Investment Policy Statement

Investment Policy Statement

Family Hu Trust

Hang Zhao

Yiming Zhang

Pengyu Wang

1. Scope and Purpose

1a. The assets of the Family Hu Trust trace back to the establishment of Macrohard in 2006 by Sam and Susan Hu. Over the course of the next 9 years, Sam and Susan Hu worked to grow the family business to include PC, smart phone and software in USA. Each business line was committed to delivering outstanding quality and value to consumers, as well as investing in the communities in which Sam and Susan Hu did business. In 2015, Macrohard was purchased by Google for the equivalent of US$59 million. Sam and Susan Hu established the Family Hu Trust with $23 million of the sale proceeds, and much of the remainder constituted the Family Hu Trust which are the subject of this investment policy statement.

1b. This Investment Policy Statement governs the family investment portfolios of Sam and Susan Hu. Investment portfolios governed by this Investment Policy Statement include all portfolios established in Sam and Susan Hu’s names.

1c. Patrick Wang, as financial advisor to Sam and Susan Hu, is responsible for coordinating updates to the Investment Policy, including soliciting input from the designated tax and legal advisors to Sam and Susan Hu. Patrick Wang is also responsible for monitoring application of the Investment Policy Statement, and shall promptly notify Sam and Susan Hu of the need for updates to the Policy and/or violations of the Policy in implementation. Sam and Susan Hu shall be responsible for approving the Investment Policy Statement and all subsequent revisions to it.

Python Capital acts as a fiduciary in its capacity as advisor to the Family Hu Trust, and acknowledges that all advice and decisions rendered must reflect first and foremost the best interests of its clients. Python Capital also affirms its compliance as a firm with the CFA Institute Asset Manager Code of Professional Conduct.

Hang Zhao, as investment advisor to Sam and Susan Hu, is responsible for monitoring investment risks and reporting them to Sam and Susan Hu.

2. Governance

2a. As trustee for the Family Hu Trust, Yiming Zhang is responsible for approval of the investment policy and any subsequent changes to it. In their capacity as counselors to the Trust, Python Capital shall counsel the trustee as to development of the Investment Policy, suggest appropriate revisions to the Investment Policy on an ongoing basis, and monitor and report on results achieved from implementation of the Policy on no less than a monthly basis.

2b. Hang Zhao is responsible for monitoring the investing requirements of Sam and Susan Hu as well as investment and economic issues, and for suggesting changes to the IPS as necessary. Hang Zhao shall review the IPS no less frequently than annually with Sam and Susan Hu.

2c. Sam and Susan Hu delegate exclusive authority to their financial advisor James Xi to retain and dismiss individuals and/or firms to manage their investment assets. James Xi shall, prior to hiring any external investment manager, disclose in writing to Sam and Susan Hu any compensation or other consideration received or due to be received from the external investment manager.

2d. At least annually, Python Capital shall review the asset allocation of the Family Hu Trust, and suggest revisions for final approval by Sam and Susan Hu. The asset allocation plan is incorporated to this Investment Policy Statement, and shall consider the proportions of investments in U.S. fixed income obligations, U.S. small capitalization equities, U.S. real estate market, and money market. Python Capital shall consider expected returns and correlation of returns for a broad representation of asset classes in the US capital markets, as well as anticipated changes in the rate of inflation, and changes in marginal tax rates.

2e. As investment advisor, Python Capital is responsible for using the statements prepared by CCC Brokerage as a basis for evaluating the risk profile of the Family Hu Trust account, consistent with the risk management policies approved and adopted by Sam and Susan Hu. Python Capital shall be responsible for identifying variances in risk positions that exceed tolerable limits as specified in the risk management policies, and taking prompt corrective action. No less than quarterly, Python Capital shall provide to Sam and Susan Hu a reporting of all such variances in the prior quarter.

3. Investment, Return, and Risk Objectives

3a. Overall investment objective. The investment program governed by the IPS is intended to achieve value growth to cover daily operation expenses, employee salaries, trustee fees, and create surplus fund for the Trust’s development and expansion.

3b. Return, distribution, and risk requirements. The investment portfolio developed for the Family Hu Trust indicates a required real growth rate of 4.5% to cover all the expenses and supplement for future growth.

The Family Hu Trust portfolio invests mainly in U.S. small-cap equity market, fixed income market, Real Estate market, and money market. The following benchmarks have

been selected for comparison to each asset class: U.S. small-cap equity: NASDAQ index; U.S. fixed income: NASDAQ BulletShares Index; Real Estate: Case-Shiller 20-City Composite Home Price Index; U.S. money market: S&P/Bgcantor 6-9 Month U.S. treasury bill index.

Based on the overall expected nominal portfolio return of 8%, inflation rate of 2%, trustee and management fees of 1.5%, and effective tax rate of 30% of total appreciation, the Family Hu Trust may retain an annual spending rate of 1.5% of the portfolio market value while keep the rest for potential growth and investments.