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Q1 Why is the initial investment US $10 million?
A
With mutual funds, it is possible to make diversified investments in small amounts. However with this game, we felt it would be enjoyable for participants to feel as they were playing the role of a fund manager or a product developer, so we decided to use this larger amount of US $10 million as the starting point for each portfolio.
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Q2　Which days are business days in Japan?
A
Business days in Japan are weekdays when trading is conducted on the Tokyo Stock Exchange. Business days do not include Saturdays, Sundays, public holidays and other holidays. Weekdays which are not business days are holidays.
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Q3　When do you start calculating the NAV of the invested assets?
A
The NAV of the invested assets for a portfolio will be calculated from the day when that portfolio is completed.
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Q4　When will transactions be completed?
A
If a transaction is submitted by 3:00 p.m. Japan Standard Time on a business day in Japan, the trade will be completed based on the NAVs of the countries in the transaction as of the following business day. The invested assets will be updated to reflect the transaction on the evening the transaction is completed. If a transaction is submitted on a Japanese holiday or after 3:00 p.m. on a business day in Japan, processing for the order will begin on the following business day and it will be completed two business days after being submitted, based on the NAV of that day.

Note: Japan Standard Time = EST + 14:00

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Q5　Is it possible to place limit orders for countries in the investment universe?
A
No. You cannot buy into countries at limit. Transactions will be completed based on the NAV as of the following business day.
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Q6　Can we submit transactions at any time of day?
A
Yes. As a rule, you can make transactions every day, including non-business days in Japan, at any time of day. However, transactions will only be accepted on the day they are submitted if they are input by 3:00 p.m. on a business day in Japan. If transactions are input on a Japanese holiday or after 3:00 p.m. on a business day in Japan, they will be processed as though they were submitted on the following business day.
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Q7　Will all transactions be completed?
A
Yes. Since the NAVs of countries are calculated on every business day in Japan (barring any systems malfunctions), all trade orders will be completed.
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Q8　Are there any penalties we should be aware of?
A
There are no particular penalties participants need to worry about. While the time a transaction is made will affect when the transaction is completed, and while there are restrictions on maximum and minimum allocations and on the number of countries in each portfolio, the game is designed so that participants will have to adhere to restrictions as they play (for example, a participant cannot allocate more than 30% to a country when making a transaction).
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Q9　Why do you stop accepting transactions for the day at 3:00 p.m.?
A
Even in real life, trade orders are not generally accepted after 3:00 p.m. when you make a transaction through brokerages, banks or other institutions which sell mutual funds. Therefore, we set the same rule for the operating hours for Country Pick.
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Q10　Why can't the weighting for one country exceed 30%?
A
In asset management, there is a basic principle of reducing risk through diversified investment. This is because if you concentrate your investment on a single asset and the value of that asset declines significantly, the value of your investments and your performance will also decline significantly. However, by diversifying your assets, you will gain a sense of security from knowing that losses from one asset will be offset by gains from another. We decided to set an upper limit for the weighting per country in Country Pick because we want the participants to understand the effects of diversified investment.
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Q11　If the NAV of a country increases to the point that its weighting exceeds 30% of my portfolio, will I have to decrease the weighting of the country in question?
A
No, you won’t be required to make any change or to adjust the weighting so that it is less than 30%. The maximum weighting rule applies only when you initially set the allocation for a country in your portfolio. The restriction only applies when you try to set the weighting of a newly incorporated country above 30% of total assets.
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Q12　If the NAV of a country decreases to the point that its weighting is less than 5% of my portfolio, will I have to increase the weighting of the country in question?
A
No, you won’t be required to make any change or to adjust the weighting so that it is more than 5%. The minimum weighting rule applies only when you initially set the allocation for a country in your portfolio. The restriction only applies when you try to set the weighting of a newly incorporated country below 5% of total assets.
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Q13　Is it necessary to remain fully invested even when we foresee a decline in the market?
A
That is correct. Country Pick is based on picking many different countries to invest in. Participants compete with one another by aiming to obtain the best performance under these conditions. So even if you think the market will decline, you still have to remain fully invested in countries selected from the investment universe.

However, when investing in real life, it is by no means appropriate to invest all of your assets at once. This is because, given the number of factors which influence market price movements, such as economic growth, corporate earnings, supply and demand, and investor sentiment, it is extremely difficult to judge when the market has hit bottom and is presenting a buying opportunity. This is where the building block investing theory is useful. It is a very effective method in which a fixed amount of funds is invested at intervals over a long period of time in order to build assets. When it comes time to redeem assets in order to use them, a fixed amount of funds is then withdrawn at intervals. In other words, it involves investing and redeeming at intervals instead of investing or withdrawing a lump sum all at once. In principle, we recommend that people take this kind of approach when investing in order to build assets over the long-term.
Building Block Investing
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Q14　Can we invest in individual stocks?
A
No, you cannot. The investment universe of Country Pick includes only countries and regions (strictly speaking, index funds which are linked to the equity markets of 31 countries and regions).
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Q15　If we break any of the game's rules for investing, will we be penalized?
A
No. The system is made in such a way that participants cannot make transactions which violate the investing rules. Therefore, there will be no penalties as long as participants can place their on-screen orders correctly.
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Q16　Is it possible to be disqualified?
A
No. Except in cases where the Participant Agreement are violated, Nikko Asset Management Co., Ltd, the sponsor of Country Pick, will not disqualify any participants.
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Q17　Are there any potential problems with maintaining the same allocation over a long period of time, without selling any of the incorporated countries?
A
No. Since there are no restrictions on the frequency of transactions or on the weightings of countries after their initial allocations have been set, keeping the countries without making any transactions for a long period of time will not cause any problems.

In principle, asset management is not a means to obtain gains by making a great deal of short-term trades. Your investment performance will instead be negatively affected by daily trading, as fees are incurred for each trade. Also, it is very difficult for investors to succeed with market timing, which aims to take advantage of short-term price movements through trading. This is because stock prices can fluctuate in an extremely short frame of time, and in many cases an upswing in the market happens suddenly and comes to an end with equal unpredictability. In such circumstances, investors who were not invested for that particular period of time will miss out on the majority of the potential gains. That said, there are certain times when the concept of market timing can be attractive, and it is not necessarily something we should completely dismiss.

That is why Nikko Asset Management proposes the money management framework known as the Three Pockets. The concept is to divide your money into Three Pockets in accordance with the aims of your investment.

The Three Pockets
The Three Pockets are:
A Savings Pocket in which you put money as an emergency reserve; an Asset-Building Pocket in which you put the money that you will need to fund future plans; and a Trading Pocket in which you put money that you aim to achieve high investment returns with.

The Savings Pocket is something everyone should have, as it is for money that may be required in emergency situations such as illnesses or accidents. Money in this pocket should be invested in vehicles such as bank deposits, savings accounts, and MMFs, which have a higher degree of principal protection. The target amount for this pocket is equivalent to your monthly living expenses for three to twelve months.

The Asset Building Pocket is for money you require for future plans, such for buying property or to take care of living expenses in your retirement. Therefore, you should use time and diversified investing to your advantage and aim for a better-than-average investment performance that exceeds that of bank deposits and savings accounts.

Lastly, the Trading Pocket is for “extra” money which is free to be used for investing or speculating with the aim of achieving higher returns. This is a pocket which allows you to indulge in the stimulation of speculative investing, and not everyone needs to have it. However, it is indeed a fun pocket to have. But what is important is that you only put “excess” funds in the Trading Pocket after you have fully funded your Savings Pocket and your Asset-Building Pocket.

You can then enjoy taking a chance at market timing through the Trading Pocket.
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