<PAGE>


                   SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549
                               FORM 10-K

(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
          For the fiscal year ended December 31, 1997.

                           OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
          For the fiscal year ended


                   COMMISSION FILE NUMBER 33-13375


                                 OF
                     IDS LIFE INSURANCE COMPANY

         (Exact name of registrant as specified in its charter)


          MINNESOTA                         41-0823832

   (State or other jurisdiction of        (I.R.S. Employer
    incorporation or organization)       Identification No.)

IDS TOWER 10, MINNEAPOLIS, MINNESOTA             55440-0010


(Address of principal executive offices)                      (Zip Code)


Registrant's telephone number, including area code   (612) 671-3309


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange 
Act of 1934 during the preceding 12 months (or for shorter period that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.       Yes   X     No

Indicate by check mark if disclosure of delinquent  filers  pursuant to item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in part  III of this  form  10-K or any
amendment to this form 10-K: Not applicable

Aggregate market value of the voting stock held by non-affiliates:Not applicable

Documents incorporated by reference: Certain pages of the Prospectus of
Registrant included in Form S-1 (as amended),  file number 33-13375 to be filed
April 3, 1998, are incorporated by reference in Parts I and II of this Annual
Report on Form 10-K.


<PAGE>


               PART I

Item 1. BUSINESS

General

IDS Life Account RE (the Account) was  established  by a resolution of the Board
of  Directors  of IDS Life  Insurance  Company  (IDS Life) as a  separate  asset
account,  pursuant to Minnesota  law. The Account was formed to make real estate
related  investments in connection with the sale of individual deferred variable
annuity  contracts  (Contracts)  offered  by IDS  Life.  The  Account  commenced
operations on August 7, 1987 when the annuity  contracts  were first offered for
sale to the public. Effective May 1, 1995, the Account discontinued new contract
sales. The Account holds assets that are segregated from all of IDS Life's other
assets and are not chargeable with liabilities arising out of any other business
of IDS Life.

The Account is not  registered  as an  investment  management  company under the
Investment  Company Act of 1940. The Account is under the control and management
of the  Board of  Directors  of IDS Life and its  officers.  The  owners  of the
Contracts have no voting rights with respect to the Account.

IDS Life does not guarantee the investment performance of the Account and is not
responsible for the liabilities of the Account. However, IDS Life is responsible
for the  fulfillment of the terms of each Contract, including  payment of death
benefits and the guarantees of the minimum annuity purchase rates contained in
the Contracts.

Investment Objective

The investment objectives of the Account previously were to provide for payment
of retirement income under the Contracts by seeking to: (i) preserve and protect
the Account's assets in real (i.e., inflation-adjusted) terms; (ii) provide for
compounding of income through reinvestment of cash flow from investments; and
(iii)  provide for  increases in income through capital appreciation of real
property investments and, to the extent available, through participation in the
capital appreciation, gross revenues or income of the real properties subject to
mortgage loans or land sale-leasebacks. There is no guarantee that the
investment objectives of the Account will be attained. The assets of the Account
have been invested primarily in real estate related investments in accordance
with the diversification requirements regarding variable annuities contained in
Section 817(h) of the Internal Revenue Code (the "Code").

The  Account  previously sought to have approximately 50 to 70 percent of the
Account's assets invested in income-producing real property investments such as
office buildings, shopping centers,  apartment complexes and other real
properties, with approximately 15 to 40 percent of the Account's assets invested
in mortgage loans and land sale-leaseback investments, which could include
participation in the appreciation or the gross revenues or income of the real
properties that are subject to the mortgage loans or land sale-leaseback
investments.  The remaining portion of the Account's assets generally were to be
invested in short-term debt instruments and intermediate term bonds with
maturities of up to five years.

Since the Account has experienced substantial net contract terminations over the
past several years the Account does not intend to acquire additional real estate
related investments. Further, the Account intends to liquidate the real estate
related investments that it currently holds when it becomes advantageous or
necessary to do so.During 1996, the Account liquidated two real estate related
investments.

IDS Life has purchased and expects to continue to purchase accumulation units in
order to maintain the Account's liquidity. IDS Life makes these payments so that
no contract  holder is  disadvantaged  because sales of new contracts  have been
discontinued. These payments for accumulation units have been made to enable the
Account to pay off amounts borrowed under its line of credit with IDS Life and
as needed in order to fund all of the Account's obligations under the contracts
such as paying surrenders.  By purchasing accumulation  units, IDS Life has an
ownership interest in the Account and participates in the increase or decrease
in value of the Account's investments just as other owners of accumulation units
do. IDS Life may realize a gain or loss on its accumulation units when redeemed.

IDS Life currently expects to hold the accumulation units it purchases until the
surrender of all outstanding contracts or until the Account's liquidity improves
(through, for example, one or more sales of real estate related  investments)
thereby permitting the Account to satisfy its anticipated contract obligations.
Because IDS Life may purchase a significant amount of accumulation  units, IDS
Life may be subject to certain conflicts of interest it would not otherwise have
if it had not purchased such accumulation units, including, among other things,
a conflict in approving periodic valuations of real estate related investments
made by the Investment Adviser, JMB Annuity Advisers.

Competition

The Account competed against other real estate investment funds and registered
investment companies including limited partnerships, real estate investment
trusts, unit investment trusts, pension and profit sharing trusts, corporations,
etc., all of which may or may not be offered for sale by commercial and
investment banks, realty corporations, insurance companies, savings and loan
associations, diversified financial service companies, and other financial
service intermediaries.

The Account had been in competition for real property investments, mortgage
loans and land sale-leasebacks with numerous other entities, as well as with
individuals, corporations, real estate investment trusts, real  estate
partnerships and other entities engaged in real estate investment activities,
including certain affiliates of the JMB Annuity Advisers (the Investment
Adviser) and IDS Life. The real properties that are the subject of the Account's
real estate related investments are in competition with other real properties
(including those in which the Investment  Adviser, IDS Life or their affiliates
may have an interest) in the areas in which they are located, particularly with
respect to obtaining new tenants and the retention of existing tenants.  Such
competition is based upon, among other things, effective rents charged, services
to tenants and the facilities available.

Employees

IDS Life Account RE does not directly employ any persons. The business of the
Account is under the control and management of IDS Life's Board of Directors,
its principal officers, and its investment committee to the Account. The
Investment Adviser, an affiliate of JMB Realty Corporation,  provides investment
selection, management, disposition, and consulting services with respect to the
real estate related investments of the Account pursuant to an investment
advisory agreement.

Item 2. PROPERTIES

Description of the Account's real estate related investments is hereby
incorporated herein by reference to pages 18 to 35 of the  Registrant's 
prospectus included in Form S-1 (as  amended),  File number 33-13375 to be filed
April 3, 1998, which pages are filed herewith as Exhibit 99.2 to this report.

Item 3. LEGAL PROCEEDINGS

There are no material legal proceedings to which the Account is a party or to
which the assets of the Account are subject.  IDS Life is engaged in various
kinds of routine litigation that, in IDS Life's  judgment, are not of material
importance in relation to its total assets.  None of such litigation  relates to
the Account.

Item 4. SUBMISSIONS OF MATTERS TO VOTE OF SECURITY HOLDERS

Not applicable.

               PART II


Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDERS 
MATTERS

The Contracts were offered for sale through the registered representatives of
IDS Life. There is no established  public trading market for the Contracts.  In
addition, the Contracts were not bid for, but were sold at the Account's current
accumulation unit value. A contract owner may elect to surrender all or part of
the Contract while the Contract is in force prior to the earlier of the
retirement date or the death of the first to die of the annuitant or owner.  A
description of surrenders, withdrawals and transfers is hereby incorporated
herein by reference to pages 50 to 51 under the heading  "Contract Surrender"  
and pages 54 to 55 under the headings "Suspension and Delay of Payments" and 
"Transfer of Ownership" in the Registrant's prospectus included in Form S-1 
(as amended), File Number 33-13375, to be filed April 3, 1998, which pages are 
filed herewith as Exhibit 99.1 to this report. For the year ended 
December 31, 1997, the high and low accumulation unit values were $1.04 and 
$.98 per unit, respectively. The number of contract owners at December 31, 1997
was 238.


Item 6. SELECTED FINANCIAL DATA
<TABLE>

                            Years ended December 31,
<S>                            <C>            <C>            <C>            <C>             <C> 
                               1997           1996           1995           1994            1993
                               ----           ----           ----           ----            ----

Contract Purchase Payments
   (Terminations), Net         $(6,923,566)   $ (2,207,498)    $  2,291,255  $ (5,184,527)  $ (6,873,380)

Net Income (Loss)                $1,718,205   $   (153,491)    $(2,378,521)  $   (946,390)  $  1,816,417

Total Contract Owners'
    Equity (A)                  $28,340,115     $33,545,476     $35,906,465    $35,993,731    $42,124,648

Accumulation Units
    Outstanding (A)              27,339,211      34,144,955      36,353,929     34,238,180   39,000,431

Accumulation Unit
    Value                             $1.04            $.98            $.99          $1.05        $1.08


</TABLE>

(A) As of December 31, 1997, IDS Life's  portion of the Total  Contract  Owners'
Equity was $25,877,976  (91%) and IDS Life owned  24,969,872  (91%) of the total
Accumulation Units Outstanding.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Financial Condition and Results of Operations
For the Year Ended December 31, 1997 Compared to the Year Ended 
December 31, 1996

Net assets decreased from $33,545,476 at December 31, 1996 to $28,340,115 at
December 31, 1997. During this same time period, the accumulation unit value
increased from $.98 to $1.04. The Account experienced net terminations amounting
to $6,923,566 for the year ended December 31, 1997 compared to net  terminations
of $2,207,498 for the year ended December 31, 1996. IDS Life did not purchase or
sell accumulation units for the year ended December 31, 1997. For the year ended
December 31, 1996, IDS Life purchased $2,000,000 accumulation  units, as
discussed more fully below.

Recorded net income for the year ended December 31, 1997 was $1,718,205 compared
to net loss of $153,491 for the year ended December 31, 1996.

Interest income for the year ended December 31, 1997, represents income earned
on the Account's investment in short-term securities.  Interest income increased
to $467,504 from $385,026 for the year ended December 31, 1997 compared to the
year ended December 31, 1996. The increase for the year ended December 31, 1997,
is due  primarily to an increase in the average  short-term  investment  balance
throughout 1997 compared to the same period in 1996. This increase was due
primarily to cash received as a result of (i) the payoff of the Riverpoint
mortgage loan receivable in December 1996 and (ii) the  sale of the West
Springfield apartments in September 1996.  Short-term investments decreased
towards the end of 1997 due primarily to net Account terminations, as discussed
above. Interest income for the year ended December 31, 1996 primarily represents
interest income earned on the Account's investment in the participation in a
mortgage loan (Riverpoint  Shopping  Center). Interest  income  in 1996  also
includes interest earned on short term investments. The borrower of the ten year
non-recourse participating first mortgage loan on the Riverpoint Shopping Center
had notified the Lenders (IDS Life Account RE, JMB Mortgage Partners-III and JMB
Mortgage Partners IV, jointly the "Lenders"), that it was experiencing financial
difficulties and approached the Lenders  regarding a loan  modification.  During
the third quarter of 1996, the Lenders and Borrowers finalized a loan
modification whereby they reached an agreement to defer payment of a portion of
the scheduled debt service from September 15, 1995 to July 15,  1996.  In
conjunction with the loan modification agreement, the scheduled maturity date of
the loan was accelerated to December 31, 1997. Finally, the Lenders agreed to
accept at certain dates through June 30, 1997 repayment of the loan at specified
amounts. On December 24, 1996, the borrower repaid the lenders $27,400,000 (of
which the Account's share was approximately $2,800,000) in full satisfaction of
the loan as agreed upon.

For the year ended December 31, 1997, the Account's recorded equity in earnings
of its unconsolidated joint ventures (N/S Associates,  Monmouth  Associates and
1225  Connecticut) was $2,277,775 compared to $2,167,460 for the year ended
December 31, 1996. The  increase is due primarily to an increase in interest
income earned by Monmouth  Associates. The increase in earnings was  partially
offset by lower rental income achieved at Southridge and Northridge Malls due to
lower effective rents.

Northridge Mall continues to be adversely affected by the perception that it is
an unsafe place to shop. This  perception has resulted in declining sales and
occupancy over a three-year period. Compounding the problem of declining sales
are the high operating costs for tenants at the mall. Occupancy has also been
affected by tenant bankruptcies over the past years. As of December 31, 1997,
occupancy of the mall shops was approximately 75%, including temporary tenants
under short term leases. In August 1997, a movie theater, which  occupied
approximately 8% of the owned net rentable area at the property, vacated its
space upon expiration of its lease. Northridge is attempting to lease this space
to another movie theater operator, however, there can be no assurance the
Northridge Mall will be successful.

To counter the negative perception of Northridge Mall, N/S Associates
implemented certain capital improvements and operational programs to improve the
shopping center's safety and appearance, as well as instituted certain marketing
efforts to enhance its image. Certain positive sales trends appear to indicate a
modest improvement;  however, elimination of the negative perception is expected
to take some time. In addition N/S  Associates is seeking to increase  occupancy
at the shopping center by aggressively marketing space for new and renewal
tenants through leasing incentives, as well as continuing to cooperate  with
existing tenants who need short-term rent reductions in order to retain
occupancy of their space. Part of the leasing strategy includes targeting
certain well-recognized retailers as a group that would become tenants at the
shopping center. It is expected that the draw of this group of tenants would
help the shopping center gain leasing momentum and aid in future leasing
efforts.

Kohl's Department Store, a successful tenant occupying approximately 66,000
square feet of space at Southridge Mall, approached N/S Associates regarding an
expansion of its tenant space and a reduction in its overall leasing costs.
During the third quarter of 1995, N/S Associates and Kohl's entered into an
amendment of its lease. Pursuant to the lease amendment, the term of Kohl's
lease was extended from 2001 until 2015 and the tenant space was increased by
approximately 19,000 square feet to approximately 85,000 square feet, exclusive
of storage space. Kohl's is required to pay annual base rent of $9.25 per square
foot,  as well as one-half of its pro rata share for real estate taxes and a
fixed amount for common area  maintenance expense.  Kohl's is also obligated to
pay as additional rent a percentage of its gross receipts in excess of a minimum
amount of annual  sales  determined  after the tenant has occupied the entire
leased space.  N/S Associates was  responsible for paying the costs of asbestos
removal for the tenant space. Kohl's was obligated to pay other costs associated
with the leased  space,  including  tenant improvements  and lease buy-out and
relocation  costs.  The lease  amendment also contains an  operating covenant
pursuant to which Kohl's is obligated to operate its retail store at Southridge
Mall until 2005, subject to earlier termination under certain circumstances.
Although the lease amendment reduces Kohl's overall rent, the expansion of its
space and the  extension of its lease term is expected to help stabilize the
shopping center on a long-term basis by ensuring Kohl's continued occupancy and
its contribution to customer traffic. As of December 31, 1997, occupancy of the
portion of Southridge Mall owned by N/S Associates was approximately  97%,
including temporary tenants under short-term leases.

For the year ended  December 31, 1997,  the Account  recognized  net  unrealized
depreciation on its investment in unconsolidated joint ventures of $169,246
primarily a result of a net decrease in the value of N/S Associates (comprised
of a decrease in value of Northridge Mall off set by a slight increase in value
at Southridge Mall). In addition, Monmouth Associates and 1225 Investment
Corporation had a slight decrease in value due to a reduction of its current
assets.

The Account paid asset management and mortality expense risk fees of $783,731
and $1,011,135 for the years ended December 31, 1997 and 1996, respectively.

Distributions  from  unconsolidated  joint  ventures increased from $2,358,370 
in  1997 compared to $1,729,576 in 1996. The increase was primarily due to the 
Account's  share of Monmouth  Associates'  distributions  of $1,115,200.  The 
increase was partially offset  by  decreased  distributions  from N/S  
Associates  and 1225  Investment Corporation.

On September  30, 1996 the Account sold land and related  improvements  known as
the West Springfield Terrace  Apartments.  The purchaser was not affiliated with
the Account and the sale price was determined by arm's-length negotiations.  The
sale  price for the land and  improvements  was  $16,100,000  (before  deducting
selling  costs)  and was  paid in cash at  closing.  A  portion  of the net sale
proceeds  was  utilized to retire the first  mortgage  debt with an  outstanding
balance of $7,704,000.

For the Year Ended December 31, 1996 Compared to the Year Ended 
December 31, 1995-

Net assets  decreased  from  $35,906,465  at December 31, 1995 to $33,545,476 at
December 31, 1996.  During this same time period,  the  accumulation  unit value
decreased from $.99 to $.98. The Account experienced net terminations  amounting
to  $2,207,498  for the year ended  December  31, 1996  compared to net sales of
$2,291,255  for the year ended  December  31,  1995.  The net sales for the year
ended December 31, 1995 include approximately $24,700,000 for accumulation units
purchased  by IDS  Life,  which  has been used to repay  principal  and  accrued
interest  on the  Account's  revolving  loan  payable to IDS Life and to pay for
contract surrenders, as discussed more fully below.

Recorded net loss for the year ended December 31, 1996 was $153,491  compared to
$2,378,521 for the year ended December 31, 1995.

Interest income for the year ended December 31, 1996 primarily represents income
earned on the  Account's  investment  in the  participation  in a mortgage  loan
(Riverpoint  Shopping Center).  Interest income also includes interest earned on
short term  investments.  The  borrower  had  notified  the Lenders  that it was
experiencing  financial difficulties and approached the Lenders regarding a loan
modification.  During  the third  quarter of 1996,  the  Lenders  and  Borrowers
finalized a loan modification whereby they reached an agreement to defer payment
of a portion of the scheduled  debt service from  September 15, 1995 to July 15,
1996.  In  conjunction  with  the loan  modification  agreement,  the  scheduled
maturity date of the loan was  accelerated  to December 31, 1997.  Finally,  the
Lenders agreed to accept at certain dates through June 30, 1997 repayment of the
loan at specified amounts. On December 24, 1996, the borrower repaid the lenders
$27,400,000 (of which the Account's share was approximately  $2,800,000) in full
satisfaction of the loan as agreed upon.

For the year ended December 31, 1996, the Account's  recorded equity in earnings
of its unconsolidated  joint ventures (N/S Associates,  Monmouth  Associates and
1225  Connecticut)  was  $2,167,460,  compared to $1,924,741  for the year ended
December 31, 1995.  However,  after eliminating the effect of the recognition in
the first quarter of 1995 of income  attributable  to certain lease  termination
fees received by N/S Associates,  the equity in earnings of unconsolidated joint
ventures showed an increase for 1996 of  approximately  12.9 percent compared to
the recorded equity increase in earnings for 1995. The increase is due primarily
to (I) an  increase  in  interest  earned  which is  currently  being  paid from
Monmouth  Associates,  (ii) an increase in rental income at 1225 Connecticut due
to the property being 100 percent leased,  and (iii) lower interest expense from
N/S Associates in 1996 as a result of prepayment  charges  incurred in the first
quarter of 1995 in connection with the repayment and refinancing of the mortgage
loans on Northridge and Southridge Malls. The increase in earnings was partially
offset by lower rental income achieved at Southridge and Northridge Malls due to
lower occupancy.

For the year ended  December 31, 1996,  the Account  recognized  net  unrealized
depreciation of  participation in mortgage loan of $147,608 as a result of lower
effective rents achieved from the mortgage property upon releasing.  The Account
recognized  net realized  depreciation  on its investment in  wholly-owned  real
estate  property  of  $2,146,691  primarily  as a result of the sale of the West
Springfield  Terrace  apartments,  as discussed below. In addition,  the Account
recognized net unrealized depreciation on its investment in unconsolidated joint
ventures  of  $1,206,750  primarily  a result of (i) a decrease  in the  current
assets of Monmouth  Associates,  which partially resulted from a $4,000,000 cash
distribution  paid in 1996 in which the  Account's  share was  $278,800,  (ii) a
decrease  in  the  estimated  value  of  N/S  Associates  (Northridge  Mall  and
Southridge Mall); and (iii) a decrease in the value of 1225  Connecticut.  These
decreases  were a result of valuations  of the  properties  which  indicated the
properties fair market values.  In addition,  the lower values at Northridge and
Southridge  can be  attributable  to the  factors  discussed  above.  Also,  the
decrease in value at 1225  Connecticut  is partially  due to 80% of the building
being leased to one tenant. This increased the property's risk factor.

The Account paid asset management and mortality  expense risk fees of $1,011,135
and $1,086,516 for the years ended December 31, 1996 and 1995, respectively.

Liquidity and Capital Resources

For the Year Ended  December  31, 1997  Compared to the Year Ended  December 31,
1996 At December  31,  1997,  the Account had cash of  approximately  $83,000 as
compared to approximately  $103,000 at December 31, 1996. The Account financed a
portion of the contract terminations during 1996 through additional  investments
made by IDS Life Insurance  Company (IDS Life).  The Account had experienced net
contract terminations in 6 consecutive quarters.

The  liquidity  requirements  of the Account  have  generally  been met by funds
provided from the Account's  short-term  investments,  cash  distributions  from
unconsolidated  joint ventures,  operating cash flow, interest income,  proceeds
from sales of contracts  and  purchases of  accumulation  units by IDS Life,  as
discussed  below.  The primary  uses of funds  currently  are expected to be for
property  operating  expenses,  asset  management and mortality and expense risk
fees and payments for contract terminations.

Effective  May 1, 1995,  new contract  sales of the Account  were  discontinued.
Additional  purchase payments continue to be accepted for existing  contracts in
amounts  specified  in  the  Account's  prospectus,  whether  by  means  of  the
previously established bank authorizations or otherwise. Existing contracts also
continue to be serviced and surrender requests will be honored.

IDS Life  continues  to purchase  accumulation  units in order to  maintain  the
Account and its  liquidity.  IDS Life makes  these  payments so that no contract
holder is disadvantaged  because sales of new contracts have been  discontinued.
The initial payments for accumulation  units that IDS Life made into the Account
in 1995 were used to pay off the amount that the Account had borrowed  under its
revolving  line of credit.  IDS Life  expects  to  continue  to make  additional
payments into the Account for accumulation  units as needed in order to fund all
of the Account's  obligations  under the contracts such as paying death benefits
and contract terminations.

By  purchasing  accumulation  units,  IDS Life has an ownership  interest in the
Account.  Since IDS Life does not  purchase  a  contract,  it is not  subject to
surrender  charges.   However,  IDS  Life,  as  holder  of  accumulation  units,
participates  in the  increase  or  decrease  in  the  value  of  the  Account's
investments just as other owners of accumulation  units do. IDS Life may realize
a gain or loss on its accumulation units when redeemed.

IDS Life currently expects to hold the accumulation units it purchases until the
surrender of all outstanding contracts or until the Account's liquidity improves
(through,  for example,  one or more sales of real estate  related  investments)
thereby permitting the Account to satisfy its anticipated contract  obligations.
Because IDS Life may purchase a significant  amount of accumulation  units,  IDS
Life may be subject to certain conflicts of interest it would not otherwise have
if it had not purchased such accumulation units, including,  among other things,
a conflict in approving  periodic  valuations of real estate investments made by
the Investment Adviser.

Since the Account has experienced substantial net contract terminations over the
past  several  years,  the Account  does not intend to acquire  additional  real
estate related investments.  During 1996, the Account liquidated two real estate
related  investments.  Further, the Account intends to liquidate the real estate
related  investments  that it currently  holds when it becomes  advantageous  or
necessary  to do so.  To the  extent  funds of the  Account  are not used to pay
obligations of the Account,  including  those under existing  contracts,  or the
redemption  of  accumulation  units  purchased  by IDS Life,  such funds will be
invested in short-term  debt  instruments and possibly  intermediate-term  bonds
with maturities of up to five years.

Through December 31, 1997, Monmouth Associates funded approximately  $25,905,000
of the renovation loan for Monmouth Mall. Fundings of principal on the loan have
been  made  from  cash  reserves  held by  Monmouth  Associates,  cash flow from
interest and ground rent payments received from the  borrower/lessee and capital
contributions  made to Monmouth  Associates  by its partners pro rata based upon
their respective  interests.  The aggregate  amount of capital  contributions to
finance the loan, is  approximately  $9,830,000.  The  Account's  share of these
capital  contributions  is approximately  $685,000.  The aggregate amount of the
renovation  loan,  including  accrued and  deferred  interest  of  approximately
$1,300,000,  is currently  expected to be no greater than $29,100,000. Remaining
fundings  for the  renovation  loan are  expected  to be made from cash flow and
funds  currently held by Monmouth  Associates.  Monmouth  Associates may also be
required  to make  certain  additional  loans to pay a  portion  of the costs of
certain tenant improvements or other ordinary capital expenditures. In addition,
Monmouth  Associates may provide additional  financing to the borrower/lessee in
order to pay  costs to be  incurred  in  connection  with the  replacement  of a
department store tenant at Monmouth Mall.  However, it is not currently expected
that this would occur during 1997.

The renovation is nearing completion with tenant improvement work for one of the
larger  tenants and retainage  work  remaining.  The occupancy of mall shops and
outparcel space at the shopping center as of December 31, 1997 was approximately
85 percent.  However,  the mall shops and outparcel space are  approximately  90
percent leased.  Leasing and occupancy at the shopping center had been adversely
affected by tenant bankruptcies occurring in 1996.

The loan had an original  term of seven years and bore interest at a rate of 9.5
percent per annum.  The loan required monthly payments of principal and interest
aggregating  $824,000 per annum until November 1996 when the remaining principal
balance was due.

In  February  1995,  N/S  Associates  obtained a new  mortgage  loan  secured by
Southridge Mall in the principal  amount of  $35,000,000.  The new mortgage loan
has a term of seven years, bears interest at 8.35 percent per annum and requires
monthly  payments of interest only prior to maturity.  A portion of the proceeds
from the new mortgage  loan was used to repay the two mortgage  loans secured by
Northridge  Mall as well as the mortgage loan  previously  secured by Southridge
Mall.  Remaining net proceeds from the refinancing have been and will be used to
pay tenant  improvement  and other capital costs at  Northridge  and  Southridge
Malls.

N/S Associates currently expects that it will incur approximately  $1,710,000 in
1998 for  tenant  improvement,  asbestos  removal  and  other  capital  items at
Northridge  and  Southridge  Malls.  Actual  amounts  expended  in 1998 may vary
depending on a number of factors,  including actual leasing activity, results of
property  operations,  liquidity  considerations  and market conditions over the
course of the year. N/S Associates undertakes asbestos removal from time to time
at portions of the Northridge and Southridge  Malls as tenant spaces are vacated
and prior to occupancy by new tenants. The cost of tenant improvements, asbestos
removal and other  capital  items  generally  will be provided out of cash flows
from the properties. N/S Associates expended approximately $1,629,000 for tenant
improvements, asbestos removal and other capital projects in 1997.

At December 31, 1997,  real  property  investments  (through two  unconsolidated
joint ventures,  N/S Associates and 1225 Connecticut),  one land  sale-leaseback
investment (Monmouth Associates),  and short-term  investments  represented 50.9
percent,  30.3  percent  and 18.5  percent  of total  assets,  respectively.  At
December  31,  1996,   real  property   investments,   mortgage  loan  and  land
sale-leaseback  investments and short-term investments represented 42.4 percent,
26.9 percent and 30.7 percent of total assets, respectively.

For the Year Ended  December  31, 1996  Compared to the Year Ended  December 31,
1995 At December 31,  1996,  the Account had cash of  approximately  $103,000 as
compared to approximately  $587,000 at December 31, 1995. The Account financed a
portion of the contract  terminations  during 1996 and 1995  through  additional
investments  made by IDS Life  Insurance  Company  (IDS  Life).  The Account had
experienced net contract  terminations in 14 consecutive quarters with net sales
(including  accumulation  units  purchased by IDS Life) in six of the last seven
quarters.

The  liquidity  requirements  of the Account  have  generally  been met by funds
provided from the Account's  short-term  investments,  cash  distributions  from
unconsolidated  joint ventures,  operating cash flow, interest income,  proceeds
from the sale of West Springfield  Terrace  apartments,  the Loan repayment from
Riverpoint  Shopping  Center,  proceeds from sales of contracts,  and borrowings
under the line of credit from IDS Life and  purchases of  accumulation  units by
IDS Life discussed below. The primary uses of funds currently are expected to be
for property operating expenses, asset management and mortality and expense risk
fees and payments for contract terminations.

In March  1994,  the Account  obtained a revolving  line of credit for up to $10
million from IDS Life to pay for contract surrenders and other obligations under
the contracts. In June 1995, the revolving credit loan balance of $9,500,000 and
accrued interest were repaid as discussed below.

Effective  May 1, 1995,  new contract  sales of the Account  were  discontinued.
Additional  purchase payments continue to be accepted for existing  contracts in
amounts  specified  in  the  Account's  prospectus,  whether  by  means  of  the
previously established bank authorizations or otherwise. Existing contracts also
continue to be serviced and surrender requests will be honored.

IDS Life  continues  to purchase  accumulation  units in order to  maintain  the
Account and its  liquidity.  IDS Life makes  these  payments so that no contract
holder is disadvantaged  because sales of new contracts have been  discontinued.
The initial payments for accumulation  units that IDS Life made into the Account
were  used to pay off the  amount  that  the  Account  had  borrowed  under  its
revolving  line of credit.  IDS Life  expects  to  continue  to make  additional
payments into the Account for accumulation  units as needed in order to fund all
of the Account's  obligations  under the contracts such as paying death benefits
and  contract  terminations.  As of December 31,  1996,  IDS Life had  purchased
approximately 24,969,872 accumulation units.

By  purchasing  accumulation  units,  IDS Life has an ownership  interest in the
Account.  Since IDS Life does not  purchase  a  contract,  it is not  subject to
surrender  charges.   However,  IDS  Life,  as  holder  of  accumulation  units,
participates  in the  increase  or  decrease  in  the  value  of  the  Account's
investments just as other owners of accumulation  units do. IDS Life may realize
a gain or loss on its accumulation units when redeemed.

IDS Life currently expects to hold the accumulation units it purchases until the
surrender of all outstanding contracts or until the Account's liquidity improves
(through,  for example,  one or more sales of real estate  related  investments)
thereby permitting the Account to satisfy its anticipated contract  obligations.
Because IDS Life may purchase a significant  amount of accumulation  units,  IDS
Life may be subject to certain conflicts of interest it would not otherwise have
if it had not purchased such accumulation units, including,  among other things,
a conflict in approving  periodic  valuations of real estate investments made by
the Investment Adviser.

Since the Account has experienced substantial net contract terminations over the
past  several  years,  the Account  does not intend to acquire  additional  real
estate related  investments.  Further, the Account intends to liquidate the real
estate related investments that it currently holds when it becomes  advantageous
or  necessary  to do so. To the extent  funds of the Account are not used to pay
obligations of the Account,  including  those under existing  contracts,  or the
redemptions  of  accumulation  units  purchased by IDS Life,  such funds will be
invested in short-term  debt  instruments and possibly  intermediate-term  bonds
with maturities of up to five years.

Through December 31, 1997, Monmouth Associates funded approximately  $25,905,000
of the renovation loan for Monmouth Mall. Fundings of principal on the loan have
been  made  from  cash  reserves  held by  Monmouth  Associates,  cash flow from
interest and ground rent  payments  received  from  borrower/lessee  and capital
contributions  made to Monmouth  Associates  by its partners pro rata based upon
their respective  interests.  The aggregate  amount of capital  contributions to
finance the loan, is  approximately  $9,830,000.  The  Account's  share of these
capital  contributions  is approximately  $685,000.  The aggregate amount of the
renovation  loan,  including  accrued and  deferred  interest  of  approximately
$1,300,000,  is currently  expected to be no greater than $29,100,000. Remaining
fundings  for the  renovation  loan are  expected  to be made from cash flow and
funds  currently held by Monmouth  Associates.  Monmouth  Associates may also be
required  to make  certain  additional  loans to pay a  portion  of the costs of
certain tenant improvements or other ordinary capital expenditures. In addition,
Monmouth  Associates may provide additional  financing to the borrower/lessee in
order to pay  costs to be  incurred  in  connection  with the  replacement  of a
department store tenant at Monmouth Mall.  

The renovation is nearing  completion with tenant improvement work and retainage
work remaining.  The occupancy of mall shops and outparcel space at the shopping
center as of December 31, 1996 was approximately 83 percent.  However,  the mall
shops and  outparcel  space are  approximately  86 percent  leased.  Leasing and
occupancy  at the  shopping  center  have  been  adversely  affected  by  tenant
bankruptcies occurring in 1995.

The Account had a loan  outstanding  in the  principal  amount of  approximately
$7,770,000,  prior to its  payoff  in  September  1996 as a result  of the sale,
secured by its wholly-owned  real estate  investment,  West Springfield  Terrace
Apartments.  The loan had an original term of seven years and bore interest at a
rate of 9.5 percent per annum.  The loan required  monthly payments of principal
and  interest  aggregating  $824,000  per annum until  November of 1996 when the
remaining principal balance was due.

In  February  1995,  N/S  Associates  obtained a new  mortgage  loan  secured by
Southridge Mall in the principal  amount of  $35,000,000.  The new mortgage loan
has a term of seven years, bears interest at 8.35 percent per annum and requires
monthly  payments of interest only prior to maturity.  A portion of the proceeds
from the new mortgage  loan was used to repay the two mortgage  loans secured by
Northridge  Mall as well as the mortgage loan  previously  secured by Southridge
Mall.  Remaining net proceeds from the refinancing have been and will be used to
pay tenant  improvement  and other capital costs at  Northridge  and  Southridge
Malls.

At December 31, 1996,  real  property  investments  (through two  unconsolidated
joint ventures,  N/S Associates and 1225 Connecticut) and mortgage loan and land
sale-leaseback  investments (through an unconsolidated  joint venture,  Monmouth
Associates) and short-term  investments  represented 42.4 percent,  26.9 percent
and 30.7 percent of total assets, respectively.


<PAGE>



Item 8. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                       IDS LIFE ACCOUNT RE
                                of
                    IDS LIFE INSURANCE COMPANY

                              Index


Independent Auditors' Report
Balance Sheets, December 31, 1997 and 1996
Statements  of  Operations,  years  ended  December  31,  1997,  1996  and  1995
Statements of Changes in Contract Owners' Equity, years ended December 31, 1997,
1996 and 1995 Statements of Cash Flows,  years ended December 31, 1997, 1996 and
1995 Notes to Financial Statements Participation in Mortgage Loan on Real Estate
and  Interest  Earned on  Participation  in Mortgage - Schedule  III Real Estate
Owned and Rental Income - Schedule IV

Schedules not Filed:
All schedules  other than those  indicated in the index have been omitted as the
required  information  is  inapplicable  or  the  information  is  presented  in
financial statements or the related notes.

N/S ASSOCIATES, MONMOUTH ASSOCIATES & 1225 INVESTMENT  CORPORATION
                   UNCONSOLIDATED JOINT VENTURES
                               of
                       IDS LIFE ACCOUNT RE

                              Index


Independent Auditors' Report
Combined  Balance  Sheets,  December 31, 1997 and 1996  Combined  Statements  of
Operations, years ended December 31, 1997,
 1996 and 1995
Combined  Statements of Partners'  Capital  Accounts,  years ended  December 31,
 1997, 1996 and 1995
Combined Statements of Cash Flows, years ended December 31, 1997,
 1996 and 1995
Notes to Combined Financial Statements
Participation in Mortgage Loan on Real Estate and Interest Earned
 on Participation in Mortgage - Schedule III
Combined Real Estate Owned and Rental Income - Schedule IV

Schedules not Filed:
All schedules  other than those  indicated in the index have been omitted as the
required  information  is  inapplicable  or  the  information  is  presented  in
financial statements or the related notes.


<PAGE>


                        INDEPENDENT AUDITORS' REPORT



TheBoard of Directors of IDS Life Insurance  Company and Contract  Owners of IDS
   Life Account RE:


We have audited the financial statements of IDS Life Account RE as listed in the
accompanying  index. In connection with our audits of the financial  statements,
we also  have  audited  the  financial  statement  schedules  as  listed  in the
accompanying index. These financial statements and financial statement schedules
are the  responsibility  of the  management of IDS Life Insurance  Company.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial statement schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of IDS Life Account RE at December
31, 1997 and 1996 and the results of its  operations and its cash flows for each
of the years in the three-year period ended December 31, 1997 in conformity with
generally  accepted  accounting  principles.  Also, in our opinion,  the related
financial  statement  schedules,  when  considered  in  relation  to  the  basic
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.



                                    KPMG Peat Marwick LLP


Minneapolis, Minnesota
March 20, 1998


<PAGE>



                                          IDS LIFE ACCOUNT RE
                                                         of
                                   IDS LIFE INSURANCE COMPANY

                                              BALANCE SHEETS
<TABLE>

<S>                                                              <C>                 <C>
                                                                 December 31,        December 31,
                                                                     1997                1996

                                                              ------------------   ----------------
Assets:
   Cash                                                                  $82,887         $102,737
   Investments in securities, at value (Note 2)
       (identified cost of $5,282,201 and $10,254,310
       at December 31, 1997 and December 31, 1996,
       respectively)                                                   5,282,201       10,254,310
   Investments  in  unconsolidated  joint  ventures,  
       at  fair  value  (cost  of $36,218,770  and  
       $36,299,366 at December 31, 1997 and 
       December 31, 1996, respectively)                               23,134,763       23,384,605
   Other assets                                                               --            4,277

                                                              ------------------   ----------------
          Total assets
                                                                    $28,499,851        $33,745,929
                                                              ==================   ================

Liabilities:
   Payable to IDS Life for:
       Operating expenses                                                 72,008            42,340
       Contract terminations                                              22,567             4,793
   Accrued mortality and expense risk fee                                 28,961            32,991
   Accrued asset management fee                                           36,200            41,239
   Liabilities related to wholly-owned
       real estate property (Note 5):
       Accounts payable and other liabilities                                --             79,090

                                                              ------------------   ----------------
          Total liabilities                                          $   159,736          $200,453
                                                              ==================   ================

Contract Owners' Equity:
   Net assets applicable to Variable Annuity
       contracts in accumulation period                              $28,340,115       $33,545,476
                                                              ==================   ================

Accumulation units outstanding                                        27,339,211        34,144,955
                                                              ==================   ================

Net asset value per accumulation unit                            $          1.04      $       0.98
                                                              ==================   ================


See accompanying notes to financial statements.
</TABLE>



<PAGE>



                                                            IDS LIFE ACCOUNT RE

                                                                            of
                                                     IDS LIFE INSURANCE COMPANY

                                                        STATEMENTS OF OPERATIONS
<TABLE>
                                                                                                  For the years ended
                                                                    December 31,          December 31,         December 31,
                                                                        1997                  1996                 1995
                                                                  ------------------    ------------------   ------------------
Income:
<S>                                                            <C>                  <C>                   <C>                 
    Interest income                                            $            467,504 $             385,026 $            264,581
    Account's equity in earnings of
          unconsolidated joint ventures                                   2,277,775             2,167,460            1,924,741
    Rental income                                                                --             1,887,995            2,379,439
    Realized loss on payoff of participation in mortgage loan                    --              (24,533)                   --
    Unrealized depreciation of participation
          in mortgage loan                                                       --             (147,608)             (27,817)
    Unrealized appreciation of investment in
          wholly-owned real estate property                                      --                    --              138,764
    Unrealized depreciation of investments
          in unconsolidated joint ventures                                (169,246)           (1,206,750)          (3,999,782)
    Realized loss on sale of wholly-owned
            real estate property                                                  --             (725,436)                 --
    Other income                                                             54,114                    --                  --
                                                                  ------------------    ------------------   ------------------
               Total income                                               2,630,147             2,336,154              679,926
                                                                  ------------------    ------------------   ------------------

Expenses:
    Asset management fee                                                    435,406               561,742              603,620
    Mortality and expense risk fee                                          348,325               449,393              482,896
    Professional services                                                    54,147                42,133               39,715
    Amortization of deferred organizational
          and borrowing costs                                                    --                19,602               25,851
    Salaries                                                                 52,055                17,562               28,218
    Revolving loan interest                                                      --                    --               94,124
    Other operating expenses                                                 22,009                17,823               27,884
    Operating expenses related to wholly-owned
     real estate property:
          Interest                                                               --               551,434              741,811
          Utilities                                                              --               139,334              153,416
          Repairs and maintenance                                                --               158,047              219,829
          Property and other taxes                                               --               160,633              186,440
          Salaries                                                               --               174,075              181,540
          Management fees                                                        --                89,712              118,983
          Other                                                                  --               108,155              154,120
                                                                  ------------------    ------------------   ------------------
               Total expenses                                               911,942             2,489,645            3,058,447
                                                                  ------------------    ------------------   ------------------

Net income (loss)                                              $          1,718,205 $           (153,491) $        (2,378,521)
                                                                  ==================    ==================   ==================
See accompanying notes to financial statements.
</TABLE>



<PAGE>



                               IDS LIFE ACCOUNT RE
                                       of
                           IDS LIFE INSURANCE COMPANY

                             STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY



<TABLE>


                                                                             For the
                                              years ended

                                              ---------------------------------------------------------------
                                              December 31, 1997         December 31, 1996    December 31,1995
                                              ---------------------------------------------------------------

<S>                                              <C>                   <C>                  <C>         
Net income (loss)                                $1,718,205            $ (153,491)          $(2,378,521)
Contract purchase proceeds                           17,038             2,049,160            24,922,267           
Contract termination payments                    (6,940,604)           (4,256,658)          (22,631,012)   
                                              ---------------------------------------------------------------
Decrease in net assets                           (5,205,361)           (2,360,989)              (87,266) 

Contract owners' equity at
      beginning of year                          33,545,476            35,906,465            35,993,731
                                              ---------------------------------------------------------------

Contract owners' equity at end
      of year                                    28,340,115            33,545,476            35,906,465
                                              ===============================================================




Accumulation Unit Activity

  Units purchased with proceeds
      from sale of contracts                         17,026             2,063,252            23,170,080
  Units redeemed for contract
      terminations                               (6,822,770)           (4,272,226)          (21,054,331) 
                                              ---------------------------------------------------------------

Net increase(decrease) in units                  (6,805,744)           (2,208,974)            2,115,749

Units outstanding at beginning
      of year                                    34,144,955            36,353,929            34,238,180
                                              ---------------------------------------------------------------

Units outstanding at end of year                 27,339,211            34,144,955            36,353,929
                                              ===============================================================

See accompanying notes to financial statements.
</TABLE>


<PAGE>


                                                          IDS LIFE ACCOUNT RE
              
                                                                     of
                                                     IDS LIFE INSURANCE COMPANY

                                                       STATEMENTS OF CASH FLOWS



                                                     For the  years ended
<TABLE>

                                                                       December 31,      December 31,         December 31,

                                                                           1997               1996                  1995
                                                                      ---------------   ------------------   -------------------
Cash flows from operating activities:
<S>                                                                    <C>                  <C>                  <C>         
    Net Income (loss)                                                  $ 1,718,205          $ (153,491)          $(2,378,521)
                                                                      ---------------   ------------------   -------------------
    Adjustments  to  reconcile  net income  (loss) to net cash used in operating
    activities:
          Account's equity in earnings of
            unconsolidated joint ventures                               (2,277,775)          (2,167,460)          (1,924,741)
          Change in accrued interest on
            participation in mortgage loan                                      --               (5,400)               5,400
          Amortization of organizational and borrowing costs                    --               19,602               25,851
          Change in cumulative discount amortization
          on short-term investments                                          9,879             (10,926)                   --
          Change in unrealized depreciation of investments
            in unconsolidated joint ventures                                169,246            1,206,750           3,999,782
          Change in unrealized depreciation (appreciation)
            of participation in mortgage loan                                    --              147,608              27,817
          Loss on participation of mortgage loan                                 --               24,533                  --
          Change in unrealized (appreciation)
            depreciation of investment in wholly-owned real estate property      --                   --            (138,764)
          Loss on sale of wholly-owned real estate property                      --              725,436                  --
          Change in other assets                                              4,277               38,858              (8,628)
          Change in payable to IDS Life for operating expenses               29,668              (34,279)             18,219
          Change in accrued mortality and expense risk fees                  (4,030)              (7,429)                284
          Change in accrued asset management fees                            (5,039)              (9,286)                354
          Change in payables and other liabilities related
            to wholly-owned real estate property                            (79,090)            (165,847)             32,740
          Change in payable to IDS Life for revolving
            loan interest                                                        --                   --              (9,224)
                                                                      ---------------   ------------------   -------------------
          Total adjustments to net income (loss)                         (2,152,864)            (237,840)          2,029,090
                                                                      ---------------   ------------------   -------------------
                    Net cash used in operating activities                  (434,659)            (391,331)           (349,431)
                                                                      ---------------   ------------------   -------------------

Cash flows from investing activities:
    Net sales (purchases) of short-term securities                        4,962,230         (10,243,384)                  --
    Sale of wholly owned property                                                --           15,574,443            (163,781)
    Distributions received from joint ventures                            2,358,371            1,726,577           1,504,514
                                                                      ---------------   ------------------   -------------------
Net cash provided by investing activities                                 7,320,601            7,057,636           1,340,733

Cash flows from financing activities:
    Proceeds from sales of contracts                                         17,038            2,349,160          24,627,492
    Payments for contract terminations                                   (6,922,830)          (4,523,183)        (22,369,833)
    Decrease in mortgage payable                                                 --           (7,770,339)            (81,940)
    Change in payable to IDS Life for revolving loan                             --                   --          (2,100,000)
    Contributions to Monmouth renovation-joint venture                           --                   --            (685,151)
    Payment for participation in Mortgage Loan                                   --            2,794,065                  -- 
                                                                      ---------------   ------------------   -------------------
Net cash used in financing activities                                    (6,905,792)          (7,150,297)           (609,432)
                                                                      ---------------   ------------------   -------------------
Net increase (decrease) in cash                                             (19,850)            (483,992)            381,870
Balance of cash at beginning of year                                        102,737              586,729             204,859
                                                                      ---------------   ------------------   -------------------
Balance of cash at end of year                                            $  82,887           $  102,737           $ 586,729
                                                                      ===============   ==================   ===================


Supplemental cash flow disclosure:
    Cash paid for mortgage and revolving
      loan interest                                                       $      --           $  551,434           $   835,935
                                                                      ===============   ==================   ===================

See accompanying notes to financial statements.
</TABLE>


<PAGE>



                   IDS LIFE ACCOUNT RE
                              of
                   IDS LIFE INSURANCE COMPANY

                       December 31, 1997

                   NOTES TO FINANCIAL STATEMENTS

1. Organization

IDS Life  Account RE (the  Account) is a  segregated  asset  account of IDS Life
Insurance Company (IDS Life) under Minnesota law. A registration statement under
the Securities Act of 1933 relative to the deferred  variable annuity  contracts
(the  Contracts)  issued by the  Account  became  effective  on August 6,  1987.
Effective May 1, 1995, the Account  discontinued  new contract  sales.  Although
additional  purchase  payments  may be made into  existing  contracts,  prior to
making any additional purchase payment an existing contract owner should bear in
mind that the Account  intends to liquidate its real estate related  investments
over  time.  The assets of the  Account  are held for the  exclusive  benefit of
contract owners and are not chargeable with liabilities arising out of any other
business conducted by IDS Life.

2. Summary of Significant Accounting Policies

The accompanying financial statements have been prepared on the accrual basis of
accounting.   Significant  accounting  policies  followed  by  the  Account  are
summarized below.

Investments in Securities

Investments  in  short-term  securities  maturing  more  than 60 days  from  the
valuation date are valued at the market price or approximate fair value based on
current  interest  rates;  those  maturing  in 60  days or less  are  valued  at
amortized  cost.  The Account  also may invest in  intermediate-term  bonds with
maturities  of up to five years which are valued at fair value as  determined by
reference  to  market  quotations,   market  indices,  matrices  and  data  from
independent brokers.

Security  transactions are accounted for on the date securities are purchased or
sold.  Interest  income,  including  amortization  of premium and  discount,  is
accrued daily.

Consolidation and Unconsolidated Joint Ventures

The Account's  policy is to consolidate the underlying  assets,  liabilities and
operations  of  property  investments  where 50  percent  or  greater  ownership
position is maintained.  Investments in unconsolidated  joint ventures with less
than 50 percent  ownership  interest are  accounted  for on the equity method of
accounting.

Investments in Real Property, Mortgage Loans and Land/Sale-Leasebacks

The  Account  initially  values real estate  related  investments  at their cost
(including  acquisition  or mortgage  placement  fees and other  acquisition  or
placement  expenses) unless  circumstances  otherwise  indicate that a different
value  should  be used.  Subsequently,  the value of these  investments  will be
periodically  reviewed  by JMB  Annuity  Advisers  (the  Investment  Adviser).
Additionally, at the time of purchase and once every two years thereafter,  
each real property investment and each real property  underlying a  
participating  mortgage loan or 
land sale-leaseback  investment will be appraised by an independent appraiser or
an existing appraisal will be updated. The relative weight to be given
to a  particular  methodology  or other  relevant  factors  in  determining  the
estimated  asset  value  of a  particular  real  property  will  depend  upon an
assessment  of the  existing  and  anticipated  market  conditions  and property
specific factors relevant to such real property.  There is no assurance that the
assumptions,  estimates and  methodologies  used in valuing the  Account's  real
estate related investments will in fact prove accurate or that such values would
in fact be realized.  Such estimates involve subjective  judgments as the actual
price of real estate can only be determined between independent third parties in
sales transactions.  In addition,  any expenses that may be borne by the Account
in connection with the  disposition of a real estate related  investment are not
deducted in determining its estimated value.

Because the Account  values its real  property  investments  at  estimated  fair
values, no provision for depreciation expense is recorded.

Each day the Account will record estimated  income and expenses  attributable to
real estate related assets. Periodically,  adjustments to reflect the difference
between estimated and actual income and expenses will be made.

Federal Income Taxes
IDS Life is taxed as a life insurance company. The Account is treated as part of
IDS Life for Federal income tax purposes. Under existing Federal income tax law,
no income taxes are payable with respect to any income of the Account.

Use of Estimates
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported  results of  operations  during the period.  Actual  results  could
differ from those estimates.

3. Fees and Expenses

The Account  pays a mortality  and expense risk fee to IDS Life which is accrued
daily and is equal,  on an annual  basis,  to 1.00 percent of the average  daily
asset  value,  as defined,  of the  Account.  The  mortality  risk is IDS Life's
guarantee to make retirement payments according to the terms of the Contract, no
matter how long annuitants  live. The expense risk portion of the fee is paid to
IDS Life for its guarantee that the various fees paid by the Account to IDS Life
will not be increased in the future. For the years ended December 31, 1997, 1996
and  1995,  the  Account  paid  IDS Life a  mortality  and  expense  risk fee of
$348,325, $449,393 and $482,896, respectively.

The  Account  also pays IDS Life an asset  management  fee  equal,  on an annual
basis,  to 1.25  percent of the average  daily asset value,  as defined,  of the
Account. A portion of this fee, equal to 0.95 percent of the average daily asset
value,  is paid by IDS Life to the  Investment  Adviser.  The  total  fee may be
adjusted  upward to a maximum of 1.50 percent  depending upon the performance of
the Account's  real property  investments  as measured  against the The National
Council of Real Estate  Investment  Fiduciaries  (NCREIF)  Property  Index.  The
performance-related  portion of the fee is calculated  and recorded on an annual
basis when the NCREIF  Property  Index is released  each year for the  preceding
calendar year.  Any  performance  fee adjustment  will be paid to the Investment
Adviser.  There were no performance  fees for the years 1997,  1996 or 1995. For
the years ended  December 31, 1997,  1996 and 1995, the Account paid total asset
management fees of $435,406, $561,742 and $603,620, respectively.

IDS Life receives  from the Account an  acquisition  and mortgage  placement fee
equal to 3.75  percent of the total cash to be paid or  advanced  by the Account
(net of any borrowings in the case of real property  investments)  in connection
with  each  real  property  investment,  mortgage  loan or  land  sale-leaseback
investment made by the Account. A portion of this fee, equal to 3.50 percent, is
paid to the Investment  Adviser in consideration  for its services in connection
with the  acquisition  or placement of real estate  related  investments  of the
Account.  No acquisition and mortgage  placement fees were paid in 1997, 1996 or
1995.

The Account pays for all operational  expenses  incurred on its behalf.  For the
years ended December 31, 1997,  1996 and 1995, IDS Life was reimbursed  $11,019,
$35,385 and $56,102,  respectively,  for personnel-related  expenses incurred in
the administration of the Account.

The Account also pays  custodian  fees to American  Express  Trust  Company,  an
affiliate of American Express Financial Corporation (AEFC).

4. Investments in Unconsolidated Joint Venture Partnerships and Participation in
Mortgage Loan Joint Venture Partnership - N/S Associates

IDS Life,  on behalf of the Account,  entered into a joint  venture  partnership
called N/S Associates, which on April 4, 1988 acquired interests in two enclosed
super regional shopping malls that are described below.

The terms of N/S Associates'  partnership  agreement provide that its annual net
cash flows and net sales or refinancing  proceeds  generally will be distributed
among  all of the  partners  in  accordance  with  their  respective  percentage
ownership  interests in N/S Associates.  The Account  contributed  approximately
$12,008,000  to N/S  Associates  as its  capital  contribution.  The  percentage
interest of the Account in N/S  Associates is 5.92 percent.  In connection  with
the  purchase  of the  shopping  malls,  the  Account  paid to IDS  Life and the
Investment Adviser their respective portions of the acquisition fee amounting to
approximately $450,000.

Summary of Real Estate Investments Made Through N/S Associates

Milwaukee, Wisconsin - Northridge Mall

The Account,  through N/S Associates,  owns an interest in an existing  enclosed
super  regional  shopping  center in Milwaukee,  Wisconsin,  known as Northridge
Mall. The mall shops and four adjacent department stores comprising the shopping
center contain  approximately  1,053,000  square feet of gross leasable area, of
which N/S Associates owns  approximately  399,000 square feet consisting of mall
shops  (approximately  388,000  square  feet) and storage  space  (approximately
11,000 square feet).  The remaining  654,000  square feet of gross leasable area
are occupied by four department stores,  three of which own their own stores and
a portion of the parking area. The fourth department store leases its space from
an unaffiliated third party.

N/S Associates  acquired its interest in the shopping center in April 1988 for a
purchase price of approximately  $108,107,000,  of which $89,653,000 was paid in
cash at closing,  subject to the existing mortgage loans with a then outstanding
aggregate  balance of  approximately  $18,454,000.  In addition to the  purchase
price,  a reserve of $8,900,000 was  established,  all of which had been used to
pay for certain capital  improvements  made at the shopping center.  In February
1995,  the two mortgage loans secured by the property were repaid with a portion
of the proceeds from the refinancing of the Southridge Mall mortgage loan.

The shopping  center is being managed by an affiliate of the Investment  Adviser
under a management  agreement.  The affiliate of the Investment Adviser receives
an annual fee equal to 3.75 percent of the gross  receipts of the property  plus
reimbursement  of  certain  direct  expenses  in  connection  with the  property
management.

Greendale, Wisconsin - Southridge Mall

The Account,  through N/S Associates,  owns an interest in an existing  enclosed
super  regional  shopping  center in Greendale,  Wisconsin,  known as Southridge
Mall. The mall shops and five adjacent department stores comprising the shopping
center contain  approximately  1,297,000  square feet of gross leasable area, of
which N/S Associates owns approximately 449,000 square feet, including the space
leased to one of the  department  stores.  The remaining  860,000 square feet of
gross leasable area are occupied by four other department stores, three of which
own their own stores and a portion of the parking  area.  The fourth  department
store leases its space from an unaffiliated third party.

N/S Associates acquired its interest in the shopping center for a purchase price
of approximately $115,401,000, of which $96,865,000 was paid in cash at closing.
In February 1995, the mortgage  loan secured by the property was repaid with a 
portion of the proceeds
from a new  mortgage  loan  in the  principal  amount  of  $35,000,000.  The new
mortgage  loan has a term of seven  years,  bears  interest at 8.35  percent per
annum and requires monthly payments of interest only prior to maturity. Proceeds
from the new  mortgage  loan  were also  used to repay  the two  mortgage  loans
secured by  Northridge  Mall.  The remaining net proceeds from the new loan were
used to pay  approximately  $2,900,000 of tenant  improvement  and other capital
costs incurred for Northridge and Southridge Malls.

The shopping  center is being managed by an affiliate of the Investment  Adviser
under a management  agreement.  The affiliate of the Investment Adviser receives
an annual fee equal to 3.75 percent of the gross  receipts of the property  plus
reimbursement  of  certain  direct  expenses  in  connection  with the  property
management.

Joint Venture Partnership - Monmouth Associates

IDS Life,  on behalf of the Account,  entered into a joint  venture  partnership
called Monmouth Associates,  which on October 27, 1988 (i) acquired certain land
underlying a super regional  shopping  center in Eatontown,  New Jersey known as
Monmouth Mall, (ii) leased the land to the owner of the shopping center pursuant
to a long-term ground lease, and (iii) executed a first leasehold  mortgage loan
to the owner of the shopping center secured by the leasehold real estate and the
improvements  thereon as more fully described  below.  The owner of the shopping
center (the  Borrower/Lessee) is a partnership whose partners are not affiliated
with Monmouth Associates.

The terms of Monmouth Associates'  partnership agreement provide that its annual
net  cash  flows  and  net  sales  or  refinancing  proceeds  generally  will be
distributed  among all of the  partners  in  accordance  with  their  respective
percentage   interests   in  Monmouth   Associates.   The  Account   contributed
approximately   $10,000,000  to  Monmouth  Associates  as  its  initial  capital
contribution.   The  Account  has  made  additional  capital   contributions  of
approximately  $685,000.  The  percentage  interest  of the  Account in Monmouth
Associates is 6.97 percent.

In  connection  with  the  investment,  the  Account  paid to IDS  Life  and the
Investment  Adviser their  respective  portions of the  acquisition and mortgage
placement fee amounting to approximately $375,000.

Summary of Real Estate Investment Made Through Monmouth Associates
Eatontown, New Jersey - Monmouth Mall

The  Account,  through  Monmouth  Associates,  acquired  an interest in the land
underlying a shopping  center in Eatontown,  New Jersey known as Monmouth  Mall.
The mall is  located  on  approximately  90 acres  of  land,  of which  Monmouth
Associates owns  approximately  88.5 acres,  subject to the rights of one of the
department  store  tenants  to  acquire  the land  underlying  its store and the
improvements thereon for nominal consideration. The remaining acres are owned by
2 department stores. Monmouth Associates acquired its interest in the land for a
purchase price of approximately $13,000,000.

Monmouth  Associates  entered into an agreement  whereby the land underlying the
mall is leased back to the  Borrower/Lessee  under a long-term ground lease. The
long-term ground lease, which has a term of 75 years,  provides for monthly base
rent  aggregating  $1,170,000  annually with minimum  payments of $650,000.  The
long-term ground lease also provides for contingent rent,  payable quarterly out
of the  excess,  if any, of  substantially  all of the gross  receipts  from the
shopping center received by the Borrower/Lessee over certain base amounts, equal
to the sum of (x) a specified annual amount of $520,000  per
annum,  increased until paid at the "applicable rate" of interest payable under
the first  leasehold  mortgage loan described below (such amount as so increased
herein called the "rent shortfall  amount"),  plus (y) 15 percent of the balance
of such excess gross receipts  remaining  after  deducting the aggregate  amount
paid at such time of the rent shortfall  amount under the long-term ground lease
and the "interest  shortfall amount" under the first leasehold  mortgage loan as
described below.

In addition,  Monmouth Associates made a first leasehold  participating mortgage
loan in the original  principal  amount of $128,920,000  to the  Borrower/Lessee
which is secured by the leasehold real estate and the improvements  thereon. The
current loan amount is $127,670,000.  The loan has a term of 15 years, which may
be extended from time to time at the option of Monmouth  Associates for up to an
additional 20 years.  The loan currently  provides for monthly  payments of base
interest at a base rate of  approximately  5.00  percent per annum for each loan
year.  The first  leasehold  mortgage also  provides for  quarterly  payments of
contingent interest,  payable out of the excess, if any, of substantially all of
the gross receipts from the shopping center received by the Borrower/Lessee over
certain base amounts,  equal to the sum of (x) the difference between the amount
of interest payable on the loan at the "applicable rate" and that payable at the
base rate described  above,  increased  until paid at the applicable  rate (such
amount as so increased herein called the "interest shortfall amount"),  plus (y)
45  percent  of the  balance  of such  excess  gross  receipts  remaining  after
deducting the aggregate  amount paid at such time of the rent  shortfall  amount
under  the  ground  lease  and the  interest  shortfall  amount  under the first
leasehold  mortgage loan. The "applicable rate" under the loan currently is 8.97
percent per annum for each loan year thereafter.  In addition, upon a joint sale
or  refinancing  of the land and  improvements  or at maturity of the  leasehold
mortgage loan, Monmouth Associates is entitled to receive certain participations
in the proceeds from such sale or refinancing after payment of its investment in
the land and/or  repayment of the  principal  amount of the  leasehold  mortgage
loan. For financial  reporting purposes,  Monmouth  Associates  discontinued the
accrual of contingent interest on the leasehold mortgage loan in April 1992 as a
result of uncertainty as to the  collectibility  of such contingent  interest in
light of the  previous  decrease in the  estimated  value of Monmouth  Mall.  In
addition, for financial reporting purposes, no contingent rent was accrued under
the ground lease for 1997, 1996 or 1995. In 1995,  Monmouth Associates wrote off
the receivable  balance of $3,576,000  primarily related to the accrued interest
resulting  from the  difference  between the accrual and pay rates  ("contingent
interest")   recorded  prior  to  1992,  due  to  the   uncertainty  as  to  the
collectibility of these amounts.

Monmouth  Associates  is  obligated  to make  certain  additional  loans  to the
Borrower/Lessee under certain circumstances to finance the cost of 60 percent of
tenant improvements or other ordinary capital expenditures.  In addition, in May
1994, Monmouth Associates made a loan to finance the cost of a renovation of the
shopping  center,  which  commenced  during  the  third  quarter  of  1994.  The
renovation  consists  of, among other  things,  the addition of a food court and
cinema and the  re-merchandising  of approximately  300,000 square feet of gross
leasable area. The renovation loan from Monmouth  Associates bears interest at a
fixed interest rate of 10.5 percent per annum. In addition, Monmouth Associates'
participation  in  certain  levels  of sale or  refinancing  proceeds  from  the
property will be increased  until  Monmouth  Associates  has received  aggregate
payments  equal to an  internal  rate of return of 11  percent  per annum on its
investments  in the land and/or the first  leasehold  mortgage loan. The maximum
amount of the renovation loan is $29,100,000,  and the cost of the renovation is
currently  estimated to be $29,100,000,  including accrued and deferred interest
of approximately  $1,300,000.  As of December 31, 1997,  Monmouth Associates had
funded  approximately  $25,905,000,  using  its  cash  reserves,  cash  flow and
additional  capital  contributions  made pro  rata  based  upon  the  respective
interests of the joint venture partners in Monmouth  Associates.  The renovation
loan requires  monthly  payments of interest only until maturity when the entire
principal amount and any accrued and unpaid interest will be due. The renovation
loan will mature  contemporaneously  with the first  leasehold  mortgage loan in
October  2003,  subject to  acceleration  or  extension  of the loan by Monmouth
Associates under certain circumstances.

Joint Venture - 1225 Connecticut Avenue, N.W.

Washington, D.C. - 1225 Connecticut Avenue, N.W.

In May 1990, IDS Life, on behalf of the Account, acquired an interest in a newly
formed Delaware corporation, 1225 Investment Corporation (the Corporation) owned
jointly with certain other persons described below. The Corporation  acquired an
office building located in Washington,  D.C. known as 1225  Connecticut  Avenue,
N.W. (1225 Connecticut).

The office building,  which was completed in 1968, is an eight-story  reinforced
concrete frame building containing 184,432 square feet of rentable office space,
18,498 square feet of rentable  retail  space,  6,416 square feet of below grade
storage space and 100,024  square feet of subsurface  parking space for over 300
automobiles.

The Corporation has elected to qualify as a real estate  investment trust (REIT)
pursuant to sections  856 through 860 of the Internal  Revenue Code of 1986,  as
amended (the Code).  For each taxable year that the  Corporation  qualifies as a
REIT, the Corporation in general will not be subject to federal corporate income
tax or the District of Columbia  corporate  franchise tax on its regular taxable
income and will not be taxed on long-term  capital gain income to the extent its
income is distributed as dividends.  If the Corporation  were to fail to qualify
as a REIT, it would be taxed at rates applicable to a corporation on its taxable
income, whether or not distributed.

The Account owns  approximately 16.3 percent of the outstanding shares of common
stock of the Corporation.  Certain of the outstanding  shares of common stock of
the  Corporation  not  owned by the  Account  are owned by an  affiliate  of the
Investment Adviser.

The Corporation  purchased 1225 Connecticut from the seller for a purchase price
of  approximately  $54,125,000  (net of  prorations  and  miscellaneous  closing
costs),  consisting of $51,425,000  paid in cash and assumption of approximately
$2,700,000  of  mortgage   indebtedness  then  encumbering  the  property.   The
Corporation paid approximately  $2,130,000 for real estate brokerage commissions
to an independent third party and certain closing costs. The Account contributed
$9,000,000  for its  interest  in the  Corporation.  The  Account  has also paid
acquisition fees amounting to $337,500.

In January  1994,  the  Corporation  refinanced  its mortgage  loan with a first
mortgage loan in the principal  amount of  $7,000,000  bearing  interest at 6.98
percent per annum.  The new loan  requires  monthly  payments  of interest  only
aggregating  $488,600  per  annum  until  maturity  in  February  2001  when the
principal amount together with accrued  interest will be due and payable.  Under
certain circumstances,  the principal amount of the loan may be prepaid in whole
(but not in part),  subject to a  prepayment  premium.  Pursuant  to the deed of
trust securing the mortgage loan, the  Corporation is prohibited  from modifying
Ernst & Young's  primary lease or from entering into certain other tenant leases
without the lender's  consent.  Prior to selling the property or encumbering the
property with any additional  debt, the  Corporation  must obtain the consent of
the  lender,  which may be  arbitrarily  withheld.  However,  subject to certain
restrictions,  the  Corporation  has a one-time  right to transfer  title to the
property together with an assumption of the mortgage loan.

The property is being managed  under an agreement  pursuant to which the manager
is  obligated  to manage  1225  Connecticut,  collect all of the  receipts  from
operations  and,  to the extent  available  from such  receipts,  pay all of the
expenses of 1225 Connecticut.  The manager is paid a fee equal to 2.5 percent of
the gross revenues of 1225  Connecticut,  plus  reimbursement for certain direct
expenses  of the  manager.  
1225 Connecticut  leases  approximately 87 percent of the available space of the
property to one tenant under  leases,  all with terms of 12 years.  For the year
ended December 31, 1997,  such tenant  represented  approximately  74 percent of
total revenues.

An unaffiliated third party leases and operates the entire parking garage 
(subject to certain parking rights provided for tenants of the property) for a
term extending until November 2000. The lease provides for a fixed
rent  payment  of  $577,560  a year,  provides  that the  lessee  shall  pay the
operating  expenses of the parking  garage and does not provide such lessee with
an option to extend the term of the lease.

Unconsolidated Joint Ventures - Summary Information

Summary  information for the Account of its investments in Unconsolidated  Joint
Ventures as of and for the years ended December 31, 1997 and 1996 is as follows:

                                           As of and for           As of and for
                                           the year ended         the year ended
                                           Dec. 31, 1997           Dec. 31, 1996


Account's investment in Unconsolidated
    Joint Ventures                               $  23,134,763    $   23,384,605

Account's share of net investment income from
    Unconsolidated Joint Ventures                $   2,277,775    $    2,167,460

Net depreciation in
    Unconsolidated Joint Ventures                $   (169,246)     $ (1,206,750)

Total net investment income of Unconsolidated
    Joint Ventures                                $27,218,000      $  27,455,000

Total assets of Unconsolidated Joint Ventures    $336,828,000       $343,717,000

Total liabilities of Unconsolidated
   Joint Ventures                                 $50,215,000      $  52,691,000


Participation in Mortgage Loan - Riverpoint Associates

Chicago, Illinois - Riverpoint Center

In August 1989, IDS Life, on behalf of the Account,  participated in the initial
funding of a  non-recourse  participation  first  mortgage loan in the principal
amount of $26,000,000. The Account's share of the initial funding was $2,666,660
or 10.26 percent of this loan.  The remaining  portion of the loan was funded by
affiliates of the Investment  Adviser  (herein,  the Account and said affiliates
are collectively  called the Lenders).  The Loan was secured by a first mortgage
on a shopping  center  known as  Riverpoint  Center in  Chicago,  Illinois.  The
shopping  center,  completed in 1989, is located on  approximately  17 acres and
consists of  approximately  200,800  square  feet of gross  leasable  area.  The
shopping center was owned by a partnership (the Borrower) whose general partners
were not affiliated  with any of the Lenders.  In connection  with the loan, the
Account paid to the  Investment  Adviser a mortgage  placement  fee amounting to
approximately  $108,000,  less  $37,500  in loan  origination  fees  paid to the
Investment Adviser by the Borrower,  for a net fee paid of approximately $70,500
paid by the Account.

Additional amounts aggregating  approximately $2,040,000 (of which the Account's
share was approximately $209,000) had been funded since the Initial Funding. The
Borrower did not qualify for any additional fundings above the $28,040,000 which
had been funded to date, and no additional fundings were made by the Lenders.

The ten-year  loan  required  periodic  payments of interest only and bore basic
interest  at the rate of 8.84  percent  per annum in the first loan  year,  8.75
percent per annum during the second loan year, increasing 0.50 percent per annum
in the fourth and 0.25  percent per annum in the seventh  loan year to a maximum
rate of 9.50  percent  per  annum,  payable  monthly in  advance.  The loan also
provided for  additional  annual simple  accrual of interest at the rate of 2.00
percent per annum payable upon prepayment or maturity.  For financial  reporting
purposes,  commencing in August of 1991,  the Account  suspended  recognition of
income  related  to the  simple  accrual  interest  receivable  (deferred  until
maturity).The loan also provided for additional interest in an amount equal to a
percentage  of annual gross income from the  underlying  property  (exclusive of
tenant  reimbursement  of  expenses)  in excess of a base amount and, on sale or
repayment  of the  loan,  an  amount  equal to a  percentage  of the  subsequent
increase  in the value of the  underlying  property  in  excess  of a  specified
amount.  Such amounts of additional interest payments made by the Borrower would
have been used to offset,  on a  dollar-for-dollar  basis, the amount of accrued
interest  payable.  The loan was generally  non-recourse to the Borrower and its
partners.

The  borrower  had  notified  the  Lenders  that it was  experiencing  financial
difficulties and approached the Lenders  regarding a loan  modification.  During
the  third  quarter  of  1996,  the  Lenders  and  Borrowers  finalized  a  loan
modification  whereby they reached an agreement to defer payment of a portion of
the  scheduled  debt  service  from  September  15,  1995 to July 15,  1996.  In
conjunction with the loan modification agreement, the scheduled maturity date of
the loan was  accelerated to December 31, 1997.  Finally,  the Lenders agreed to
accept at certain dates through June 30, 1997 repayment of the loan at specified
amounts.  On December 24, 1996, the borrower repaid the lenders  $27,400,000 (of
which the Account's share was approximately  $2,800,000) in full satisfaction of
the loan as agreed upon.


5. Investments in Wholly-owned Real Estate Property

Fairfax County, Virginia - West Springfield Terrace Apartments

In August 1989, IDS Life, on behalf of the Account,  acquired a 244-unit  garden
apartment complex known as West Springfield Terrace Apartments, which is located
in Fairfax County, Virginia.

The  apartment  complex,  which was  completed in 1978,  consists of 17 separate
three and  four-story  buildings  of wood frame with brick  veneer  construction
containing 52 one-bedroom  units, 22 one-bedroom and den units,  118 two-bedroom
units, 22 two-bedroom and den units,  and 30  three-bedroom  units.  The complex
contains a swimming pool, tennis court,  clubhouse and approximately 380 parking
spaces.

The  Account  paid  $15,222,278  for the  apartment  complex in cash at closing,
excluding  closing costs and  prorations.  The Account also paid to IDS
Life and the Investment Adviser their respective portions of the acquisition fee
amounting to $274,834. At the time of the acquisition it was anticipated that an
additional  amount of  approximately  $1,450,000 would be used by the Account to
pay the cost of upgrading  kitchens and bathrooms and certain other upgrades and
capital  improvements at the complex.  The renovation  project was  subsequently
increased to include  replacing  certain carpets in units as they were renovated
and to  increase  the  number  of units  that  received  certain  upgrades.  The
renovation   project  was  completed   during  1992  at  an  aggregate  cost  of
approximately  $1,900,000.  The Account paid IDS Life and the Investment Adviser
their  respective  portions  of the  acquisition  fee  amounting  to  $18,000 in
connection with the renovation project.

In November 1989, the Account  obtained a loan from an  institutional  lender in
the principal amount of $8,000,000  secured by a first mortgage on the property.
The loan was repaid in September  1996 as a result of the sale of this property,
as discussed  below.  The loan had a term of seven years and bore  interest at a
rate of 9.50 percent per annum.  The loan required  monthly payments of interest
only during the first three loan years and  thereafter  was  amortizable  over a
27-year schedule through monthly payments of principal and interest  aggregating
$824,400 per annum until November 1996, when the remaining principal balance and
any accrued and unpaid interest was due and payable.

On September  30, 1996 the Account sold land and related  improvements  known as
the West Springfield Terrace  Apartments.  The purchaser was not affiliated with
the Account and the sale price was determined by arm's-length negotiations.  The
sale  price for the land and  improvements  was  $16,100,000  (before  deducting
selling  costs)  and was  paid in cash at  closing.  A  portion  of the net sale
proceeds  was  utilized to retire the first  mortgage  debt with an  outstanding
balance of $7,704,000.

The  apartment  complex was being managed for a fee equal to 5.00 percent of the
gross revenues from the property,  plus reimbursement of certain direct expenses
of the  manager.  

6. Liquidity Arrangements with IDS Life

The Account has experienced  substantial net contract terminations over the past
several years, which have adversely  affected its liquidity.  In March 1994, the
Account  obtained a  short-term  revolving  line of credit for up to $10 million
from IDS Life to pay for contract  surrenders  and other  obligations  under the
Contracts.  On June 2, 1995,  the line of credit was  terminated and the Account
repaid the  outstanding  balance under the line of credit with the proceeds from
accumulation  units purchased by IDS Life. As of December 31, 1997, IDS Life had
cumulatively  contributed $26,700,000 toward the purchase of accumulation units.
IDS Life expects to continue to make  additional  payments  into the Account for
accumulation  units in order to maintain  the Account and its  liquidity.  As of
December  31,  1997,  IDS Life's  portion  of the  Contract  Owners'  Equity was
$25,877,976, which represents 91% of total Contract Owners' Equity.

7.  Year 2000 Issue (Unaudited)

The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have 
time-sensitive software may recognize a date using "00" as the year 1900 
rather than 2000. This could result in the failure of major systems or 
miscalculations, which could have a material impact on the operations of 
the Account. The Account has no computer systems of its own but is 
dependent upon the systems maintained by AEFC and certain other third parties.

A comprehensive review of AEFC's computer systems and business processes
has been conducted to identify the major systems that could be affected by the
Year 2000 issue. Steps are being taken to resolve any potential problems 
including modification to existing software and the purchase of new software.
These measures are scheduled to be completed and tested on a timely basis.
AEFC's goal is to complete internal remediation and testing of each system by
the end of 1998 and to continue compliance efforts through 1999.

The Year 2000 readiness of unaffiliated investment managers and other third
parties whose system failures could have an impact on the Account's
operations is currently being evaluated. The potential materiality of 
any such impact is not known at this time.


<PAGE>


Schedule III

                                               IDS LIFE ACCOUNT RE
                                                     of
                                          IDS LIFE INSURANCE COMPANY


                            Participation in Mortgage Loan on Real Estate and
                           Interest Earned on Participation in Mortgage


                                              December 31, 1997


Part 1 - Participation in Mortgage           Part 2 - Interest Earned on
         Loan on Real Estate at Close of Year          Participation in
Mortgage
<TABLE>

Liens on Shopping Center:
                                  Principal unpaid           Amount of       Interest due
Riverpoint Center       Carrying           at close    mortgage being        & accrued at           Interest
Chicago, Illinois     Amount (A)         of period         foreclosed       end of period      Income Earned

<S>    <C>        <C>                <C>                       <C>         <C>                <C>           
       1997       $           --     $          --             $    --     $           --     $           --
                  ==============     =============             =======     ==============     ==============

       1996       $           --     $          --            $   --       $           --       $    256,843
                  ==============     ==============           ========     ==============       ============

       1995           $2,966,206         $2,875,853            $    --      $     (5,400)       $    264,581
                      ==========         ==========            =======      =============       ============

</TABLE>



(A) - Reconciliation  of the carrying value of the participation in the mortgage
loan:
<TABLE>

                                                          1997              1996           1995
                                                          ----              ----           ----

<S>                                                     <C>           <C>              <C>       
      Balance at the beginning of year...........       $   --        $2,966,206       $2,994,023

      Changes during year:
        Unrealized depreciation..................           --         (147,608)         (27,817)
        Loan repayment...........................           --       (2,794,065)               --
        Realized loss............................           --          (24,533)               --
                                                      --------          --------            -----

      Balance at end of year.....................           --                --        2,966,206
                                                       -------           -------        ---------

</TABLE>

<PAGE>


Schedule IV
                                           IDS LIFE ACCOUNT RE
                                                of
                                       IDS LIFE INSURANCE COMPANY

                                   Real Estate Owned and Rental Income

                                            December 31, 1997

                               Part 1 - Real Estate Owned at End of Year (A)
Apartment Complex:
<TABLE>

West Springfield                           Amount at                                                             Amount at
Terrace Apartments                     which carried            Cost of                      Carrying value  which carried
Fairfax County,           Amount of     at beginning      improvements,        Unrealized    of real estate   at close of
Virginia               encumbrances    of period (A)              etc.      Appreciation                  sold period (B)

<S>   <C>            <C>            <C>                      <C>              <C>        <C>               <C>            
      1997           $           -- $             --         $       --       $        --$               --$            --
                     ============== ================         ==========       ============================================

      1996           $           --      $16,295,602           $136,544       $        --     $(16,432,146)$            --
                     ==============      ===========           ========       ===========     ============================

      1995               $7,770,339      $15,993,057           $163,781          $138,764$               --    $16,295,602
                         ==========      ===========           ========          ==========================    ===========



                                 Part 2 - Rental Income

                        Rents due    Total rental         Expended for
                      and accrued          income       interest taxes,       Net income
                        at end of      applicable          repairs, and       applicable
                           period       to period              expenses       to period

      1997                $    --  $           --         $          --       $       --
                          =======  ==============         =============       ==========

      1996                $    --      $1,760,141            $1,381,391         $378,750
                          =======      ==========            ==========         ========

      1995                 $4,016      $2,379,439            $1,756,139         $623,300
                           ======      ==========            ==========         ========

</TABLE>

(A) Reconciliation of real estate owned:
<TABLE>
                                                                 1997               1996          1995
                                                                 ----               ----          ----

<S>                                                            <C>          <C>                <C>        
      Balance at the beginning of period..........             $   --       $ 16,295,602       $15,993,057

      Additions (deductions) during the year:
        Improvements, etc.........................                 --            136,544           163,781
        Unrealized appreciation...................                 --                 --           138,764
        Carrying value of real estate sold........                 --       (16,432,146)                --
                                                                -----       ------------             -----

      Balance at end of year......................             $   --   $             --      $16,295,602
                                                               ======   ================      ===========
</TABLE>

(B) Reserve for depreciation is not applicable as real estate owned is stated at
estimated fair market value.


<PAGE>



                Independent Auditors' Report

The Board of Directors of IDS Life Insurance  Company and Contract Owners of IDS
Life Account RE:

We  have  audited  the  accompanying   combined  financial   statements  of  N/S
Associates, Monmouth Associates and 1225 Investment Corporation,  unconsolidated
joint  ventures of IDS Life  Account RE (Note 1), as listed in the  accompanying
index. In connection with our audits of the combined  financial  statements,  we
also have audited the combined  financial  statement  schedules as listed in the
accompanying  index. These combined financial  statements and combined financial
statement  schedules  are the  responsibility  of the  Investment  Adviser.  Our
responsibility is to express an opinion on these combined  financial  statements
and combined financial statement schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by the  Investment  Adviser,  as well as evaluating  the overall
combined financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion,  the combined  financial  statements  referred to above  present
fairly,  in all  material  respects,  the  combined  financial  position  of N/S
Associates,  Monmouth Associates and 1225 Investment Corporation, as of December
31, 1997 and 1996 and the results of their combined operations and combined cash
flows for each of the years in the three year period ended December 31, 1997, in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related combined financial statement schedules,  when considered in relation
to the basic combined financial  statements taken as a whole, present fairly, in
all material respects, the information set forth therein.



                                         KPMG PEAT MARWICK LLP

Chicago, Illinois
March 20, 1998


<PAGE>


                       IDS LIFE ACCOUNT RE
                  OF IDS LIFE INSURANCE COMPANY
N/S Associates, Monmouth Associates and 1225 Investment Corporation
      Unconsolidated Joint Ventures of IDS Life Account RE

                     Combined Balance Sheets

                    December 31, 1997 and 1996


                                      Assets

<TABLE>
                                                                  1997                  1996
                                                                  ----                  ----


<S>                                                       <C>                   <C>         
Investments in real estate                                $323,264,000          $323,484,000
Cash and cash equivalents (note 1)                           9,459,000            14,603,000
Rents, interest, and other receivables                       2,219,000              2,966,000
Other assets                                                 1,886,000              2,664,000
                                                        --------------              ---------
                                                          $336,828,000          $343,717,000


                      Liabilities and Partners' Capital Accounts

Mortgage notes payable (note 3)                            $42,000,000          $ 42,000,000
Accounts payable and other accrued expenses                  8,215,000            10,691,000
                                                          ------------            ----------

         Total liabilities                                  50,215,000            52,691,000
                                                            ----------            ----------

Commitments and contingencies (notes 2 and 4)

Partners' capital accounts (notes 1 and 2): IDS Life Account RE:
  Capital contributions                                     32,856,000             32,856,000
  Cumulative net investment income                          18,228,000            15,951,000
  Cumulative share of net unrealized depreciation         (13,084,000)           (12,915,000)
  Cumulative cash distributions                           (14,865,000)           (12,507,000)
                                                          ------------           ------------
                                                           23,135,000             23,385,000

Venture partners:
  Capital contributions                                    379,954,000           379,954,000
  Cumulative net investment income                         216,261,000           191,319,000
  Cumulative share of net unrealized depreciation        (157,694,000)          (155,581,000)
  Cumulative cash distributions                          (175,043,000)          (148,051,000)
                                                         -------------          -------------
                                                           263,478,000           267,641,000

         Total partners' capital accounts                  286,613,000            291,026,000
                                                           -----------            -----------

                                                          $336,828,000           $343,717,000


</TABLE>

                       See accompanying notes to combined financial statements.


<PAGE>



                        IDS LIFE ACCOUNT RE
                   OF IDS LIFE INSURANCE COMPANY
 N/S Associates, Monmouth Associates and 1225 Investment Corporation
        Unconsolidated Joint Ventures of IDS Life Account RE

                  Combined Statements of Operations

             Years Ended December 31, 1997, 1996 and 1995


<TABLE>

                                                        1997          1996            1995
                                                        ----          ----            ----

Investment income:
<S>                                               <C>           <C>               <C>       
 Rental income                                    37,824,000    38,715,000        38,008,000
 Interest                                          9,890,000     9,827,000          7,685,000
                                                   ---------     ---------          ---------

                                                  47,714,000    48,542,000         45,693,000

Investment expenses:
 Mortgage and other interest                       3,412,000     3,412,000         4,250,000
 Real estate taxes                                 5,919,000     6,639,000          7,401,000
 Property operating expenses                      11,026,000    10,934,000         13,789,000
 General and administrative                          139,000       102,000            183,000
                                                     -------       -------            -------

                                                  20,496,000    21,087,000         25,623,000
                                                  ----------    ----------         ----------

    Net investment income                         27,218,000    27,455,000         20,070,000
                                                  ==========    ==========         ==========

Unrealized depreciation on investments
 in real estate (note 1)                         (2,282,000)   (8,650,000)       (65,938,000)
                                                 ===========   ===========       ============





</TABLE>

                       See accompanying notes to combined financial statements.


<PAGE>



                       IDS LIFE ACCOUNT RE
                 OF IDS LIFE INSURANCE COMPANY
N/S Associates, Monmouth Associates and 1225 Investment Corporation
       Unconsolidated Joint Ventures of IDS Life Account RE

        Combined Statements of Partners' Capital Accounts

          Years Ended December 31, 1997, 1996 and 1995

<TABLE>

                                                    Combined         IDS Life          Venture
                                                       Total       Account RE         Partners

<S>                                              <C>               <C>            <C>        
Balance at December 31, 1994                     345,159,000       27,045,000     318,114,000

Net investment income                             20,070,000        1,925,000      18,145,000
Cash contributions                                 9,830,000          685,000        9,145,000
Net unrealized depreciation on investments
  in real estate                                (65,938,000)      (4,000,000)     (61,938,000)
Cash distributions and dividends                (17,500,000)      (1,505,000)     (15,995,000)
                                                ------------      -----------     ------------

Balance at December 31, 1995                    $291,621,000       24,150,000     267,471,000

Net investment income                             27,455,000        2,168,000       25,287,000
Net unrealized depreciation on investments
   in real estate                                (8,650,000)      (1,207,000)      (7,443,000)
Cash distributions and dividends                (19,400,000)      (1,726,000)     (17,674,000)
                                                ------------      -----------     ------------

Balance at December 31, 1996                    $291,026,000       23,385,000      267,641,000
                                                ------------       ----------      -----------

Net investment income                             27,218,000        2,277,000       24,941,000
Net unrealized depreciation on investments
   in real estate                                (2,282,000)        (169,000)      (2,113,000)
Cash distributions and dividends                (29,349,000)      (2,358,000)     (26,991,000)

Balance at December 31, 1997                    $286,613,000      $23,135,000     $263,478,000
                                                ------------      -----------     ------------
</TABLE>

See accompanying notes to combined financial statements.


<PAGE>


                      IDS LIFE ACCOUNT RE
                 OF IDS LIFE INSURANCE COMPANY
N/S Associates, Monmouth Associates and 1225 Investment Corporation
       Unconsolidated Joint Ventures of IDS Life Account RE

               Combined Statements of Cash Flows

          Years Ended December 31, 1997, 1996 and 1995
<TABLE>

                                                            1997              1996            1995
                                                            ----              ----            ----


Cash flows from operating activities:
 Net increase (decrease) in net assets resulting
<S>                                                   <C>                  <C>               <C>          
 from operations                                      $24,937,000          $18,805,000       $(45,868,000)
 Provision for uncollectible accrued interest                  --                  --            3,576,000
 Unrealized loss on investments                         2,282,000            8,650,000          65,938,000
Adjustments to reconcile net investment income to net cash provided by operating
 activities represented by changes in:
  Rents, interest and other receivables                   747,000            (212,000)             135,000
  Other assets                                            778,000            (253,000)        (2,129,000)
  Accounts payable and accrued expenses                 (391,000)            (802,000)         (1,713,000)
                                                        ---------            ---------         -----------

     Net cash provided by operations                   28,353,000           26,188,000         19,939,000
                                                       ----------           ----------         ----------

Cash flows from investing activities:
  Net (purchases) sales of short-term investments              --                   --           7,589,000
  Additions to investments in real estate, net of
  related accounts payable and accrued expenses       (4,147,000)          (5,093,000)        (16,748,000)
                                                      -----------          -----------        ------------

     Net cash provided by (used in)
      investing activities                            (4,147,000)          (5,093,000)         (9,159,000)
                                                      -----------          -----------         -----------

Cash flows from financing activities:
 Principal payments on mortgages payable                       --                   --        (30,929,000)
 Cash distributions to partners                      (25,000,000)         (14,250,000)        (13,000,000)
 Cash contributions                                            --                   --           9,830,000
 Proceeds from mortgage note payable                           --                   --         35,000,000
 Cash dividends paid to shareholders                  (4,350,000)          (5,150,000)         (4,500,000)
                                                      -----------          -----------         -----------

     Net cash used in financing activities           (29,350,000)         (19,400,000)         (3,599,000)
                                                     ------------         ------------         -----------
     Net increase in cash and cash
       equivalents                                    (5,144,000)            1,695,000           7,181,000
     Cash and cash equivalents beginning
       of year1                                        14,603,000           12,908,000          5,727,000
                                                       ----------           ----------          ---------
     Cash and cash equivalents end
       of year                                          9,459,000           14,603,000          12,908,000
                                                        =========           ==========          ==========

Supplemental disclosure of cash flow information:
 Cash paid for mortgage and other interest              3,412,000            3,412,000          3,759,000
                                                        =========            =========          =========
 Non-cash investing and financing activities:
  Unrealized depreciation on
    investments in real estate                        (2,282,000)          (8,650,000)        (65,938,000)
                                                      ===========          ===========        ============
</TABLE>

                       See accompanying notes to combined financial statements.


<PAGE>


                      IDS LIFE ACCOUNT RE
                 OF IDS LIFE INSURANCE COMPANY
N/S Associates, Monmouth Associates and 1225 Investment Corporation
       Unconsolidated Joint Ventures of IDS Life Account RE

              Notes to Combined Financial Statements

           Years ended December 31, 1997, 1996, and 1995


(1)                 Organization and Basis of Accounting

The  accompanying  combined  financial  statements  have been  prepared  for the
purpose of complying  with Rule 3.09 of  Regulation  S-X of the  Securities  and
Exchange  Commission.  The combined financial statements include the accounts of
the  unconsolidated  joint  ventures  in which IDS Life  Account  RE of IDS Life
Insurance Company owns an equity interest. The unconsolidated joint ventures are
N/S Associates, Monmouth Associates and 1225 Investment Corporation.

The accompanying  combined financial statements have been prepared on the market
value accrual basis of accounting.

The  preparation  of  the  combined  financial  statements  in  conformity  with
generally accepted  accounting  principles requires Management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

The  ventures  have  implemented   Statement  of  Accounting  Standards  No.  95
"Statement of Cash Flows" which  classifies  receipts and payments  according to
whether  they  stem from  operating,  investing  or  financing  activities.  The
ventures  records  amounts held in U.S.  Government  obligations at cost,  which
approximates market. For the purposes of these statements,  the ventures' policy
is to consider all such amounts held with original maturities of three months or
less ($0 and  $12,084,000 at December 31, 1997 and 1996,  respectively)  as cash
equivalents with any remaining amounts reflected as short-term investments.

Investments  in real estate are stated at estimated market value. A description 
of the valuation process is contained in Note 2 of Notes to Financial Statements
of the Account. Such note is incorporated herein by reference.

Market values have been estimated by the Investment Adviser.  Such market values
involve  subjective  judgments  and the actual  values can only be determined by
negotiations with independent third parties.

No provision for State or Federal  income taxes has been made for N/S Associates
or Monmouth  Associates as the liability for such taxes,  if any, is expected to
be that of the  venture  partners  rather  than  the  venture.  1225  Investment
Corporation has elected and qualifies to be treated as a real estate  investment
trust for Federal income tax purposes. The Corporation had no Federal income tax
liabilities for taxable years ended December 31, 1997, 1996 and 1995.


<PAGE>



                      IDS LIFE ACCOUNT RE
                 OF IDS LIFE INSURANCE COMPANY
N/S Associates, Monmouth Associates and 1225 Investment Corporation
      Unconsolidated Joint Ventures of IDS Life Account RE

       Notes to Combined Financial Statements - (Continued)


Maintenance   and  repair  expenses  are  charged  to  operations  as  incurred.
Significant   costs  of  physical   improvements  are  capitalized  as  part  of
investments in real estate.

Fixed rental income is recorded when the  obligation  for the payment of rent is
incurred according to the terms of the lease agreements.


(2)                 Venture Agreements

A  description  of the venture  agreements  are  contained in Note 4 of Notes to
Financial  Statements of the Account for the year ended December 31, 1997.  Such
note is incorporated herein by reference.


<PAGE>


                      IDS LIFE ACCOUNT RE
                 OF IDS LIFE INSURANCE COMPANY
N/S Associates, Monmouth Associates and 1225 Investment Corporation
      Unconsolidated Joint Ventures of IDS Life Account RE

       Notes to Combined Financial Statements - (Continued)

(3)                 Mortgage Notes Payable

(a) Mortgage  notes  payable  consist of the  following at December 31, 1997 and
1996:

<TABLE>

                                                                            1997       1996
8.35% mortgage note, secured by Southridge Mall; payable in monthly installments
 of $244,000 (interest only) until
<S>                                                                   <C>           <C>       
 maturity on February 1, 2002 (see 3 (b) below)                       35,000,000    35,000,000

6.98% mortgage note, due February 1, 2001, secured by 1225
Connecticut Avenue; interest only, payable monthly                     7,000,000      7,000,000
                                                                       ---------      ---------

           Total mortgage notes payable                               42,000,000     42,000,000
                                                                      ----------    -----------

</TABLE>

      (b) Refinancing - Southridge

    On February 1, 1995, the Partnership  refinanced the existing  mortgage note
on Southridge  Mall in the amount of $35,000,000.  Proceeds,  net of transaction
costs,  were  used to  repay  the  existing  mortgage  notes at  Southridge  and
Northridge  Malls  (including  prepayment  penalties of $155,000  and  $240,000,
respectively).  The remaining  proceeds  which were reserved for future  leasing
costs, capital improvements and other related costs, have been expended.

    Five year maturities of mortgage notes payable are as follows:

            1998 . . . . . . . . . .            $      --
            1999 . . . . . . . . . .                   --
            2000 . . . . . . . . . .                   --
            2001 . . . . . . . . . .            7,000,000
            2002 . . . . . . . . . .           35,000,000
            Thereafter. . . . . . .            $       --

    (4)             Leases - As Property Lessor

The venture has determined that all leases relating to the two retail properties
and the office building are properly classified as operating leases;  therefore,
rental  income is reported  when earned.  Leases with tenants range in term from
one to  thirty-two  years and provide for fixed minimum rent and partial to full
reimbursement of operating costs. In addition,  substantially  all retail leases
provide for additional  rent based upon percentage of tenants' sale volumes over
certain specified amounts.


<PAGE>


                          IDS LIFE ACCOUNT RE
                     OF IDS LIFE INSURANCE COMPANY
    N/S Associates, Monmouth Associates and 1225 Investment Corporation
          Unconsolidated Joint Ventures of IDS Life Account RE

           Notes to Combined Financial Statements - (Continued)

                    Minimum  lease  payments to be received in the future  under
the above operating lease agreements, are as follows:
                    1998 . . . . . . . . . .        $20,406,724
                    1999 . . . . . . . . . .         18,824,571
                    2000 . . . . . . . . . .         17,086,220
                    2001 . . . . . . . . . .         14,761,601
                    2002 . . . . . . . . . .         13,683,666
                    Thereafter . . . . . . .         59,720,462
                                                   $144,483,244

Contingent rent (based on sales by property tenants) from the retail investments
included in rental income is $748,000,  $578,000 and $1,058,000 in 1997, 1996 
and 1995, respectively.

Monmouth Associates entered into an agreement whereby the land underlying the
Monmouth shopping center is leased under a long-term ground lease. The long-term
ground lease, which has a term of 75 years,  provides for accrual of annual base
rent of $1,170,000 with minimum payments of $650,000 per annum. However, in 
April 1992, Monmouth Associates put these loans on non-accural, based on the 
uncertainty as to the collectibility of such contingent interest.

(5)                 Related Party Transactions

N/S  Associates  has  entered  into a  management  agreement  with Urban  Retail
Properties  Company,  (the "Retail Manager").  The Retail Manager is entitled to
receive  a fee of 3.75% of gross  receipts  from the  operations  of the  Malls.
Management fees earned by the Retail Manager are included in property  operating
expenses and aggregated  approximately $1,057,000 and $1,132,000 for the periods
ended December 31, 1997 and 1996, respectively.

1225  Investment  Corporation  had entered into a management  agreement with JMB
Properties  Company.  During December 1994, JMB Properties  Company assigned the
management  agreement  to Heitman  Washington  D.C.  Properties,  Ltd.  ("Office
Manager").  The  Office  Manager is  entitled  to receive a fee of 2.5% of gross
receipts  from the  operations of the  Property.  Management  fees earned by the
Office  Manager are  included  in property  operating  expenses  and  aggregated
approximately  $197,000 and  $188,000 for the years ended  December 31, 1997 and
1996, respectively.


<PAGE>


                      IDS LIFE ACCOUNT RE
                 OF IDS LIFE INSURANCE COMPANY
N/S Associates, Monmouth Associates and 1225 Investment Corporation
      Unconsolidated Joint Ventures of IDS Life Account RE

       Notes to Combined Financial Statements - (Continued)

(6)                 Subsequent Events

         (a)  N/S Associates

              In February  1998, the  Investment  Adviser  authorized and paid a
              cash  distribution to the partners  aggregating  $4,000,000.  Each
              partner received its  proportionate  share based on its respective
              ownership percentage.

         (b)  1225 Investment Corporation

              In February 1998, 1225 Investment  Corporation  paid a dividend of
              $1,100,000  ($19.95 per share) to the shareholders of record as of
              December 31, 1997.

         (c)  Monmouth Associates

              In February  1998, the  Investment  Advisor  authorized and paid a
              cash  distribution to the partners  aggregating  $2,500,000.  Each
              partner received its  proportionate  share based on its respective
              ownership percentage.


<PAGE>



Schedule III

                             IDS LIFE ACCOUNT RE of
                           IDS LIFE INSURANCE COMPANY
                               Monmouth Associates
                Unconsolidated Joint Venture of IDS Life Account RE
                 Participation in Mortgage Loan on Real Estate and
                   Interest Earned on Participation in Mortgage

                               December 31, 1997


Part   1 -Participation in Mortgage   
Part   2 - Interest Earned on
Loan on Real Estate at Close of Year on Participation in
Mortgage

Liens on Shopping Center:
<TABLE>
                            Principal unpaid        Amount of   Interest due
  Monmouth Mall                   Carrying        at close   mortgage being   & accrued at          Interest
Eatontown, New Jersey           Amount (A)       of period       foreclosed  end of period     Income Earned

<S>    <C>                <C>                <C>                     <C>      <C>               <C>         
       1997               $    109,556,000   $ 160,033,000           $   --   $    785,000      $  9,354,000

       1996                  $ 109,556,000   $ 160,033,000           $   --   $    772,000      $  9,159,000

       1995                  $ 108,000,000   $ 158,373,000           $   --   $    742,000      $  6,994,000

</TABLE>



(A) - Reconciliation  of the carrying value of the participation in the mortgage
loan:
<TABLE>

                                                      1997                  1996             1995
                                                      ----                  ----             ----

<S>                                              <C>               <C>                <C>          
      Balance at the beginning of year...........$109,556,000      $ 108,000,000      $ 119,154,000

      Changes during year:
        Additional fundings......................       --             1,556,000         17,317,000
        Unrealized depreciation..................        --                   --       (28,471,000)
                                                 ----------              -------       ------------

      Balance at end of year.....................$109,556,000      $ 109,556,000      $ 108,000,000
                                                 ============      =============      =============
</TABLE>


<PAGE>


Schedule IV
                       IDS LIFE ACCOUNT RE of
                     IDS LIFE INSURANCE COMPANY
 N/S Associates, Monmouth Associates and 1225 Investment Corporation
        Unconsolidated Joint Ventures of IDS Life Account RE

            Combined Real Estate Owned and Rental Income

                         December 31, 1997

                               Part 1 - Real Estate Owned at End of Year (C)
<TABLE>
                                                                                                  Amount at
                                                                 Cost of                      which carried
                            Amount of                       improvements,       Unrealized    at close of

                          encumbrances     Initial Cost              etc.     Depreciation    period (A)
Retail properties:
Northridge Mall,
<S>                        <C>             <C>               <C>             <C>               <C>         
 Milwaukee, WI             $        --     $108,107,000      $ 16,242,000    $(87,149,000)     $ 37,200,000
Southridge Mall,
 Greendale, WI            $ 35,000,000     $115,401,000      $ 17,483,000    $(21,884,000)     $111,000,000
Office Building:
 1225 Connecticut Ave.,
  Washington, D.C.        $  7,000,000     $ 54,775,000      $  8,146,000   $ (10,413,000)     $ 52,508,000
Ground Lease:
 Monmouth Mall,
  Eatontown, NJ            $        --     $ 13,000,000       $        --      $        --     $ 13,000,000
                           -----------     ------------       -----------      -----------     ------------
                          $ 42,000,000     $291,283,000      $ 41,871,000   $(119,446,000)     $213,708,000
                          ============     ============      ============   ==============     ============

</TABLE>
                                 Part 2 - Rental Income
                                      Rents due
                                    and accrued
                                      at end of
                                         period
Retail Properties:
 Northridge Mall,
  Milwaukee, WI                      $   74,000
 Southridge Mall,
  Greendale, WI                      $  185,000
 Office Building:
  1225 Connecticut Ave.,
   Washington, D.C.                  $       --

                                     $  259,000

(A) Reconciliation of real estate owned:
<TABLE>
                                                       1997              1996            1995
                                                       -----             ----            ----
<S>                                               <C>            <C>             <C>         
      Balance at the beginning of period..........$213,928,000   $220,270,000    $254,500,000

      Additions (deductions), including
        unrealized depreciation................... (220,000)      (6,342,000)    (34,230,000)
                                                   ---------      -----------    ------------

      Balance at end of year......................$213,708,000   $213,928,000   $220,270,000
                                                  ============   ============   ============
</TABLE>
(B) - Reconciliation  for depreciation is not applicable as real estate owned is
stated at estimated
      market value.


<PAGE>


Item 9.  CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

Not applicable.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Account has no directors or officers.  The directors and principal executive
officers of IDS Life Insurance Company are listed below.

David R. Hubers,  born in 1943:  Director since  September  1989;  president and
chief  executive  officer,  AEFC,  since August 1993, and director since January
1984.  Senior vice president,  Finance and chief financial  officer,  AEFC, from
January 1984 to August 1993.

Richard W. Kling,  born in 1940:  Director since February 1984;  president since
March 1994; Executive vice president,  Marketing and Products, from January 1988
to March 1994. Senior vice president, AEFC, since May 1994. Director of IDS Life
Series Fund,  Inc.  and  chairman of the board of managers and  president of IDS
Life Variable Annuity Funds A & B.

Paul F. Kolkman, born in 1946: Director since May 1984; executive vice president
since March 1994;  vice  president,  Finance,  from May 1984 to March 1994; vice
president, AEFC, since January 1987.

James A.  Mitchell,  born in 1941:  Chairman  of the  Board  since  March  1994;
director since July 1984; chief executive officer since November 1986; president
from July 1984 to March 1994; executive vice president,  AEFC, since March 1994;
director, AEFC, since July 1984; senior vice president,  AEFC, from July 1984 to
March 1994.

Barry J. Murphy,  born in 1951:  Director and executive vice  president,  Client
Service since March 1994;  senior vice president,  AEFC, since May 1994;  senior
vice president,  Travel Related  Services (TRS) a subsidiary of American Express
Company,  from July 1992 to April 1994; vice president,  TRS, from November 1989
to July 1992.

Stuart A. Sedlacek, born in 1957: Director and executive vice president, Assured
Assets since March 1994; vice president, AEFC, since September 1988.

Jeffrey S. Horton,  born in 1961:  Vice  president and treasurer  since December
1997;  vice  president and  corporate  treasurer,  AEFC,  since  December  1997;
controller,  American Express Technologies - Financial Services, AEFC, from July
1997 to December 1997; controller, Risk Management Products, AEFC, from May 1994
to July 1997; director of finance and analysis,  Corporate Treasury,  AEFC, from
June 1990 to May 1994.

William  A.  Stoltzmann,  born in 1948:  Vice  President,  general  counsel  and
secretary since 1989; vice president and assistant general counsel,  AEFC, since
November  1985.  Vice  president,   general  counsel  and  secretary,   American
Enterprise Life Insurance Company, American Partners Life Insurance Company.


<PAGE>


The  directors  and  executive  officers of JMB Realty  Corporation  (JMB),  the
managing  partner of the  Investment  Adviser,  are listed  below.  Many of such
persons are also officers and/or directors of numerous  affiliated  companies of
JMB and/or partners of certain partnerships (herein collectively  referred to as
the Associate  Partnerships)  which are  partners,  directly or  indirectly,  in
publicly offered real estate limited partnerships sponsored by JMB.

Judd D.  Malkin,  60,  Chairman  and  Director  of JMB,  is a director  of Urban
Shopping  Centers,  Inc., an affiliate of JMB engaged in the business of owning,
managing and developing  shopping centers, an officer and/or director of various
other JMB affiliates and a partner of the Associate Partnerships. Mr. Malkin has
been  associated  with  JMB  since  October  1969.  He  is  a  Certified  Public
Accountant.

Neil G. Bluhm,  60,  President  and  Director  of JMB, is a principal  of Walton
Street Real Estate Fund I, L.P., a director of Urban Shopping Centers,  Inc., an
affiliate  of JMB engaged in the  business of owning,  managing  and  developing
shopping centers, an officer and/or director of various other JMB affiliates and
a partner of the Associate Partnerships.  Mr. Bluhm has been associated with JMB
since August  1970.  He is a member of the Bar of the State of Illinois and is a
Certified Public Accountant.

Burton E. Glazov,  59,  Director of JMB, was until  December 1990 also Executive
Vice President of JMB. Mr. Glazov has been  associated with JMB since June 1971.
He is a member of the Bar of the State of  Illinois  and is a  Certified  Public
Accountant.

Stuart C.  Nathan,  56,  Executive  Vice  President  and  Director of JMB, is an
officer and/or director of various JMB affiliates and a partner of the Associate
Partnerships.  Mr. Nathan has been  associated with JMB since July 1972. He is a
member of the Bar of the State of Illinois.

John G.  Schreiber,  51,  Director of JMB, is also a director of Urban  Shopping
Centers,  Inc., an affiliate of JMB engaged in the business of owning,  managing
and developing  shopping centers,  and was, until December 1990,  Executive Vice
President of JMB. Mr.  Schreiber  has been  associated  with JMB since  December
1970. Mr. Schreiber is President of Schreiber Investments, Inc., a company which
is engaged in the real estate  investing  business.  He is also a senior advisor
and partner of  Blackstone  Real Estate  Advisors,  L.P. , an  affiliate  of the
Blackstone  Group,  L.P.  Mr.  Schreiber  also  serves  as  a  Trustee  of  Amli
Residential  Property Trust, a publicly-traded real estate investment trust that
invests  in  multi-family  properties.  He is also a  director  of a  number  of
investment  companies  advised or managed  by T. Rowe Price  Associates  and its
affiliates.  He holds a  master's  degree in  business  administration  from the
Harvard University Graduate School of Business.

A. Lee Sacks,  64,  Director of JMB, is President and Director of JMB  Insurance
Agency, Inc.  and a partner of various  Associate  Partnerships.  Mr.  Sacks has
been  associated with JMB since December 1972.

H. Rigel Barber,  49, Chief  Executive  Officer and Executive  Vice President of
JMB, is an officer of various JMB affiliates and a partner of various  Associate
Partnerships. Mr. Barber has been associated with JMB since March 1982. He holds
a law degree from the Northwestern  University Law School and is a member of the
Bar of the State of Illinois.

Gary Nickele,  45,  Executive Vice  President and General  Counsel of JMB, is an
officer  and/or  director  of  various  JMB  affiliates.  Mr.  Nickele  has been
associated  with  JMB  since  February  1984.  He  holds a law  degree  from the
University  of  Michigan  Law  School and is a member of the Bar of the State of
Illinois.

Glenn E. Emig, age 50,  Executive Vice President and Chief Operating  Officer of
JMB, is an officer of various JMB affiliates and a partner of various  Associate
Partnerships.  Mr. Emig has been  associated  with JMB since  December  1979. He
holds a master's degree in business  administration  from the Harvard University
Graduate School of Business.

<PAGE>


Item 11. EXECUTIVE COMPENSATION

Not applicable.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
 MANAGEMENT

IDS Life has purchased and expects to continue to purchase accumulation units in
order to maintain the Account's liquidity. By purchasing accumulation units, IDS
Life has an ownership  interest in the Account and  participates in the increase
or  decrease  in value of the  Account's  investments  just as other  owners  of
accumulation  units  do.  As of  March  19,  1998,  IDS  Life  owned  26,700,000
accumulation units.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Account  incurred asset management fees for the year ended December 31, 1997
of  $435,406  of which  $330,908  was  paid to the  Investment  Adviser  and the
remainder  to IDS  Life.  Asset  management  fees  incurred  for the year  ended
December 31, 1996 were  $561,742,  of which  $426,924 was paid to the Investment
Adviser and the remainder to IDS Life.

For the years ended  December 31, 1997 and 1996, IDS Life was paid or reimbursed
$348,325 and  $449,393,  respectively,  for  mortality  and expense risk fee and
$76,733 and $35,385,  respectively,  for personnel-related  expenses incurred in
the administration of the Account.

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

   (A.1) See Item 8 for required financial statements.

   (A.2) See Item 8 for required financial statements schedules.

   (B) Report on Form 8-K.

         No reports on Form 8-K were required by the Registrant  during the year
ended December 31, 1997.

       No annual  report  for the  fiscal  year 1996 or proxy  material  for the
current year has been  distributed to the contract  owners as of March 31, 1997.
An annual report for the period ending  December 31, 1997 will be distributed to
contract owners subsequent to this filing, and copies of such annual report will
be furnished to the Securities and Exchange Commission at such time.

   (C) Exhibits.

          3.1 Copy of Articles of  Incorporation  of IDS Life Insurance  Company
              are hereby  incorporated herein by reference to Exhibit A(6)(b) to
              Form N-8B-2, File Number 2-97637, filed April 28, 1986.

          3.2 Copy  of  By-laws  of  IDS  Life  Insurance   Company  are  hereby
              incorporated  herein  by  reference  to  Exhibit  A(6)(b)  to Form
              N-8b-2, File Number 2-97637, filed
              April 28, 1986.

          3.3 Copy of Resolution of the Board of Directors of IDS Life Insurance
              Company  establishing  IDS Life Account RE is hereby  incorporated
              herein by reference to Exhibit 3.3 to the Account's Form S-1, File
              Number 33-13375, filed April 13, 1987.

          4.1 Form of Deferred Variable Annuity Contract is hereby  incorporated
              herein by  reference  to Exhibit 4 to the  Account's  Form S-1 (as
              amended), File Number 33-13375, filed July 17, 1987.

          4.2 Copy of  mortgage  loan  documents  relating  to West  Springfield
              Terrace Apartments is hereby  incorporated  herein by reference to
              Exhibit 4.2 to the Account's  Form S-1 (as  amended),  File Number
              33-13375, filed April 12, 1990.

          4.3 Copy of the line of credit agreement, dated March 30, 1994 between
              IDS  Life  and  the  Account  (including  a copy  of the  executed
              promissory note, dated March 30, 1994), filed April 5, 1994.

         10.1 Copy of  Investment  Advisory  Agreement  between IDS Life and JMB
              Annuity  Advisors is hereby  incorporated  herein by  reference to
              Exhibit 10.1 to the Account's  Form S-1 (as amended),  File Number
              33-13375, filed April 29, 1988.

         10.2 Copy of N/S  Associates  Joint  Venture  Agreement  together  with
              certain  documents  relating  to the  purchase  of an  interest in
              Northridge  Mall is hereby  incorporated  herein by  reference  to
              Exhibit 10.2 to the Account's  Form S-1 (as amended),  File Number
              33-13375, filed April 29, 1988.

       10.2.1 Copy of Second Amended and Restated Articles of Partnership of N/S
              Associates  hereby  incorporated  herein by  reference  to Exhibit
              10.2.1  to the  Account's  Form  S-1  (as  amended),  File  Number
              33-13375, filed April 20, 1989.

         10.3 Copy of N/S  Associates  Joint  Venture  Agreement  together  with
              certain  documents  relating  to the  purchase  of an  interest in
              Southridge  Mall is hereby  incorporated  herein by  reference  to
              Exhibit 10.3 to Form S-1 (as amended), File Number 33-13375, filed
              April 29, 1988.

         10.4 Copy  of   Commitment   Letter   relating  to  the  funding  of  a
              participating mortgage loan secured by Riverpoint Center is hereby
              incorporated  herein by  reference to Exhibit 10.4 to Form S-1 (as
              amended), File Number 33-13375, filed October 11, 1988.

         10.5 Copy of Amended and Restated  Articles of  Partnership of Monmouth
              Associates are hereby  incorporated herein by reference to Exhibit
              10.5 to the Account's Form S-1 (as amended), File Number 33-13375,
              filed April 12, 1990.

       10.5.1 Copy of Amended and Restated  Articles of  Partnership of Monmouth
              Associates are hereby  incorporated herein by reference to Exhibit
              10.5.2  to the  Account's  Form  S-1  (as  amended),  File  Number
              33-13375, filed April 12, 1990.

         10.6 Copy of Agreement  together with certain other documents  relating
              to the purchase of West Springfield  Terrace  Apartments is hereby
              incorporated  herein by  reference to Exhibit 10.6 to Form S-1 (as
              amended), File Number 33-13375, filed
              October 16, 1989.

         10.7 Copy of Agreement  together with certain documents relating to the
              purchase  of an  interest  in 1225  Connecticut  Avenue  is hereby
              incorporated  herein by  reference to the  Account's  Form S-1 (as
              amended), File Number 33-13375, filed June 29, 1990.

         10.8 Copy of Purchase  Agreement  for the sale of the West  Springfield
              Terrace Apartments is hereby  incorporated  herein by reference to
              the Accounts Report on Form 10-Q (File No. 33-13375) for September
              30, 1996 dated
              November 14, 1996.

         21.1 List of subsidiaries of IDS Life Insurance Company:
              American Centurion Life Assurance Company, American
              Enterprise Life Insurance Company, American Partners
              Life Insurance Company, and IDS Life Insurance Company
              of New York

         27.1 Financial  Data  Schedule  of the  Account  for the  period  ended
              December 31, 1995 is filed herewith.

         99.1 Copy of description of surrenders,  withdrawals and transfers from
              pages 61 to 62 and 66 to 67 of the Account's  prospectus  included
              in its Form S-1 (as  amended),  File  Number  33-13375 to be filed
              March 31, 1997, is filed herewith.

         99.2 Copy  of   description   of  the  Account's  real  estate  related
              investments  from  pages  21  to 44 of  the  Account's  prospectus
              included in its Form S-1 (as amended),  File Number 33-13375 to be
              filed March 31, 1997, is filed herewith.


<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned officers of IDS Life Insurance Company, thereunto duly
authorized.

        IDS LIFE ACCOUNT RE of IDS LIFE INSURANCE COMPANY


                                           Registrant

     March 27, 1998       By   /S/ James A. Mitchell
         Date                  James A. Mitchell, Chairman of the
                                   Board and Chief Executive Officer

     March 27, 1998       By   /S/ Jeffrey S. Horton
         Date                  Jeffrey S. Horton, Vice
                            President and Treasurer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been duly signed below by the following  persons on behalf of the registrant
and in the capacities and on the dates indicated.


     March 27, 1998       By   /S/ David R. Hubers
             Date                  David R. Hubers, Director


     March 27, 1998       By   /S/ Richard W. Kling
             Date                  Richard W. Kling, President


     March 27, 1998       By   /S/ Paul F. Kolkman
         Date                     Paul F. Kolkman, Executive
                                     Vice President

    March 27, 1998       By   /S/ Pamela J. Moret
         Date                     Pamela J. Moret, Executive
                                     Vice President, Variable Assets

     March 27, 1998       By   /S/ James A. Mitchell
              Date                  James A. Mitchell, Chairman of the
                                       Board and Chief Executive Officer


     March 27, 1998       By   /S/ Jeffrey S. Horton
             Date                  Jeffrey S. Horton, Vice
                                            President and Treasurer