Pear Tree Polaris Foreign Value Small Cap Fund

The PEAR TREE POLARIS FOREIGN VALUE SMALL CAP FUND provides investors with the opportunity to participate in the growth potential of small cap companies located in foreign countries. A small cap company will generally be a company with a market capitalization from $50 million to $5 billion.

Investment Process

The Fund will generally own 50 to 100 stocks of non-U.S. companies located in Europe, Australia and the Far East. In addition, the Fund may also invest in companies located 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 foreign markets, reduces the likelihood that negative 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 over 30,000 companies down to 400 to 600 for further consideration. 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*
10.40%

NAV*
$16.46

INCEPTION
May 1, 2008

MINIMUM INVESTMENT
$2,500

CUSIP
70472Q609

BENCHMARK
MSCI ACWI ex. US SMALL CAP

NET EXPENSE RATIO(1)
1.43%

GROSS EXPENSE RATIO(2)
1.53%

 

*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)
10.40% -2.31% 39.36% 7.87% 8.99% 10.05% 7.09% 1.53% 1.43%

Calendar Year

2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
6.36% 20.24% -19.09% 33.06% 2.46% -1.49% 6.54% 24.95% 27.11% -20.02% 20.70%

Portfolio

as of September 30, 2021

Top Ten Holdings

Percentage Of Total Net Assets 20.00%
Greencore Group plc 2.30%
Glanbia plc 2.10%
Prima Meat Packers Limited 2.10%
goeasy Ltd. 2.10%
C & C Group plc 2.10%
Equatorial Energia S.A. 2.00%
Jumbo S.A. 1.90%
LIC Housing Finance Limited 1.80%
Huaku Development Co., Limited 1.80%
Elite Material Co., Limited 1.80%

Sector Weightings

Percentage Of Total Net Assets 100.0%
Financials 23.70%
Industrials 19.80%
Consumer Discretionary 15.50%
Information Technology 12.70%
Consumer Staples 11.20%
Materials 6.20%
Utilities 3.60%
Real Estate 3.40%
Communication Services 0.30%
CASH + other assets (net) 3.60%

Top Ten Country Allocations

Percentage Of Total Net Assets 73.40%
Japan 13.90%
Taiwan 13.00%
United Kingdom 12.50%
Ireland 7.20%
Norway 5.50%
Canada 5.30%
South Korea 4.90%
Sweden 4.40%
Singapore 3.40%
Denmark 3.30%

Portfolio Characteristics

Net Assets $1,253,913,748
Number Of Holdings 74
Percentage in Top 10 Holdings 20.00%
Weighted Average Market Cap (Mil) $2,095.70
Annual Turnover 35.00%

Portfolio Allocation

Percentage of Portfolio 100.0%
Equity Securities 96.40%
Cash and Other Assets (Net) 3.60%

FOR THE QUARTER ENDED SEPTEMBER 30, 2021

The Pear Tree Polaris Foreign Value Small Cap Fund’s Ordinary Shares (the “Fund”) underperformed its benchmark, the MSCI ACWI ex USA Small Cap Index (the “Index”). The Fund had a return of (2.31%) at net asset value compared to 0.09% for the Index.

Market Conditions and Investment Strategies

During the quarter, the Fund saw positive contributions from Financials, Real Estate, Health Care and Consumer Staples. However, these gains were eroded by losses among Industrials, Materials and Consumer Discretionary sector holdings. Outperformance in overweight countries including Belgium, Norway, Indonesia and Taiwan partially offset declines from South Korea, U.K., Hong Kong and the Netherlands. Foreign exchange was the largest deterrent to portfolio performance, as the U.S. dollar depreciated against almost all currencies to which the Fund has exposure.

Four of the top 10 holdings came from the Financial Sector, namely Goeasy Ltd, OSB Group, Ringkjoebing Landbobank and Moneta Money Bank. Goeasy, the Canadian alternative financial services company, posted solid quarterly results with lower credit costs. With new funding secured at much lower interest rates, Goeasy will expand its consumer business. One of the most popular Danish banks, Ringkjoebing announced robust earnings and continued their share buyback program. All three Real Estate Fund holdings gained ground, with Pakuwon Jati benefiting from the post-pandemic reopening of the Indonesian economy.

Among other individual standouts was D’Ieteren Group, the Belgian automobile distribution and vehicle glass company, which announced a commercial vehicle parts acquisition. Additionally, the second-largest shareholder of Belron (a division of D’Ieteren) sold a minority stake to three private equity funds; the premium priced deal values Belron at an equity value of $19.8 billion, implying that D’Ieteren’s Belron stake is valued at $9.9 billion whereas D’Ieteren’s total equity market capitalization is $9.0 billion. Greencore Group offered an improved trading update, with growth in food-to-go and convenience categories, new business wins and late-stage development of an eco-friendly sandwich skillet.

Ongoing supply/demand challenges negatively impacted a number of fund holdings. In Consumer Discretionary, Halfords Group and Fila Holdings both pointed to delayed COVID-19 recovery, constrained production, raw material inflation and higher freight costs. The same held true for IT companies like Vtech Holdings. Although the company reported strong quarterly results and a solid order book, Vtech stated that a shortage of electronic components, higher materials prices and shipping costs will impact the company’s bottom line in 2022.

Portfolio Changes

This was a busy quarter for portfolio changes with eight sales, most of which reached valuation targets. UDG Healthcare and Fjord1 were sold as they became acquisition targets. Ratch Group was exited on questionable capital allocation decisions that strayed from core utility services. Cash from sales was redeployed to existing holdings, as well as three new buys: Sankyu Inc., a Japanese engineering services company specializing in plant maintenance for the steel, petrochemical, oil refining and electricity industries; AEM Holdings, a Singapore-based manufacturer of semiconductor test handlers for customers including Intel; and Tisco Financial, a Thai bank specializing in auto title loans.

Outlook

In early 2020, we increased the number of holdings in our portfolio as COVID-19 induced volatility provided attractive entry points to fundamentally strong, but previously overpriced, companies. As many of these companies recovered, we sold at a profit and gradually began reducing the number of holdings to traditional norms. This past quarter was no exception. Our research screens are ripe with opportunities; we will continue our current buy/sell execution while paring down our portfolio. We expect this strategy will enhance the valuation, risk profile and ultimately performance of the Fund.

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.