<p> Report of the IREM Audit and Investment Committee</p><p>To Executive Committee Conference Call 12:00 P.M. Chicago, IL September 22, 2014</p><p>Chair: Chris Mellen, CPM Vice Chair: Ben Forsyth, CPM Staff Liaison: Ken Paul</p><p>Background: </p><p>Motion: None</p><p>Other items:</p><p>Chris Raab of Morgan Stanley, IREM’s financial advisor was introduced. He reviewed the August 31, 2014 investment performance reports which were distributed to the committee.</p><p>Chris indicated that IREM’s existing portfolio as of August 31, 2014 has earned a positive gross return of 5.51 %; he also indicated that the 12 month return is a positive12.73%. Chris further stated that the Augusts’ portfolio is comprised of 56% equities, 39% fixed income, and 5% cash. Chris stated that the current portfolio is valued at $3,762,000 and is anticipated to decrease after today’s closing market. </p><p>The IREM Foundation has a positive gross year-to-date return as of August 31, 2014 of 3.92% with a balance of $739,812, which amounts to a year-to-date gain of $33,812. On a 12 month return the Foundation had a 12.63% gross return on investments - this excludes the $100,000 transfer of funds from the general checking account in May. The Foundation’s current portfolio value is $736,360, and consists of 62% equities, 31% fixed income, and 7% cash. </p><p>Chris explained how the federal open markets are affecting the US interest rates and compared our rates to other world economies such as; Japan and Germany. He also stated that the current interest rate on a 10 year U.S. Treasury bond is approximately 2.7% as compared to the German bond at 1%. He feels that this condition will allow our interest to fall. He further talked about the world situation and how it is affecting our portfolio, but stated to stay the course. </p><p>Chris indicated the benchmarks for both IREM and the foundation will increase slightly. </p><p>Benchmarks for IREM and the Foundation are addressed in the table below. Report of the IREM Audit and Investment Committee</p><p>IREM FOUNDATION High Point 8-31-2014 $3,806,000 $739,800 Benchmark-August 31, 2014 $3,235,000 N/A Benchmark-August 31, 2014 N/A $628,800 Current–September 22, 2014 $3,762,000 $736,360 Difference +$527,000 +$107,560 above Benchmark</p><p>Financial Philosophy* $4,068,652* N/A Cash & Investments 8/2014** $6,028,293** N/A Difference +$1,959,641 N/A</p><p>* Financial Philosophy reflective of August, 31, 2014 ** Rolling average is used to set balance</p><p>Motion passed to approve the August, 18th, 2014 minutes.</p><p>Committee members: Name-present/absent</p><p>Chris Mellen, CPM - Present Ben Forsyth, CPM - Excused Gregg Cichy, CPM –Present Jack Gallagher, CPM –Excused Pam Monroe, CPM – Absent Todd Taylor, CPM – Present Mike Lanning, CPM - Present Others: Chris Rabb of Morgan Stanley Ken Paul, CFO Don Ross, CPA Comptroller</p>