Pear Tree Funds N-CSRCertified annual shareholder report (management investment company)

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All Data as of March 31, 2021

(prepared by Polaris Capital Management, LLC, sub-adviser to Pear Tree Polaris Small Cap Fund)

For the fiscal year ended March 31, 2021, 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 78.75% at net asset value compared to 94.85% for the Index.

Cyclical sectors contributed most, with Industrials, Consumer Discretionary, Financials and Information Technology posting double-digit gains. Defensives added nominally, offering some downside during the early stages of the pandemic but rising only incrementally as macro-economic conditions improved.

In Industrials, EXCO Technologies announced resilient results in a strained auto environment, expecting increased demand for automotive components, assemblies, and consumable equipment. Barrett Business Services, the professional employment organization, rose as the U.S. announced additional stimulus, a boon for its small business customer base. Kforce noted continued demand for IT staffing services, as companies invest in digitization projects.

With typical vacation plans scuttled due to COVID-19, many families sought alternative vacations focusing on outdoor living and social distancing. This trend helped RV manufacturer, Winnebago, and small boat motor supplier, Johnson Outdoors. Strong demand and limited inventory were a boon for Asbury Automotive, as competitive discounting abated among auto dealers. While an overweight position in Financials hampered Fund results in late 2019/early 2020, the recovery in the latter half of 2020/early 2021 boosted performance materially. Nearly all holdings had high double-digit returns, with four stocks gaining more than 100% during the fiscal year period.

The only detractor of note was United Insurance Holdings. The Southeast U.S. property/casualty insurer faced two headwinds: rising insurance claims during a record hurricane season and exposure to a Florida market rife with fraudulent homeowners’ insurance claims. The second issue is being actively addressed by state government.

The Fund had higher portfolio activity this year, as we bought attractively priced companies at the height of the pandemic, only to sell for a profit months later when the stocks return to more normalized valuations. Others were exited in favor of companies with expected better upside potential. Still more were sold when they became subject to premium-priced acquisitions, namely HD Supply and Bryn Mawr Bank. For the year, we had approximately a dozen sales and an equal number of new purchases. Purchases helped further diversify the portfolio: Science Applications International and Curtiss-Wright Corp. in Industrials; Johnson Outdoors and Perdoceo Education in Consumer Discretionary; Berry Global and Graphic Packaging Holdings in Materials; Maximus Inc. and Methode Electronics in IT; and a sprinkling of stocks in the remaining sectors.

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All Data as of March 31, 2021

(prepared by Polaris Capital Management, LLC, subadviser to Pear Tree Polaris Foreign Value Fund)

For the fiscal year ended March 31, 2021, the Pear Tree Polaris Foreign Value Fund’s Ordinary Shares (the “Fund”) outperformed its benchmark, the MSCI EAFE Index (the “Index”). The Fund had a return of 66.76% at net asset value compared to 45.15% for the Index.

The Fund was overweight and outperformed in the Consumer Discretionary, Materials and Financials sectors; Utilities detracted due to losses at Kansai Electric Power. At the country level, holdings in the United Kingdom, Germany, Norway and Sweden, along with strong results from out-of-benchmark holdings in South Korea and Canada, added measurably to gains. Holdings in Greece, Taiwan, Switzerland and Italy were the smallest contributors.

In Consumer Discretionary, Canadian auto supplier, Magna International, advanced as the company reported strong sales, volumes and cost cutting, while forming two electric vehicle joint ventures. Kia Motors cited record operating profit on the back of higher total vehicle sales, a new slate of SUV models and a dedicated platform of EV offerings. U.K. homebuilders made progress, working efficiently under the new socially-distanced construction conditions. Nordic banks, including DNB ASA and Sparebank 1 SR, performed well as local regulators decided to soften their dividend payouts stance. Methanex Corp. built momentum, as methanol spot prices jumped. Samsung Electronics logged a nearly 90% return on higher DRAM chip prices and robust TV sales.

Detractors included U.K. engineering services firm, Babcock International, which had dwindling profits due to distancing requirements on worksites. Concerns also arose about Babcock’s forward orders considering an anemic British defense budget for 2021. Other decliners, Japanese utility, Kansai Electric, and U.K-headquartered bank, Standard Charter, were sold during the year.

Companies purchased cheaply during the height of COVID-19 (including Zhongsheng Group, Dometic AB, and Ryanair Holdings) returned to higher valuation; we sold these at a profit. Others were exited in favor of new companies with expected better upside potential. Still more were sold on M&A activity, namely U.K.-listed Signature Aviation, which jumped on news of its acquisition by Global Infrastructure Partners. Among new purchases were: Coca-Cola European Partners; Japanese electronics group, Sony; three publicly listed airports in Mexico; Jumbo SA, a Greek toy retailer; D’Ieteren SA, a Belgian Volkswagen distributor and auto glass repair business; Weichai Power Co. Ltd., a Chinese engine maker for heavy trucks; auto manufacturer, Honda Motor Co.; consumer printer/ink supply company, Brother Industries; diversified business conglomerate, Marubeni Corp.; and construction/real estate firm, Daito Trust Construction Company.

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All Data as of March 31, 2021

(prepared by Polaris Capital Management, LLC, subadviser to Pear Tree Polaris Foreign Value Small Cap Fund)

For the fiscal year ended March 31, 2021, the Pear Tree Polaris Foreign Value Small Cap Fund’s Ordinary Shares (the “Fund”) slightly underperformed its benchmark, the MSCI ACWI ex USA Small Cap Index (the “Index”). The Fund had a return of 70.25% at net asset value compared to 70.42% for the Index.

Cyclical sectors contributed most to Fund performance, led by Consumer Discretionary, Industrials and Financials; defensives lagged in comparison. On a country basis, the Fund substantially outperformed in the U.K., Japan, India, Italy, Canada and Germany; laggards in Egypt and Indonesia still posted gains.

Halfords Group, the U.K.’s largest bike shop, had strong online bicycle sales as this mode of  “socially distanced” transportation and exercise enticed COVID-19 weary consumers. The company is set to acquire Universal Tyre and Autocentres, expanding Halfords’ garage sites and mobile service fleet. Another U.K. company, National Express Group made up ground, as vaccinations should lead to looser travel restrictions, more commuter traffic via mass transit and school re-openings.

ENF Technology Co., a beneficiary of Korea’s locally-sourced materials mandate, cited strong sales of tablets, personal computers and home electronic goods as more people reverted to home offices. Other companies that capitalized on COVID-19 “stay-at-home” mandates included: Italy’s De’Longhi SPA, which supplies coffee makers and kitchen goods; and Japan’s Prima Meat Packers Ltd., which saw consumers stock freezers with its ham and sausage products.

Among Information Technology companies, Coforge Limited announced robust quarterly earnings and dividend payout. HANA Microelectronics was up more than 100%, as the company reported higher operating margins even in a slower sales environment.

There were only a few holdings in absolute negative territory, including Nihon House Holdings, VITEC Group and DGB Financial Group, all of which were sold during the year.

During the fiscal year, the Fund had more than a dozen sales, almost all of which were executed on valuation. Stocks cheaply purchased during the height of COVID-19 were sold at a profit as they rebounded. Others were sold that were either expensive or illiquid and replaced with stocks with better valuation profiles. Still more were exited at a profit on M&A activity, including U.K.-listed Signature Aviation which jumped on news of its acquisition by Global Infrastructure Partners.

Sale proceeds were used to buy National Express Group PLC, a British public transport company; Canadian non-prime mortgage lender, GoEasy Ltd; D’Ieteren SA, the Belgian Volkswagen distributor, which also has a dominant position in the auto glass repair business; Pakuwon Jati TBK, a commercial mall developer in Indonesia; Cloetta AB, a branded candy manufacturer out of Sweden; Venture Corp, a Singapore electronic contract manufacturer; Aecon Group, a Canadian heavy development infrastructure and concessions company; Kyudenko Corp., a Japanese construction company specializing in HVAC and renewable energy; and Primax Electronics, a Taiwanese electronics components business.

All Data as of March 31, 2021

(prepared by Polaris Capital Management LLC, subadviser to Pear Tree Polaris International Opportunities Fund)

For the annual period ended March 31, 2021, Pear Tree Polaris International Opportunities Fund’s Ordinary Shares (the “Fund”) outperformed its benchmark, the MSCI ACWI ex USA Index (the “Index”). The Fund achieved a return of 76.07% at net asset value compared to 50.03% for the Index.

The Fund outperformed in nearly all sectors in which it participated, with the exception of Communication Services. Cyclicals dominated, with Industrials, Consumer Discretionary, Financials and Information Technology contributing materially. Outperformance in Taiwan, U.K., China, Germany and South Korea drove gains; the Fund’s single stock holdings in Peru and Egypt contributed least.

Taiwanese IT company, Sinbon Electronics Co., continued its streak as the best performer in the portfolio, up more than 100% for the year. Demand for OEM assembly services continued unabated among a diversified customer base. Higher demand was also at the core of Taiwan Semiconductor’s strong performance.

Industrials were led by BeNext Group Inc., the Japanese technical staffing firm, which announced a merger with Yumeshin Holdings Co. Swedish building services company, Bravida, capitalized on demand for electricity and HVAC installation in a relatively resilient Nordic commercial building market. Bunzl reinstated dividends after reporting higher pre-tax profits in the first half of 2020, as its grocery and cleaning/safety divisions rose. The British distribution/outsourcing company also announced acquisitions of U.S. safety-products company MCR Safety and Irish flexible-packaging distributor, Abco Kovex.

China Meidong Auto Holdings topped the Consumer Discretionary sector. The company reported robust sales and increased profits year-over-year due to booming luxury car sales in China and high margin after-market sales. Poya International Co., the Taiwanese cosmetics/skin care retail company, highlighted strong sales and profits, seemingly impervious to the pandemic.

Detractors were limited, as more than 90% of holdings were in absolute positive territory. U.K.-based SSP Group was the notable decliner, as the multinational airport food/beverage concession company was hurt by social gathering restrictions during COVID-19. SSP Group, and another underperformer Kenya’s Equity Group Holdings, were sold during the year.

During the fiscal year period, the Fund had notable activity with more than a dozen sales and twice as many new buys. Companies purchased cheaply during the height of COVID-19 returned to higher valuation; we sold these at a profit. Others were exited in favor of new companies with expected better upside potential. Among the diversified new buys were: Nextage Co., a Japanese used car dealership; Collins Foods, which recently acquired KFC in Europe and launched Taco Bell in Australia; Scientex BHD, a Malaysian integrated consumer packaging manufacturer; Lancashire Holdings, the U.K. specialty insurance company; Essity Akteibolag, a global tissue/feminine care supplier; Kenya telecom provider, SafariCom PLC; South African Consumer Staples company, AVI Ltd; payment processor, Euronet Worldwide; Greggs PLC, a British bakery chain; Greek toy retailer, Jumbo SA; France’s luxury leather goods company, LVMH Moet Hennessy Louis Vuitton; and numerous others.