Communication Services, Health Care and Materials; Consumer Discretionary, Financials and Information Technology were the main detractors. At the country level, double-digit losses in South Korea, France, U.K. and Switzerland were modestly offset by outperformance in Ireland, Singapore and Belgium. The U.S. dollar hit a two-year high and posted an annual gain against almost all major currencies. The differential was especially prominent against the South Korean Won, Canadian Dollar, Swedish Krona and Norwegian Krone – all geographies where the Fund was heavily weighted.

Consumer spending kept pace in the fourth quarter of 2024, but trended toward holiday spends versus higher-ticket items. LG Electronics was down on disappointing third-quarter earnings, resulting from weaker appliance sales and lower operating profit margins in its auto parts division. France-based Michelin faced headwinds, as consumers traded down to lower priced tires, impacting the business mix. One sector standout was Sony Group Corp., as the company gained more than 10% on the back of solid gaming and music revenues.

Among Financials, German reinsurers underperformed due to elevated insured natural catastrophe losses. South Korea-based Shinhan Financial posted lower-than-expected third quarter results, with net profit falling short of forecasts due to derivative trading losses. However, the sector did have some stellar performers, including United Overseas Bank Limited and flatexDEGIRO.

Information Technology results were skewed by geopolitical concerns in both the U.S. and South Korea. SK Hynix and Samsung Electronics declined on the concerns that the incoming Trump administration may impose semiconductor chip trade restrictions. In December, the President of South Korea declared martial law, where after the opposition party began impeachment proceedings. Investors sold off the South Korean market, which began to rebound in early 2025.

We must also highlight a number of standout performers for the quarter: Irish biopharma company, Jazz Pharmaceuticals, received accelerated FDA approval of Ziihera for HER2 positive biliary tract carcinoma. Among Industrials, Tecnoglass Inc. had strong earnings, pointing to organic growth, geographic expansion and room for margin improvement. In Materials, Canadian methanol producer Methanex Corp. affirmed its fourth quarter outlook, capitalizing on a fully operational Geismar 3, higher sales volumes, and a firmer pricing environment.

Portfolio Changes

During the quarter, we exited Antofagasta, Daito Trust and Bellway PLC at a healthy profit, as all three reached the upper valuation
thresholds. Capital was redeployed to purchase four new holdings: LATAM Airlines Group, Sanofi SA, Chailease Holding and Vipshop Holdings.

Outlook

Inflation, interest rates and tariffs mean 2025 is shaping up to be an interesting year for the global economy. Growth is expected to remain at a stable 3.2%, according to the International Monetary Fund, but may be stymied by the slowdown in interest rate cuts. Why? Inflation pushed up in the U.S., U.K. and Eurozone in November. We do believe the “higher-for-longer” stance cuts the right balance in the economy, which is no longer subjected to the artificially low rates that created liquidity traps and asset bubbles. Such environment may favor value stocks with strong current earnings and cash flows vs. growth stocks with longer-dated earnings.