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 35 years of investment experience to the Fund.

Fund Overview

YTD RETURN*
5.15%

NAV*
$26.97

INCEPTION
August 3, 1992

MINIMUM INVESTMENT
$2,500

CUSIP
70472Q401

BENCHMARK
Russell 2000

NET EXPENSE RATIO(1)
1.53%

GROSS EXPENSE RATIO(2)
1.53%

 

*as of 7/12/2024

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 7/12/2024
Quarterly
As Of 3/31/2024
1 Year
As Of 3/31/2024
3 Years
As Of 3/31/2024
5 Years
As Of 3/31/2024
10 Years
As Of 3/31/2024
Since Inception As Of
3/31/2024
Total Gross Expense Ratio(1) Total Net Expense Ratio(2)
5.15% 7.06% 21.12% 6.38% 8.46% 6.16% 9.20% 1.53% 1.53%

Calendar Year

2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
12.84% -5.10% 24.23% -4.78% 23.50% -10.88% 6.42% 20.88% -1.48% -6.81% 40.21%

Portfolio

as of March 31, 2024

Top Ten Holdings

Percentage Of Total Net Assets 28.00
Barrett Business Services, Inc. 3.30%
OFG Bancorp 3.10%
Graphic Packaging Holding Co. 3.00%
South Plains Financial, Inc. 2.80%
Cabot Corporation 2.70%
International Bancshares Corporation 2.70%
Hercules Capital, Inc. 2.60%
Ingredion Incorporated 2.60%
MKS Instruments, Inc. 2.60%
Eagle Materials Inc. 2.60%

Sector Weightings

Percentage Of Total Net Assets 100.00%
Industrials 35.60%
Financials 22.50%
Materials 10.50%
Energy 7.60%
Information Technolgy 5.90%
Consumer Discretionary 5.60%
Health Care 5.30%
Consumer Staples 2.60%
Real Estate 1.30%
CASH + other assets (net) 3.10%

Top Ten Country Allocations

Percentage Of Total Net Assets 100.00%
United States 88.50%
Puerto Rico 5.30%
Canada 3.10%
CASH + other assets (net) 3.10%

Portfolio Characteristics

Net Assets $88,131,787
Number Of Holdings 53
Percentage in Top 10 Holdings 28
Weighted Average Market Cap (Mil) $5,445.79
Annual Turnover 30.00%

Portfolio Allocation

Percentage of Portfolio 100.00%
Equity Securities 96.9
Cash and Other Assets (Net) 3.1

For the Quarter ended March 31, 2024

The Pear Tree Polaris Small Cap Fund’s Ordinary Shares (the “Fund”) outperformed its benchmark, the Russell 2000 Total Return Index (the “Index”). The Fund had a return of 7.06% at net asset value compared to 5.18% for the Index.

Market Conditions and Investment Strategies

Industrials drove outperformance for the quarter, led by gains at Allison Transmission. Strength in North American on-highway and defense divisions, coupled with price increases, drove Allison’s net sales higher, which more than offset elevated material and manufacturing costs. DNOW Inc. posted record performance in 2023, with its U.S. Process Solutions delivering double-digit revenue growth in each of its four core businesses. Air Lease Corp. cited strong demand for aircraft leases as the shortage of airplanes persists due to Boeing’s manufacturing problems.

Material holdings added to gains, with Eagle Materials reporting record quarterly revenues and net earnings. The company cited positive industry supply-demand imbalances and continued infrastructure and housing development. Graphic Packaging unveiled their growth targets for the coming year, while discussing product innovation and value-add pricing, as opposed to building another greenfield facility. These strategic decisions were lauded by the market. The “electrification of everything”
and a resurgent Chinese economy drove copper demand, but supply side constraints were an equally, if not more important, determinant of pricing. The copper market should remain tight for the next decade benefitting the likes of pure copper player, Lundin Mining.

Footwear manufacturer Crocs, Inc. was up more than 50% on strong earnings and upbeat guidance. The market sees significant upside to Crocs’ story as the Hey Dude acquisition gains traction, international expansion continues, and demand remains strong
for the Crocs brand.

Among the small handful of detractors was Kimball Electronics, which reported a sales decline and walked back guidance for the year. Medical division results were adversely impacted by a major customer who is remediating an FDA recall unrelated to Kimball’s work. Standard Motor Products had flat annual results, reporting lower sales in the aftermarket business offset by solid performance in engineered solutions. In particular, vehicle control sales declined due to customer point-of-sale weakness.  Among small-cap banks, South Plains Financial reported fourth quarter results, with lower net income and EPS; however full year numbers beat 2022 results, while the bank completed an aggressive stock repurchase program. Colony Bancorp reported lackluster earnings, citing softer net interest margins.

Portfolio Changes

During the quarter, Berry Global Group was sold due to a shift in fundamentals. Berry may face future cash flow impingement following its health/hygiene division spin-off and combination with Glatfelter Corp. via a Reverse Morris Trust transaction.  Cambridge Bancorp is being acquired by Eastern Bankshares in an all-stock deal with a 24% premium; we took the opportunity to sell. There were no new buys.

Outlook

The portfolio’s balanced mix of defensive and cyclical holdings helped performance, offering strong downside risk protection during periods of macro-economic volatility, while capitalizing on market upswings. The strategy proved fruitful this quarter, as the Fund outperformed by nearly 200 basis points. Short-term volatility may persist as the Fed navigates elevated inflation metrics with timing of rate cuts. When rates do start to come down, Cyclicals will likely benefit. As such, we are looking for opportunities in stocks that have been hit particularly hard over the past year.

Distributions

Dividend Short-Term Capital Gain Long-Term Capital Gain
2023 $0.2212 $0.0000 $0.0000
2022 $0.1044 $0.0000 $2.2043
2021 $0.1543 $0.6423 $1.4143

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, 2024 for all funds except Pear Tree Polaris International Opportunities Fund whose net expense ratio will expire on September 30, 2024.

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.