Pear Tree Polaris Small Cap Fund
The PEAR TREE POLARIS SMALL CAP FUND provides investors with the opportunity to participate in the growth potential of domestic small cap companies. A small cap company will generally be a company with a market capitalization from $250 million to $5 billion.
Investment Process
The Fund generally invests in domestic stocks with a market cap of up to $5 billion at the time of purchase. 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 industry.
Buy and Sell Discipline
The Fund uses proprietary models to rank publicly traded small cap companies on the basis of value and to narrow the universe down to 200 to 400 for further consideration. The Fund supplements the screening process by performing in-depth financial and fundamental analysis. Risk controls are also employed to prevent the Fund from concentrating its investments in any particular industry sector.
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 40 years of investment experience to the Fund.
Fund Overview
YTD RETURN*
2.40%
NAV*
$27.68
INCEPTION
August 3, 1992
MINIMUM INVESTMENT
$2,500
CUSIP
70472Q401
BENCHMARK
Russell 2000
NET EXPENSE RATIO(1)
1.42%
GROSS EXPENSE RATIO(2)
1.42%
*as of 10/31/2025
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.
Bin Xiao, CFA
Jason Crawshaw
Performance
| YTD As Of 10/31/2025 |
Quarterly As Of 9/30/2025 |
1 Year As Of 9/30/2025 |
3 Years As Of 9/30/2025 |
5 Years As Of 9/30/2025 |
10 Years As Of 9/30/2025 |
Since Inception As Of 9/30/2025 |
Total Gross Expense Ratio(1) | Total Net Expense Ratio(2) |
|---|---|---|---|---|---|---|---|---|
| 2.40% | 4.51% | 2.85% | 13.69% | 14.50% | 8.10% | 8.99% | 1.42% | 1.42% |
Calendar Year
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|---|---|---|
| 8.69% | 12.84% | -5.10% | 24.23% | -4.78% | 23.50% | -10.88% | 6.42% | 20.88% | -1.48% | -6.81% |
Portfolio
as of September 30, 2025
Top Ten Holdings
| Percentage Of Total Net Assets | 24.00 |
|---|---|
| CVR Energy, Inc. | 2.60% |
| Laureate Education, Inc. | 2.50% |
| Perdoceo Education Corporation | 2.50% |
| MKS Instruments, Inc. | 2.40% |
| Ingles Markets Inc. | 2.40% |
| Black Hills Corporation | 2.40% |
| EVERTEC Inc. | 2.30% |
| ePlus, Inc. | 2.30% |
| South Plains Financial, Inc. | 2.30% |
| Netstreit Corporation | 2.30% |
Sector Weightings
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| Financials | 25.80% |
| Industrials | 18.60% |
| Information Technology | 10.80% |
| Consumer Discretionary | 9.30% |
| Real Estate | 8.40% |
| Health Care | 6.90% |
| Materials | 6.20% |
| Consumer Staples | 4.30% |
| Energy | 4.20% |
| Utilities | 2.40% |
| CASH + other assets (net) | 3.10% |
Top Ten Country Allocations
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| United States | 89.10% |
| Puerto Rico | 4.50% |
| Bermuda | 2.00% |
| Canada | 1.30% |
| CASH + other assets (net) | 3.10% |
Portfolio Characteristics
| Net Assets | $93,508,878 |
|---|---|
| Number Of Holdings | 55 |
| Percentage in Top 10 Holdings | 24 |
| Weighted Average Market Cap (Mil) | $4,492.45 |
| Annual Turnover | 49.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.00% |
|---|---|
| Equity Securities | 96.9 |
| Cash and Other Assets (Net) | 3.1 |
Commentary
For the Quarter ended September 30, 2025
The Pear Tree Polaris Small Cap Fund’s Ordinary Shares (the “Fund”) underperformed its benchmark, the Russell 2000 Total Return Index (the “Index”). The Fund had a return of 4.51% at net asset value compared to 12.39% for the Index.
Market Conditions and Investment Strategies
U.S. small cap equities advanced as inflation moderated and investors began anticipating further Federal Reserve rate cuts in early 2026. However, the rally was one dimensional, with a handful of high growth, highly volatile speculative stocks (AI-driven) leading the charge. Most other industries failed to keep pace, more reflective of the weakness in the underlying economy. At the sector level, the
Fund outperformed in Consumer Discretionary, Energy, Materials and Utilities; holdings in Information Technology (“IT”) detracted from
absolute portfolio gains.
In Consumer Discretionary, Laureate Education reported record enrollment growth and margin expansion, validating the scalability of its digital learning platform. American Eagle Outfitters rose over 80%, driven by stronger-than-expected quarterly earnings and upbeat guidance. The Buckle Inc. gained on solid sales and continued expense discipline, highlighting management’s focus on profitability and inventory control.
Among other individual standouts diversified across sector: CVR Energy advanced on stronger refining margins and record cash flow, which supported a higher dividend and special distribution. In Materials, Lundin Mining Corp. had solid results with copper/gold production tracking to full year targets. Supernus Pharmaceuticals benefited from strong prescription volume and stable pricing.
In IT, MKS Inc. continued to deliver impressive profitability despite its semiconductor business operating near trough demand. These gains couldn’t offset losses from Progress Software; the company reported decent guidance and strong renewals inconsistent with the steep stock decline. Progress fell with industry peers, as the rapid advancement of AI creates pressure for SaaS companies to adapt.
A handful of Industrials trailed. Covenant Logistics Group fell as freight volumes and spot pricing weakened across the trucking sector. Allison Transmission declined on weaker global heavy-truck demand and inventory adjustments among OEM customers. Carlisle Companies underperformed as non-residential construction activity slowed. Kforce referenced subdued tech hiring and deferred client spending in consulting.
Portfolio Changes
AirLease Corp was sold at a healthy profit when the company accepted an all-cash takeover offer at a 14% premium from a private equity consortium. We exited Regal Rexnord and Tecnoglass, as both reached upper valuation targets. NOV Inc., Science Applications
International and Crocs, Inc. were sold, as each faced business cycle pressures compounded by clouded long-term visibility. We invested in Avnet Inc., the global semiconductor chip and electronics distributor playing into the AI space. Utility company Black Hills Corp. was added as a defensive play; shortly after purchase, Black Hills made a complementary acquisition of NorthWestern Energy. Two Health Care companies were added: ANI Pharmaceuticals, a generics company for rare/orphan diseases and Lantheus Holdings, a leading precision diagnostic company focused on imaging solutions for cancer/cardio disease.
Outlook
Lower interest rates should stimulate the U.S. economy, disproportionally helping small cap companies across many industries – not just AI-related. We are already seeing signs of recovery in the Consumer Discretionary sector and re-rating in financials. We continue to emphasize high-quality small cap businesses with durable competitive advantages, sustainable earnings, strong cash generation, and prudent capital allocation. These attributes help position the portfolio to benefit as fundamentals regain market focus.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2024 | $0.1028 | $0.0000 | $0.7808 |
| 2023 | $0.2212 | $0.0000 | $0.0000 |
| 2022 | $0.1044 | $0.0000 | $2.2043 |
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.
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, 2026 for all funds.
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 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.