Q:  Would you give us a brief overview of the fund? A : John Hancock Global Opportunities Fund was launched in 2005. The fund is sub-advised by MFC Global Investment Management (U.S.) LLC, an institutional asset manager affiliated with John Hancock’s parent Manulife Financial Corporation. The fund has no market cap or country restrictions. It is our best ideas globally. Q:  What is the main investment objective of the fund? A : The main investment objective of this fund is long-term capital appreciation primarily from global securities regardless of market size. Q:  What kind of strategies do you use to meet this goal? A : The fund invests in a diversified portfolio of global equity securities that include common and preferred stocks and their equivalents. We may invest up to 100% of assets in foreign securities and 20% of assets in bonds of any maturity rated as low below investment grade and their unrated equivalents. In building the portfolio, the management team uses a value-oriented, bottom-up approach to individual stock selection. With the aid of proprietary financial models, the team looks for companies that are ignored by the market and selling at substantial discounts to their long-term intrinsic values. These companies often have growth catalysts that can be attributed to new products, business reorganization or mergers. Q:  How are you different from others in this approach? A : We look for companies that have margin of safety in the business, through some distinct competitive advantage, and margin of safety in the valuation. Also, we look for catalysts that will serve to unlock value. While these are attributes that some managers look for, we differentiate ourselves in the way we look for catalysts. We are very focused on catalysts that are occurring at the company level, as opposed to catalysts that are dependent on some uncertain macro event. We believe it is very difficult to have a lot of conviction in the macro outlook given all the uncertainties in the world such as the potential slowdown in China or the burgeoning sovereign debt in Europe. Effectively, we are looking for catalysts at the company level that are so powerful that they will overshadow the macro backdrop and allow the market to reassess the value of the business regardless of external uncertainties. Q:  Would you describe the steps that you follow in this approach? A : We follow a four-step process in our research. The first one is idea generation, the second step is research and verification followed by portfolio construction, and the final step is risk management. The idea generation step is to find from the universe of global stocks, ones that have a good margin of safety in the business, a good margin of safety in the valuation and then a company-specific catalyst that will spur growth and unlock value. Even though we do generate ideas from various sources, the biggest source is our own team members. MFC Global Investment Management, the subadvisor for this strategy, has investment offices spread across the world which allows us to draw upon ideas from all over the globe. We have offices located in North America, Europe and eleven investment management offices in Asia, including China. Also, our team members undertake a lot of traveling. We believe seeing the assets and meeting the management teams is critical to gaining the conviction required to step-in and use the volatility in the markets to our advantage. The second step of the process is the fundamental analysis. We are trying to understand what provides the margin of safety in the business. We talk to management teams, competitors, industry experts, and this is when we build our financial models and come up with our price targets. This is also when we’re identifying the catalysts that will unlock value. We are very disciplined on valuation and we rank all of our stocks based on upside/downside. The third step of the process is portfolio construction. We determine position sizes based on upside/downside and the timing of upcoming catalysts. Also, we pay very close attention to the correlations of our stocks, seeking to build a portfolio that is very diversified. Step four is risk management. We are constantly looking for hidden risks in the portfolio. Besides our philosophy, which based on margin of safety in the business and valuation, is a natural risk mitigant, we have a dedicated risk management team whose specific job is to keep looking for unintended risks in the portfolio. Also, we consider our sell discipline an important part of our risk management process. Q:  How would you define your sell discipline? A : We sell names for three main reasons. First of all, we sell a name when it reaches the price target set by the team, beyond which the risk reward ratio for the stock has diminished. Also, we don’t wait for the stock to reach its price target before trimming it The second reason to sell is when we realize that we have made an error in our selection and this could be due to a host of reasons like a change in management, change in economic climate in a country, change in economics of a particular industry, political uncertainty etc. The third reason we will sell a position is when we see another stock with a better risk reward profile. We have a pipeline full of stocks that have margin of safety in the business, but may not have sufficient margin of safety in the valuation or imminent catalysts. Market volatility can provide opportunities to buy stocks that we’ve always wanted to buy, but don’t own, and the passage of time works in our favor when we’ve identified catalysts that are going to occur in the future, but were initially to far out to justify buying the stock. Q:  Could you illustrate this process with some examples? A : Our largest position right now is a Brazilian company called OGX Petroleo e Gas Participacoes SA. This oil and gas company was founded in 2007 by Brazilian billionaire Eike Batista. He owns drilling rights to numerous blocks off the coast of Brazil. He started his drilling campaign last summer and has had a 100% hit rate so far. Currently, the market isn’t giving OGX credit for the assets it owns. Recognizing this disconnect, OGX is going to sell a 20% stake in some of these blocks, in an effort to mark to market the value of the company’s oil and gas assets. This catalyst will occur in the next 6 to 9 months and we believe this stake sale will mark to market about 30% of OGX’s assets at no less than the company’s current market capitalization, implying that you’re getting the rest of the company for free. Another top holding is Sirius XM Radio Inc. Sirius XM is a monopoly satellite radio company in the U.S. that we believe has a very bright future despite its checkered past. The market isn’t giving the company credit for the tremendous synergies that have been created as a result of Sirius and XM merging. Content cost synergies, as well as the ability to pay less to car manufacterers in the form of revenue sharing payments, as well as the ability to raise prices beginning next year, will bode well for the company. Also, we believe the market is overlooking the massive used car opportunity, in which there will be 70 mm used cars on the road in the next 5 years with satellite radio installed. Used car subscribers carry no customer acquisition costs, and so provide very high incremental margins. Also, we believe the company will be able to monetize advertising on the non-music channels. Sirius XM only generated $60 mm in advertising revenues last year, despite reaching 35 mm listeners and reaching key demographics. This was never a focus of Sirius XM, but when you consider the billions and billions of revenues ever year generated on terrerstial radio, this has huge potential as its all incremental profit. Lastly, capex is set to drop quite significantly in 2012 as Sirius puts up its final satellite in the sky for the next 7 to 8 years. That coupled with the massive NOL’s that the company enjoys, will allow earnings and free cash flow to explode in 2 to 3 years. Only 3 analysts have earnings estimates out to 2012 and only 2 have estimates out to 2013, yet these are the years that matter when thinking about the intrinsic value of the company. Q:  When looking at emerging markets, do you give consideration to political and currency stability? A : We certainly do. We stay away from countries that are politically unstable or have currencies that can’t be cost effectively hedged and we believe are at risk of significant depreciation versus the dollar. As a result, we typically are only invested in a handful of emerging markets at a given point in time. Q:  How many names are there in the portfolio? A : We have about 40 names in the portfolio now, but our historical range is 35 to 65 names. This is a high conviction, concentrated strategy, and so it will always be fairly concentrated. We’re big believers that any given point in time, there aren’t hundreds of great risk/rewards and so it is logical to build a portfolio around only our best risk/rewards. Q:  What is the average turnover in the fund? A : Historically, the turnover has been 60% to 80%, but right now it is somewhere in the region of 200%. The reason for that is primarily because we have done quite well in recent times with our names reaching their prices targets, and hence getting sold and being replaced with other names. Q:  What is the fund’s benchmark? A : Our benchmarks are the MSCI All Country World Index and the S&P Global BMI Index. Q:  Do you hold and match the index for stocks and their weightings? A : No, we do not. In fact, many of our names are not in the benchmark. We are benchmark agnostic.