IDS LIFE ACCOUNT RE OF IDS LIFE INSURANCE CO, 424B3, 1996-05-03

IDS LIFE ACCOUNT RE OF IDS LIFE INSURANCE CO
424B3, 1996-05-03
LIFE INSURANCE

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Real Estate Variable Annuity

Prospectus/April 30, 1996

This prospectus describes Individual Deferred Variable Annuity
Contracts (the Contracts) offered by IDS Life Insurance Company
(IDS Life), in which purchase payments accumulate on a variable
basis and pay retirement benefits to the owner. The Contracts are
available for non-qualified retirement plans only. The Contracts
are not available for Individual Retirement Annuities (IRAs),
401(k) plans, 403(b) plans or other qualified plans.

Effective May 1, 1995, IDS Life discontinued new contract sales of
the Account.

The minimum initial purchase payment for a Contract was $5,000; or
$2,000 if concurrently the owner agreed to make additional monthly
purchase payments of not less than $100 each by means of a bank
authorization. Additional purchase payments may be made in amounts
of at least $2,000 each or, if made by means of a bank
authorization, of not less than $100 per month. The maximum
aggregate additional purchase payments in any one contract year
after the first may not exceed $50,000. Purchase payments are
allocated to IDS Life Account RE (the Account), a segregated asset
account of IDS Life. See The Account section. Contract values of
the Account and annuity payments from the Account will vary with
the performance of the investments of the Account. There is no
guaranteed minimum contract value. Owners of the Contracts bear
the complete investment risk of the Account.

IDS Life Account RE
Individual Deferred Variable
Annuity Contracts

Sold by:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Telephone: (612) 671-3733

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.

IDS LIFE IS NOT A FINANCIAL INSTITUTION, AND THE SECURITIES IT
OFFERS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY FINANCIAL INSTITUTION NOR ARE THEY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY.
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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.

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.
Moreover, the Account will not be acquiring any new or additional
real estate related investments with the cash flow or proceeds
generated by the operations or sales of its existing real estate
related investments. Such funds, to the extent not used to pay the
Account's obligations under existing contracts or the redemption of
accumulation units purchased by IDS Life, will be invested in
short-term debt instruments and possibly intermediate-term bonds
with maturities of up to five years. Accordingly, an existing
contract owner should carefully consider these facts in light of
his or her own investment objectives before making any additional
purchase payment into an existing contract.

IDS Life will furnish to each owner an annual report showing the
current number of accumulation or annuity units, the value per unit
and the contract value. In addition, IDS Life will send to each
owner annual financial statements for the Account audited by
independent auditors.

The Contracts involve a substantial degree of risk, particularly
due to the illiquidity of the assets of the Account. Over the past
few years the Account has experienced substantial contract
surrenders in excess of contract purchase payments. IDS Life is
purchasing accumulation units in the Account. See the Other
Investment Policies--Borrowing Policies, Risk Factors, Conflicts of
Interest-Borrowings from IDS Life; and Management's Discussion and
Analysis of Financial Condition and Results of Operations sections.
The ability of an owner of a Contract to withdraw the contract <PAGE>
PAGE 3
value is subject to certain restrictions and, under certain
circumstances, payments under the Contracts may be suspended. See
the Contract Charges and Deductions and the Suspension and Delay of
Payments sections. In addition, the investment and operation of
the assets of the Account involve certain conflicts of interest.
See the Conflicts of Interest section.

IDS Life will purchase accumulation units in order to maintain the
Account and to increase its liquidity. IDS Life will make these
payments so that no contract holder is disadvantaged because sales
of new contracts have been discontinued. IDS Life will 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 surrenders.

By purchasing accumulation units, IDS Life will have an ownership
interest in the Account. Since IDS Life will not actually purchase
a contract, it will not be subject to surrender charges. However,
IDS Life, as holder of accumulation units, will participate 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 related investments made by the
Investment Adviser.

Summary of Contents

This prospectus offers Individual Deferred Variable Annuity
Contracts designed primarily to allow owners to participate in the
investment performance of a pool of real estate related investments
held or owned by the Account. An owner will receive variable
retirement payments depending upon his choice of annuity.

See the Definitions section for the definition of many of the terms
used in this prospectus.

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The Account is a segregated asset account of IDS Life established
pursuant to the laws of the State of Minnesota. The assets of the
Account are not subject to any liabilities arising out of any other
assets or business of IDS Life. Income, gains and losses of the
Account are credited to or charged against the Account without
regard to any other income, gains or losses of IDS Life. IDS Life
is not liable for any obligations of the Account. IDS Life is
liable for fulfillment of the terms of the Contracts, including the
obligations to pay death benefits and to guarantee the annuity
purchase rates in the Contracts. See The Account section.

The minimum initial purchase payment for a Contract was $5,000; or
$2,000 if concurrently the owner agreed to make additional monthly
purchase payments of not less than $100 each by means of a bank
authorization. Additional purchase payments may be made in amounts
of at least $2,000 each or, if made by means of a bank
authorization, of not less than $100 per month. The maximum
aggregate additional purchase payments in any one contract year
after the first may not exceed $50,000. IDS Life, at its
discretion, may permit greater maximum initial or additional
purchase payments in certain instances. No sales charge is
deducted from any purchase payment when made. See The Contract --
Accumulation Period section.

During the first eight years after any purchase payment, surrender
of the Contract will be subject to assessment of a surrender
charge, based upon the number of payment years that have elapsed
since the purchase payment. The surrender charge, which is a
contingent deferred sales charge, is 8 percent of the amount
surrendered during the first payment year and decreases by 1
percent per year thereafter to 1 percent in the eighth payment
year. There is no surrender charge on amounts surrendered after
the eighth payment year. See The Contract -- Accumulation Period
section.

IDS Life assesses the Account a daily charge for mortality and
expense risks that amounts to an aggregate of 1 percent on an
annual basis of the average daily asset value. IDS Life assesses
the Account a daily charge for an asset management fee that amounts
to an aggregate of 1.25 percent on an annual basis of the average
daily asset value of the Account, subject to increase by not more
than 0.25 percent per year in the event the Account's real property
investments exceed a certain rate of return on an annual basis.
IDS Life also assesses the Account an acquisition and mortgage
placement fee that amounts to 3.75 percent of the total cash
investment to be paid or advanced by the Account in connection with
each real property investment, mortgage loan and land <PAGE>
PAGE 5
sale-leaseback investment. Portions of the asset management and
acquisition and mortgage placement fees will be paid by IDS Life to
the Investment Adviser, JMB Annuity Advisers. See the Contract
Charges and Deductions section.

The investment objectives of the Account are to provide for payment
of retirement income under the Contracts by seeking to preserve and
protect the Account's assets in real (i.e., inflation-adjusted)
terms; to provide for compounding of income through the
reinvestment of cash flow from investments; and to provide for
increases in income through capital appreciation of real property
investments and, to the extent available, through participations in
the capital appreciation or gross revenues or income of the real
properties subject to mortgage loans or land sale-leaseback
investments of the Account. IDS Life seeks to achieve these
objectives by investing approximately 50 percent to 70 percent of
the Account's assets in such income-producing real property
investments as office buildings, shopping centers, apartment
complexes and other real properties, and approximately 15 percent
to 40 percent of the Account's assets in mortgage loans and land
sale-leaseback investments. However, IDS Life is permitted to
alter such percentages in accordance with changing market
conditions or under other circumstances. To enable the Account to
meet its needs for liquidity, certain of the Account's assets may
be invested in short-term debt instruments and intermediate-term
bonds with maturities of up to five years. See the Investment
Objectives of the Account section.

There is no assurance that enough suitable investments will be
found or that the investment objectives of the Account will be
achieved. Owners bear the complete investment risk of the
Contracts. Contract values will fluctuate depending upon the
investment performance of the Account, which will reflect the
performance of the Account's portfolio of investments and the
charges and deductions assessed under the Contracts.

Under present law, an owner is not taxed on the increases in
contract value until distributions occur, either through the
surrender of the Contract or the receipt of annuity payments, or
until a change of ownership occurs. Under certain circumstances,
a tax penalty of 10 percent of the portion of a distribution
representing income to the owner may be assessed for distributions
made prior to age 59-1/2. See the Certain Federal Income Tax
Considerations section.

Because the assets of the Account will be invested primarily in
real estate related investments, the investment performance of the
Account will be subject to all of the risks generally incident to
investments in real estate, such as the uncertainty of cash flow to
meet obligations, the uncertainty in making market valuations of
properties, adverse changes in national or local economic
conditions, the cost of funds and other factors affecting real
estate. See the Risk Factors -- General Risks of Real Property
Investments section. Owners will bear all investment risk of the
Account's portfolio. In addition, the real estate related
investments made or to be made by the Account are illiquid <PAGE>
PAGE 6
investments. Accordingly, owners will bear the risk that benefits
under the Contracts will not be immediately payable in the event
that a substantial portion of the Account's assets is required to
be used to redeem Contracts. IDS Life is purchasing accumulation
units in the Account. However, it is possible that necessary funds
for the payment of benefits under the Contracts may not be readily
obtainable by the Account either through borrowings by the Account
or through the disposition of real estate related investments on
commercially reasonable terms. In such event, payments may be
suspended for up to six months. In the event of any suspension of
payments, the cash available will be used first to pay any
obligations of the Account (other than contract obligations);
second, to make annuity payments; third, to pay death benefits; and
finally, to pay any contract surrenders. See the Suspension and
Delay of Payments section. For information regarding certain other
risk factors that may affect the operation and performance of the
Account and the value of its investments, see the Risk Factors
section. IDS Life, the Investment Adviser and their respective
affiliates may have potential conflicts of interest with respect to
operating the Account, including the fact that the arrangements
relating to the compensation of IDS Life under the Contracts are
not the result of arm's-length negotiations and that IDS Life, the
Investment Adviser and their affiliates may make real estate
investments for their own accounts or those of other entities and
may render real estate investment services to other entities that
may have the same or substantially similar investment objectives
as those of the Account. See the Conflicts of Interest section.

Premium or other taxes that may be payable to a state or other
government agency in connection with the purchase of Contracts may
be deducted from purchase payments or from the contract value.

See page __, where a description of the real estate related
investments made for IDS Life Account RE begins.
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Table of Contents Page

Summary of Contents..........................................
Definitions..................................................
IDS Life.....................................................
The Account..................................................
Description of the Investment Adviser and Affiliates.........
Investment Objectives of the Account.........................
Investment Restrictions......................................
Other Investment Policies....................................
Real Estate Related Investments..............................
Risk Factors.................................................
Conflicts of Interest........................................
The Contract -- Accumulation Period..........................
Contract Charges and Deductions..............................
Suspension and Delay of Payments.............................
Transfer of Ownership........................................
Beneficiary..................................................
Annuity Period...............................................
Certain Federal Income Tax Considerations....................
Valuation of Assets..........................................
Distribution of Contracts....................................
State Regulation.............................................
Experts......................................................
Registration Statement.......................................
Reports......................................................
Financial Statements.........................................
Legal Proceedings............................................
Appendix A: Directors and principal executive officers
of IDS Life.....................................
Appendix B: Directors, executive officers and certain
other officers of JMB Realty Corporation........
Summary of Selected Financial Information....................
Management's Discussion and Analysis of
Financial Condition and Results of Operations..............
Index to Financial Statements................................
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Definitions

Some terms used in this prospectus:

Account -- IDS Life Account RE, a segregated asset account of IDS
Life.

Accumulation Unit -- An accumulation unit is an accounting unit of
measure. It is used to calculate the contract value prior to
settlement.

Accumulation Unit Value -- The accumulation unit value is
determined by dividing the Account's net asset value by the number
of accumulation units outstanding at the end of the valuation
period.

Annuitant -- The person on whose life monthly payments depend.

Annuity Unit -- An annuity unit is an accounting unit of measure.
It is used to calculate the value of annuity payments from the
Account on and after the retirement date.

Asset Value -- The Account's asset value is determined by
calculating (i) the total value of the Account's assets less (ii)
the amount of any accrued expenses or liabilities other than any
borrowings in connection with the purchase, financing, improvement,
development or refinancing of real property investments.

Beneficiary -- The beneficiary is the party entitled to receive the
benefits to be paid at the death of the annuitant or owner.

Contract -- An Individual Deferred Variable Annuity Contract
offered by means of this prospectus.

Contract Value -- The sum of the value of the accumulation units
attributable to the Contract.

Contract Year -- A period of 12 months, starting on the effective
date of the Contract and on each anniversary of the effective date.

Land Sale-Leaseback -- Land sale-leaseback means a transaction
involving the purchase of land on which improvements are
constructed, are under construction or are under contract to be
constructed, and the lease of such land pursuant to a land or
ground lease generally to the owner or developer of the
improvements on the land. Such land sale-leasebacks may be
subordinated to a first mortgage and other liens or security
interests (whether or not also held by the Account) that are liens
on the entire property including the land.

Mortgage Loan -- Mortgage loan means a first mortgage loan,
subordinated or junior mortgage loan or wrap-around mortgage
evidenced by notes, bonds, debentures and other evidences of
indebtedness, and which is secured by a mortgage, trust deed, deed
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PAGE 9
of trust, deed to secure debt or other liens on interests,
including leasehold interests in land and/or improvements that are
constructed, are being constructed or are under contract to be
constructed.

Net Asset Value -- The Account's net asset value is determined by
calculating the total value of the Account's assets, less the
amount of any expenses or liabilities, including tax liabilities,
mortgage indebtedness, administrative expenses, that portion of
organizational and offering expenses being amortized and the
accrued but unpaid daily charges for mortality and expense risk and
asset management fees.

Organizational and Offering Expenses -- Organizational and offering
expenses means the following expenses that are incurred in
connection with the formation and qualification of the Account, in
the registration of the Contracts under applicable Federal and
state law, and in marketing the Contracts: (a) registration fees,
filing fees and taxes, (b) the costs of qualifying, printing,
amending, supplementing, mailing and distributing the registration
statement and prospectus, (c) direct expenses (including salaries
and related salary expenses) of officers and employees of IDS Life,
the Investment Adviser and their affiliates while directly engaged
in organizing the Account and in registering and qualifying the
Contracts, and (d) accounting and legal fees and expenses
(including those fees and expenses of the Investment Adviser's
attorneys and accountants) incurred in connection therewith,
provided, however, that organizational and offering expenses will
not include selling commissions or any other costs or expenses
relating to marketing the Contracts.

Owner -- The person or party having ownership of the annuity and
who is entitled to receive its benefits.

Purchase Payment -- Payment made to IDS Life for the annuity.

Real Property Investments -- Real property investments are equity
interests in existing real properties that are completed at the
time of commitment for purchase and, to a lesser extent, properties
that are under construction or under contract for development.

Retirement Date -- The date shown on the Contract on which annuity
payments are to begin. The date may be changed as provided in the
Contract.

Surrender Charge -- A deferred sales charge is applied if the
annuity is surrendered within a certain number of years from when a
purchase payment is made.

Surrender Value -- The total value of the annuity after any
applicable surrender charge has been deducted.

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Valuation Date -- A normal business day, Monday through Friday,
except for the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

Valuation Period -- The interval of time commencing at the close of
business on each valuation date and ending at the close of business
on the next valuation date.

IDS Life

IDS Life is a stock life insurance company organized in 1957 under
the laws of the State of Minnesota. IDS Life is a wholly owned
subsidiary of American Express Financial Corporation, which itself
is a wholly owned subsidiary of the American Express Company. IDS
Life acts as a direct writer of life insurance policies and
annuities and as the investment manager of various investment
companies. IDS Life is licensed to write life insurance and
annuity contracts in 49 states and the District of Columbia. The
headquarters of IDS Life is IDS Tower 10, Minneapolis, MN
55440-0010. For information concerning the directors and principal
executive officers of IDS Life, see Appendix A. For information
concerning the financial statements of IDS Life, see Index to
Financial Statements.

The Account

The Account was established in March 1987 by a resolution of the
Board of Directors of IDS Life as a segregated asset account,
pursuant to Minnesota law, and commenced operations in August 1987.
IDS Life purchased the initial 200,000 accumulation units of the
Account. Such units were subsequently redeemed by IDS Life at the
then current accumulation unit value. The Account holds assets
that are segregated from all of IDS Life's other assets and is not
chargeable with liabilities arising out of any other business of
IDS Life. The Account is not registered as an investment company
under the Investment Company Act of 1940 (the 1940 Act).

The Account is under the control and management of IDS Life. The
board of directors and officers of IDS Life are responsible for
management of the Account. The owners of the Contracts have no
voting rights with respect to the Account. For information
regarding the directors and principal executive officers of IDS
Life, see Appendix A. For information concerning the financial
statements of IDS Life, see Index to Financial Statements.

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 fulfillment of the terms of
each Contract, including payment of the death benefits and the
guarantee of the minimum annuity purchase rates contained in the
Contracts.<PAGE>
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Description of the Investment Adviser and Affiliates

IDS Life will provide services in connection with the acquisition
or placement and management of the assets of the Account. IDS
Life, in turn, has contracted with JMB Annuity Advisers (the
Investment Adviser), an Illinois general partnership, to provide
investment selection, management, disposition and consulting
services with respect to the real estate related investments of the
Account. The Investment Adviser is primarily responsible for the
identification, evaluation, investigation, negotiation, selection
and recommendation for purchase or placement of any real estate
related assets for the Account. IDS Life maintains an investment
committee that is responsible for approving all real estate related
investments or dispositions on behalf of the Account. A quorum of
such investment committee consists of any two members, who may act
on behalf of the committee.

The partners of the Investment Adviser are JMB Realty Corporation
(JMB), which is the managing partner of the Investment Adviser, and
an affiliate of JMB. The Investment Adviser is responsible for the
day-to-day administration and management of the real estate related
investments of the Account. For information regarding the
directors and principal executive officers of JMB, see Appendix B.
JMB has been engaged principally in real estate investment,
brokerage, management and sales since December 1968. Through Dec.
31, 1994, JMB has managed or advised, directly or through
affiliates, real estate investment partnerships that had purchased
real estate (directly or through other entities) for an aggregate
purchase price (including mortgage indebtedness), plus other
initial cash payments, of approximately 11.3 billion. Through Dec.
31, 1995, JMB, directly or through affiliates, had purchased real
estate for its own corporate accounts and affiliated accounts
having an aggregate purchase price (including mortgage
indebtedness) of approximately 5.6 billion. See the Conflicts of
Interest section for a description of conflicts of interest arising
out of the activities of the Investment Adviser and its affiliates.

In December 1994, certain affiliates of the Investment Adviser sold
substantially all of their assets to an unaffiliated third party
that acts as an adviser to institutional investors with respect to
real estate investments, and in connection with this sale, certain
management personnel of these affiliates of the Investment Adviser
became management personnel of the purchaser or its related
entities. These affiliates of the Investment Adviser included JMB
Institutional Realty Corporation and its related real estate
advisory entities, which acted as advisers or managers of qualified
pension and profit-sharing plans, tax-exempt foundations and
endowments and other institutional investors, and JMB Properties
Company, which was engaged in performing property management
services for office, industrial and multi-family real properties.
Prior to December 1994, JMB Institutional Realty Corporation and
its related real estate advisory entities were advisers or managers
of certain institutional investors that have invested jointly with
the Account in Northridge and Southridge Malls, Monmouth Mall and
the 1225 Connecticut office building, and JMB Properties Company
acted as property manager for two of the Account's real property<PAGE>
PAGE 12
investments, the 1225 Connecticut office building and the West
Springfield Terrace Apartments. See the Real Estate Related
Investments section. As a result of the sale, the institutional
investors that have invested jointly with the Account are no longer
advised or managed by affiliates of the Investment Adviser. In
addition, the officers and directors of 1225 Investment
Corporation, which owns the 1225 Connecticut office building, are
no longer affiliated or associated with the Investment Adviser.
See the Risk Factors -- Risks of Joint Ownership and Conflicts of
Interest -- Possible Joint Venture Investments with Affiliates of
the Investment Adviser or IDS Life sections. The successor to JMB
Properties Company's assets has assumed property management of the
1225 Connecticut office building and the West Springfield Terrace
Apartments on the same terms that existed prior to sale.

The Investment Adviser is not liable for any error of investment
selection, judgment or law except for willful misfeasance, bad
faith or negligence on the part of the Investment Adviser in the
performance of its obligations or duties under the investment
advisory agreement. See the Conflicts of Interest -- Limitation on
Liability section.

Compensation of IDS Life, the Investment Adviser and their
Affiliates in Connection with Real Estate Related Services

IDS Life is paid an asset management fee for its services in
connection with the management of the assets of the Account. This
fee is accrued on a daily basis and deducted on a monthly basis and
is equal on an annual basis to 1.25 percent of the average daily
asset value of the Account, subject to increase as described below.
A portion of the asset management fee equal to 0.95 percent of the
average daily asset value is paid by IDS Life to the Investment
Adviser for its services in connection with the management of the
real estate related assets of the Account. In the event that the
Account's real property investments have produced a rate of return
for the Account (measured for each calendar year) that exceeds the
rate of return as measured for such period by the FRC Property
Index (which is released in April of each year for the preceding
calendar year) by 0.5 percent per year, then the Investment Adviser
shall be entitled to an additional amount equal to 0.05 percent of
the average daily asset value of the Account for such calendar
year. The Investment Adviser also will be entitled to an
additional amount equal to 0.01 percent (up to a maximum of 0.2
percent) of the average daily asset value of the Account for each
0.1 percent by which the rate of return of the Account's real
property investments for such calendar year exceeds the rate of
return as measured for such period by such index plus 0.5 percent
per year. Rate of return shall be calculated on a quarterly basis
and in general shall mean the sum of all net income from operations
of the Account's real property investments (without deducting any
asset management fees or certain other expenses of the Account) and
realized and unrealized capital appreciation or depreciation on the
Account's real property investments (net of all acquisition and
mortgage placement fees) for the calendar quarter taken as a
percentage of the aggregate asset value of such investments (net of
all acquisition and mortgage placement fees) as of the beginning of
such calendar quarter. Additionally, IDS Life and the Investment
<PAGE>
PAGE 13
Adviser will not be entitled to, and will forego, that portion of
the asset management fee, as calculated above, attributable to the
use of indebtedness in excess of 40 percent of the aggregate value
of all of the Account's real property investments.

IDS Life receives an acquisition and mortgage placement fee of 3.75
percent of the total cash investment to be paid or advanced by the
Account, including all cash down payments, interest, points,
special reserves and all other initial cash payments in connection
with each real property investment, mortgage loan and land
sale-leaseback made by the Account. The amount paid to IDS Life is
measured by the cash investment to be paid by the Account for real
property investments or land sale-leasebacks or the amount to be
borrowed under a mortgage loan by the borrower for mortgage loans.
A portion of the acquisition and mortgage placement fee equal to
3.50 percent of the total cash investment to be paid or advanced by
the Account in connection with each real property investment,
mortgage loan and land sale-leaseback made by the Account is paid
to the Investment Adviser in consideration of the services of the
Investment Adviser and its affiliates in connection with the
identification, evaluation, investigation, negotiation, selection
and recommendation for purchase or placement of real estate related
investments for the Account. In addition, certain expenses of IDS
Life, the Investment Adviser and their affiliates are reimbursed as
described under the Contract Charges and Deductions section. At
its discretion, the Investment Adviser may provide any or all of
its services to the Account through affiliates, in which event fees
may be payable to such affiliates.

In some instances, some or all of the acquisition and mortgage
placement fee may be paid by the sellers of properties or
borrowers. This fee will indirectly affect the Account because the
payment of the fee by the seller of property or borrower may affect
the terms on which the seller or borrower is willing to close the
transaction. To the extent that the seller or borrower pays less
than 3.75 percent, the additional amount will be paid directly by
the Account to IDS Life. Fees and expenses paid to IDS Life or the
Investment Adviser and its affiliates will reduce the assets of the
Account for purposes of calculating the accumulation or annuity
unit value.

Property Management, Insurance Brokerage and Mortgage Brokerage

Certain of the Account's retail properties may be managed by JMB or
an affiliate of JMB such as Urban Retail Properties Co. Under
property management agreements, the company employed to manage the
property usually collects the rental income on the property and
deducts its fee and the costs of operating the property such as
insurance premiums, taxes, repairs and improvements and other
costs related to the maintenance and operation of the property.
The balance of rental income is remitted to the owner of the
property.

To the extent agreements are entered into with a JMB affiliate to
manage the real property investments owned directly by the Account,<PAGE>
PAGE 14
such agreements are subject to the approval of IDS Life and are
expected to be on terms no less favorable to the Account than those
customarily charged for similar services in the relevant
geographical area. For real property investments in which the
Account owns an interest through a joint venture, such agreements
are subject to the approval of the joint venture.

JMB Insurance Agency, Inc., which is engaged in the insurance
brokerage business, may provide insurance brokerage services in
connection with certain of the Account's investments. JMB
Insurance Agency, Inc. will receive commissions and/or fees for
such services at rates that are set by the insurance companies for
the classes of coverage involved. JMB or its affiliates may
provide mortgage brokerage services in connection with the
financing or refinancing of certain of the Account's real property
investments. To the extent that services are provided, such
affiliates will receive a fee equal to 1 percent of the proceeds
advanced under such financing or refinancing.

JMB or its affiliates also may provide other real estate related
services to the Account. Any such additional services and the
terms thereof with respect to real estate related investments owned
directly by the Account will be subject to the approval of IDS
Life.

Investment Objectives of the Account

The investment objectives of the Account are to provide for payment
of retirement income under the Contracts by seeking to: (1)
preserve and protect the Account's assets in real (i.e.,
inflation-adjusted) terms; (2) provide for compounding of income
through reinvestment of cash flow from investments; and (3) provide
for increases in income through capital appreciation of real
property investments and, to the extent available, through
participations 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 will be invested primarily in real estate related
investments. It is anticipated that approximately 50 percent to 70
percent of the Account's assets will be invested in such
income-producing real property investments as office buildings,
shopping centers, apartment complexes and other real properties,
and approximately 15 percent to 40 percent of the Account's assets
will be invested in mortgage loans and land sale-leaseback
investments, which may include participations in the appreciation
or the gross revenues or income of the real properties that are the
subject of the mortgage loans or land sale-leaseback investments.
However, IDS Life will have the discretion to alter such <PAGE>
PAGE 15
percentages in accordance with changing market conditions or under
certain other circumstances if it deems it advisable given the
Account's investment objectives and portfolio or the liquidity
considerations of the Account. IDS Life expects to diversify the
Account's investments consistent with the Treasury regulations
regarding diversification for variable annuities. Other than
meeting the diversification requirements of Section 817(h) of the
Internal Revenue Code of 1986, as amended, there are no limits on
the percentage of Account assets that may be invested in one
property. See the Certain Federal Income Tax Considerations --
Diversification Requirements section.

Real Property Investments

The Account will seek to diversify its investments geographically
and will consider and review investments in areas throughout the
United States. Some of the Account's real property investments may
be owned jointly by the Account, on one hand, and the seller of a
property (or an affiliate of the seller), on the other hand. The
Account also may enter into joint investments with affiliates of
the Investment Adviser. Such joint ownership may take the form of
joint venture partnerships, tenancies-in-common or other legal
arrangements. The Account may acquire existing properties that are
debt-financed, thereby assuming leverage, or may incur indebtedness
in connection with the acquisition of such real property
investments, but it is currently anticipated that the aggregate
indebtedness on all real property investments of the Account will
not exceed 50 percent of the purchase price (i.e., total
consideration paid for properties including all liens and mortgages
on the properties, but excluding points and prepaid interest) plus
other initial cash payments in connection with the purchase of all
properties. However, in connection with the refinancing of real
property investments, the aggregate indebtedness of the Account may
exceed the maximum level currently contemplated. See the Risk
Factors -- Risks of Leverage section.

Types of Real Property Investments. The Account is expected to
acquire real property investments only of the following types:
shopping centers, office buildings, multi-use complexes and other
commercial properties, apartment complexes and buildings, mobile
home parks and industrial properties. The Account does not intend
to invest in agricultural properties or single family dwellings.

To attain the Account's stated objectives, it will be necessary for
the Account to acquire properties that will generate cash in excess
of that required to meet the gross operating expenses of the
Account. To do this it is currently anticipated that a significant
portion of the Account's assets will be invested in existing real
properties that are completed at the time of commitment for
purchase or investment. The Account also may acquire recently
constructed properties that may in some instances be subject to
agreements with sellers (or affiliates of sellers) providing for
certain minimum levels of income or funding of cash deficits during
the early years of the Account's ownership. In the event such
agreements are negotiated, there can be no guarantee that the <PAGE>
PAGE 16
sellers or other parties will be able to carry out such
obligations. Upon the expiration of or default under such
agreements, there can be no assurance that the Account will be able
to maintain the level of operating income that is necessary to
produce the return it was previously experiencing or anticipated.

It is currently anticipated that the property acquired by the
Account generally will be real estate that is ready for occupancy.
Additionally, the Account may, to a lesser extent, invest in
developmental real estate deemed consistent with the Account's
objectives, and the Account then will be subject to the risks
inherent in such properties.

Mortgage Loans

Types of Mortgage Loans. Mortgage loans made by the Account may
include conventional mortgage loans that pay fixed or variable
rates of interest and, to the extent available, mortgage loans that
have a participation (as defined below).

The properties to be subject to mortgage loans are anticipated to
consist of commercial properties (such as office buildings and
shopping centers), residential properties (such as garden apartment
complexes, high-rise apartment buildings and mobile home parks) and
industrial properties. The mortgage loans generally will be
secured by properties with an income producing potential based on
historical or projected data. Mortgage loans generally will not be
personal obligations of the borrower and generally will not be
insured or guaranteed by governmental agencies or otherwise. The
Account will not make mortgage loans to IDS Life, the Investment
Adviser or their affiliates.

First Mortgage Loans. It is expected that the Account may make
first mortgage loans secured by mortgages on existing
income-producing property. Such first mortgage loans may provide
for interest-only payments and a balloon payment at maturity.

The yield on a traditional first mortgage loan has historically
been less than that of a wrap-around mortgage loan on the same
property. However, because of innovations involving the terms and
conditions of first mortgage loans, such as the use of variable
interest rates, equity participations and similar devices, the
yield on a first mortgage loan may, in certain instances, be
greater than that of a wrap-around mortgage loan on the same
property.

Wrap-around Mortgage Loans. The Account also may make wrap-around
mortgage loans on income-producing real properties that are already
subject to prior mortgage indebtedness. A wrap-around mortgage
loan is one having a principal amount equal to the outstanding
balance under the prior existing mortgage loan plus the amount
actually to be advanced by the lender under the wrap-around
mortgage loan, thereby providing the owner of a property with
additional funds without disturbing the existing loan. The terms
of a wrap-around mortgage loan made by the Account typically will <PAGE>
PAGE 17
require the borrower to make all principal and interest payments on
the underlying loan to the Account, which in turn will pay the
holder of the existing first mortgage loan. Because the existing
first mortgage loan is preserved, the lien of the wrap-around
mortgage loan is necessarily junior to it.

Junior Mortgage Loans. The Account also may invest in other junior
mortgage loans. Junior mortgage loans will be secured by mortgages
that are subordinate to one or more prior liens on the real
property and generally, but not in all cases, will provide for
repayment in full prior to the end of the amortization period or
maturity of the senior mortgages. Recourse on such loans will
include the real property encumbered by the Account's mortgage and
additionally may, in some instances, include other collateral or
personal guarantees by the borrower or its affiliates.

The Account generally will make junior or wrap-around mortgage
loans only if the senior mortgage or mortgages, when combined with
the amount of the mortgage loan, would not exceed the maximum
amount that the Account would be willing to commit to a first
mortgage loan and only under such circumstances and on such
property as to which the Account would otherwise make a first
mortgage loan.

Participations. The Account will seek to make mortgage loans that,
in addition to charging a base rate of interest, will include
provisions permitting the Account to participate (a participation)
in the economic benefits of the underlying property through the
receipt of additional interest in the form of a percentage of the
gross or net revenues derived from operation of the property and/or
of the increase in the value of the property realized by the
borrower, such as through sale or refinancing of the property.
Such arrangements also may involve the grant to the Account of an
option to acquire the property or an undivided interest in the
property securing the loan. To the extent that the Account
negotiates the right to receive additional interest in the form of
a percentage of the gross revenues or otherwise, the current fixed
cash return to the Account from such an investment generally will
be less than would otherwise be the case. It is expected that the
Account generally will be entitled to such percentage
participations when the gross or net revenues derived from
operation of the property exceed a certain base amount, which may
be subject to adjustment upon an increase in real estate taxes or
other similar operating expenses. The form and extent of such
additional interest to be received by the Account will vary with
each transaction depending on such factors as the equity investment
of the owner or developer of the property, other financing or
credit obtained by the owner or developer, the fixed base interest
rate on the mortgage loan by the Account, any other security
arrangement and the cash flow and pro forma cash flow from the
property. It is intended that the Account would utilize such
additional interest as a hedge against inflation on the assumption
that as prices increase in the economy generally, the rental prices
obtained by properties, such as shopping centers or office
buildings, will increase and that there should be a corresponding <PAGE>
PAGE 18
increase in the value of such properties. There can be no
assurance, however, that participations will be negotiated on
behalf of the Account or, if obtained, that, even allowing for
inflation, such additional interest or increased values will in
fact be received. In that event, the Account would be entitled to
receive only the fixed portion of its return.

Standards for Mortgage Loan Investments. In making mortgage loans,
the Investment Adviser will consider, among other things, a
loan-to-value ratio, operating cash income from the property, the
real estate management and operating experience of the borrower,
the financial strength of the borrower, and expectations for the
property in the market. In addition, the Investment Adviser will
analyze any available historical expenses and the projected
expenses of the property, present and expected levels of rentals
and occupancy rates, general economic conditions in the area where
the property is located, competition and potential competition from
other properties in the area, compatibility with the general
investment objectives of the Account and any other factors that the
Investment Adviser believes are relevant. In general, the amount
of each mortgage loan made by the Account will not exceed, when
added to the amount of any existing indebtedness, 90 percent of the
estimated or appraised value of the property mortgaged.

Investments in Land Sale-Leasebacks

A portion of the Account's investments may consist of real property
land sale-leasebacks. In a transaction of this type, the Account
will typically purchase the land on which income-producing
improvements are constructed and simultaneously lease the land,
generally to the seller, under a long-term lease (sometimes known
as a ground lease). The Account's land sale-leasebacks will
involve properties similar to those as to which it will make
mortgage loans. Ground leases may be for terms ranging up to 99
years and may provide for payments from the ground leases in
escalating amounts.

Generally, under the terms of a ground lease, the tenant will
operate, or provide for the operation of, the property and be
responsible for the payment of all costs, including taxes, mortgage
debt service, maintenance and repair of the improvements and
insurance. Upon termination of the ground lease and any renewals
thereof, the improvements may become the property of the Account,
although the ground lease may be for a substantial period of time,
and there can be no assurance as to the value of the improvements
at the end of such period.

The Investment Adviser often will seek to obtain for the Account,
in addition to base rents in its land sale-leasebacks,
participations in the appreciation of the improvements or the gross
revenues or income therefrom. The participations may take such
forms as a percentage of the gross revenues of the ground lessee
above a base amount (which may be subject to adjustment upon an
increase in real property taxes or upon other events), a share of
the proceeds of future mortgage financings or refinancings that are
<PAGE>
PAGE 19
not used for construction or the reduction of existing mortgage
indebtedness, a share of the proceeds from the eventual sale of the
improvements, or other interests.

The Account may invest in land sale-leasebacks that are
subordinated to other interests in the land or improvements, such
as a first or other mortgage or lien. In those situations, the
Account's land sale-leaseback interest will be subject to greater
risks. In general, the aggregate amount of such first or other
mortgage or lien and the value of the land subject to the land
sale-leaseback will not exceed 90 percent of the estimated or
appraised value of the land and improvements thereon at the time of
financing. In some cases, the Account may grant to the ground
lessee an option to acquire the land from the Account after a
period of years. The option exercise price would generally be
based upon the fair market value of the land, considering such
factors as the increase in the gross revenues from the property,
the rental payments actually received by the Account or other
objective criteria reflecting the increased value of the property.
In making investments in land sale-leasebacks, the Investment
Adviser will consider factors similar to those described under the
Standards for Mortgage Loan Investments section above.

Liquid Assets

The Account may invest certain of its assets in short-term liquid
instruments such as U.S. government securities, securities issued
or fully guaranteed by U.S. government agencies, securities issued
or fully guaranteed by states or municipalities, certificates of
deposit and time or demand deposits in commercial banks, bankers'
acceptances, savings and loan association deposits, deposits in
members of the Federal Home Loan Bank System or commercial paper.
The Account also may invest in intermediate-term bonds with
maturities of up to five years when IDS Life determines the
extension of the maturity period for the liquid assets is
warranted. (For information regarding the valuation of the liquid
asset investments, see the Valuation of Assets -- Liquid Assets
section.)

Investment Restrictions

The Account may not:

1. Purchase common stock, warrants, or other equity securities or
invest in any company for the purpose of exercising control or
management (except for joint ventures or partnerships relating
to real estate related investments as described herein or
except where real property is the principal asset of a company
and its acquisition can best be effected by the acquisition of
the securities of the company).

2. Engage in underwriting of securities issued by others.

3. Purchase or sell oil, gas or other mineral exploration or
development programs.

<PAGE>
PAGE 20
These investment restrictions may be changed only by a resolution
adopted by the Board of Directors of IDS Life. The Account intends
to make only investments that will not result in the Account being
deemed to be an investment company under the 1940 Act.

Other Investment Policies

Borrowing Policies

It is contemplated that the Account will incur indebtedness in
connection with the purchase, improvement, development and
refinancing of properties. Generally, the Account will attempt to
make real property investments in which aggregate mortgage
indebtedness of all real property investments does not exceed
approximately 50 percent of the purchase price (i.e., total
consideration paid for the properties including all liens and
mortgages on the properties but excluding points and prepaid
interest) plus other initial cash payments in connection with the
purchase of all properties. There can be no assurance, however,
that such a degree of leverage will be obtained, and the Account
may acquire some properties that, when completed, will be owned on
an unleveraged basis or on a basis of leverage substantially in
excess of 50 percent. There is no limit on the amount of leverage
that can be used to acquire any one property.

The Account also may acquire real property investments for which no
permanent financing has been obtained and for which the Investment
Adviser, subject to market conditions, intends to obtain permanent
financing on behalf of the Account in the future. There is no
assurance that the Investment Adviser will be successful in
obtaining such financing on favorable terms. The proceeds of such
financings may be invested in additional investments of the
Account.

The Account also may borrow in order to meet working capital or
liquidity requirements. Some of those borrowings may be secured by
mortgages or liens on real property investments or other
investments made by the Account. The Account will not obtain
permanent mortgage financing from IDS Life or its affiliates, but
may obtain short-term borrowings from IDS Life or its affiliates
for working capital, liquidity or other purposes.

Borrowing requires the Account to pay interest to the lender and
thus may, in certain instances, inhibit the Account from achieving
its investment objectives and may increase the Account's risk.

In addition, to the extent that borrowing is incurred, the
Account's income may be reduced because of the need to service any
such indebtedness. Also, the amount of fees paid to IDS Life and
the Investment Adviser and its affiliates may be increased due to
the fact that certain of such fees are calculated as a percentage
of the Account's assets, including those attributable to the
Account's mortgage indebtedness. See the Conflicts of Interest --
Receipt of Commissions, Fees and Other Compensation by IDS Life,
the Investment Adviser and Affiliates section.

<PAGE>
PAGE 21
Joint Venture Investments

The Account may invest in real property investments, land
sale-leaseback transactions or mortgage loans jointly with
others, including affiliates of IDS Life or the Investment Adviser,
through joint venture partnerships or otherwise. See the Conflicts
of Interest -- Possible Joint Venture Investments with Affiliates
of the Investment Adviser or IDS Life section. The Account
reserves the right to participate in such joint investments either
at the initiation of investment or during the time it holds an
investment.

Real Estate Related Investments

The Account has made the real estate related investments described
below. Due to the substantial net contract terminations
experienced by the Account over the past several years, the Account
does not intend to acquire additional real estate related
investments. See the Risk Factors -- Liquidity Considerations
section.

Summary of Investments

The following is a table which sets forth all real estate related
investments presently made or committed to be made by the Account
as of the date of this prospectus.

Real Property Investments
Long-Term
Cash payments made Indebtedness
or to be made (a) Amount Rate
Shopping Centers
Northridge Mall
Milwaukee, Wis. (b)........ $5,838,000 none N/A

Southridge Mall
Greendale/Greenfield
Milwaukee, Wis. (b)........ 6,170,000 $2,072,000 8.35%

Office Building
1225 Connecticut Avenue
Washington, D.C. (b)........ 9,000,000 1,141,000 6.98%

Apartment Complex
West Springfield Terrace
Fairfax County, VA.......... 9,214,000 7,770,339 9.50%
$30,222,000 $10,983,339

<PAGE>
PAGE 22
Mortgage Loan and Land Sale-Leaseback Investments
Cash payments made
or to be made (a)
Shopping Centers
Monmouth Mall
Eatontown, New Jersey (b)...................... $10,727,000

Riverpoint Center
Chicago, Illinois (c).......................... 2,876,000
$13,603,000

(a) Includes cash down payments, amounts funded or committed to be
funded for mortgage loans, prepayment premiums, special
reserves and other cash payments made or expected to be made
out of the Account's net assets but does not include
acquisition and mortgage placement fees, mortgage financing
fees and other acquisition, placement or financing costs.
(b) The interest of the Account in this investment is owned by the
Account through a joint venture. The amount shown for the
property under "Cash payments made or to be made" includes
only the cash investment of the Account in the joint venture
for this investment and does not reflect any investment by any
other joint venturers in the investment owned by the joint
venture. For real property investments in which the Account
has an equity interest, the amount shown for the investment
under Long-Term Indebtedness reflects the Account's
proportionate share, based upon its percent interest in the
joint venture, of the amount of financing which is encumbering
the property held by the joint venture.
(c) The interest of the Account in this investment is as a
participant in the funding of a mortgage loan secured by the
property.

The Account's investments in Northridge Mall and Southridge Mall
and in the land sale-leaseback investment and first leasehold
mortgage loan secured by Monmouth Mall have been made through two
joint venture partnerships, the other partners of which include
institutional investors. The percent interest of each partner in
these two joint ventures is determined generally based on the
timing and amount of capital contributed by all partners.

The Account made a capital contribution of approximately
$12,008,000 in return for an approximate 5.92 percent interest in
N/S Associates, which owns interests in Northridge Mall and
Southridge Mall, and made an initial capital contribution of
$10,000,000 in return for an approximate 6.97 percent interest in
Monmouth Associates, which owns the underlying land subject to a
ground lease of, and holds a first leasehold mortgage on, Monmouth
Mall. JMB Group Trust IV, which had been advised by an affiliate <PAGE>
PAGE 23
of the Investment Adviser but is currently advised by an
unaffiliated third party, owns the majority percent interest in
each of N/S Associates and Monmouth Associates.

In May 1994, Monmouth Associates agreed to finance the cost of a
renovation of Monmouth Mall. The maximum amount of the renovation
loan is $29,100,000 and as of December 31, 1995 fundings of
$21,476,000 have been made. Certain of the fundings for the
renovation loan have been made out of cash reserves and the cash
flow of Monmouth Associates, as well as out of additional capital
contributions to Monmouth Associates made pro rata based upon the
respective interests of its joint venture partners. The Account's
share of such additional capital contributions would be
approximately $727,000 based on its approximate 6.97 percent
interest in Monmouth Associates of which $685,000 had been
contributed as of December 31, 1995. The renovation of the
shopping center includes, among other things, the addition of a
food court and cinema and the re-merchandising of approximately
300,000 square feet of space and has been substantially completed
as of December 31, 1995.

In general, joint venture partnership agreements for N/S Associates
and Monmouth Associates provide that decisions concerning the joint
ventures and their real estate investments are to be made by the
vote or approval of the joint venture partner or partners holding a
majority of the percent interests in the respective joint ventures.

Under the respective joint venture partnership agreements, in the
event that one or more, but less than all, of the joint venture
partners propose to sell the joint venture's entire interest in a
real estate related investment during a specified period commencing
generally not earlier than the end of the fourth year after the
funding of the investment and ending 10 years after such funding,
each other joint venture partner not approving such sale will have
a right of first offer to purchase such investment on the terms set
forth in a notice of the proposed sale from the joint venture
partners desiring such sale. If more than one joint venture
partner elects to exercise a right of first offer, each of the
joint venture partners making such election will have the right to
purchase an interest in such investment based upon the proportion
of its percent interest in the respective joint venture to the
aggregate percent interests of all joint venture partners making
such election. If no joint venture partner elects to exercise the
right of first offer, the joint venture partners approving the sale
may effect such sale on behalf of the respective joint venture for
a sales price of not less than 90 percent of the proposed sales
price and on other terms at least as favorable to the respective
joint venture as those set forth in the notice of proposed sale.
<PAGE>
PAGE 24
In general, each joint venture partner may sell its interest in the
respective joint venture subject to each other joint venture
partner's right of first refusal to purchase the interest, and any
such sale may not be made without the consent of all other joint
venture partners unless it is to be made to an affiliate of the
selling joint venture partner or to certain institutional
investors, a "Fortune 500" corporation or an affiliate thereof, or
to an entity of similar financial standing or sophistication of the
foregoing or of the selling joint venture partner.

Northridge Mall
Milwaukee, Wisconsin

Northridge Mall, located in Milwaukee, Wisconsin, was completed in
1972. 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. 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. These four stores are Younkers, which leases its store from
an unaffiliated third party (approximately 166,000 square feet),
J.C. Penney (approximately 168,000 square feet), Sears
(approximately 169,000 square feet) and Boston Store (approximately
151,000 square feet). Existing operating covenants for occupancy
of their stores by Younkers extend through January 1999 and by
Boston Store through 2000. J.C. Penney and Sears, whose operating
covenants expired in August 1992, continue to operate their
respective stores at the shopping center.

The proposed acquisition of Younkers by Proffitt's, Inc. should
eliminate the need for a possible anchor replacement at both
Northridge and Southridge malls. Carson, Pirie Scott & Co. had
made a bid to purchase the Younkers chain, which operates at both
malls. Carson's already operates the Boston Store at Northridge
and Southridge, and had indicated that they would not continue
operating the Younkers store. The acquisition by Proffitt's should
eliminate the need for an anchor replacement at both centers and
should continue to provide the malls with an anchor similar to the
existing Younkers in quality and type of merchandise.

The shopping center is located on an approximate 105-acre site, of
which N/S Associates owns approximately 32 acres, at the northwest
corner of West Brown Deer Road and North 76th Street on the north
side of Milwaukee. The shopping center is a two-level center of
masonry construction and contains a large center court atrium with
a fountain and skylights. The entire parking lot contains parking
for approximately 7,800 automobiles.
<PAGE>
PAGE 25
Real estate taxes on the portion of the shopping center owned by
N/S Associates were approximately $2,468,000 for the 1995 tax year
and are estimated to be approximately $2,569,000 for the 1996 tax
year due to a successful tax appeal filed by N/S Associates.

The shopping center is subject to competition from other retail
properties in the vicinity. In the opinion of the Investment
Adviser, the portion of the shopping center owned by N/S Associates
is adequately insured.

The portion of the shopping center owned by N/S Associates consists
of approximately 388,000 square feet of mall space and 11,000
square feet of storage space. The mall space is currently
approximately 86 percent leased and occupied by 125 tenants. Tenant
leases for mall space have minimum terms, not including renewal
options, ranging from one to 20 years, with current annual base
rents ranging from approximately $5 to $150 per square foot. The
current average annual base rent for mall space is approximately
$18.83 per square foot. The average annual occupancy rates (based
upon occupancy at the end of each month during the year) and
approximate average annual base rents per square foot for the mall
space for the past five years are as follows:

Average Annual
Average Annual Base Rent
Year Occupancy Rate Per Square Foot
1991 93% $21.50
1992 87 22.10
1993 87 22.30
1994 80 22.65
1995 83 18.83

Substantially all of the leases contain provisions pursuant to
which N/S Associates is entitled to participate in tenant gross
receipts above certain minimum amounts, and most leases entitle N/S
Associates to receive tenants' contributions for operating expenses
and real estate taxes. Certain of the more recent leases provide
for N/S Associates' participation in tenant gross receipts above
certain minimum amounts without receipt by N/S Associates of any
specified annual base rent or tenant contributions for operating
expenses or real estate taxes.

N/S Associates acquired its interest in the shopping center in
April 1988 for a purchase price of approximately $89,653,000 paid
in cash at closing, subject to the existing mortgage loans with a
then outstanding aggregate balance of approximately $18,454,000.
At closing, N/S Associates established a reserve of approximately
$8.9 million that has been used to pay for certain capital
improvements made at the shopping center, including certain
asbestos removal, construction of a food court and center and side
court improvements. It is expected that additional asbestos removal
will be undertaken from time to time. For 1996 N/S Associates has
currently budgeted approximately $2,551,000 for completion of
tenant improvements and asbestos abatement for certain tenant
spaces at Northridge Mall. Such amount is expected to be paid out
of proceeds from the refinancing described below and cash flow from
the property.<PAGE>
PAGE 26
In February 1995, N/S Associates repaid the two mortgage loans
secured by Northridge Mall, as well as the mortgage loan secured by
Southridge Mall, out of the proceeds of a new loan in the principal
amount of $35,000,000 secured by a mortgage on Southridge Mall. In
addition, approximately $2,900,000 of the net proceeds from the new
mortgage loan was used to pay tenant improvements, asbestos
abatement and other capital costs incurred for Northridge and
Southridge Malls during 1995.

The portion of the shopping center owned by N/S Associates is being
managed by an affiliate of the Investment Adviser under an
agreement pursuant to which it is obligated to manage the property
and collect all receipts from operations of the property. The
affiliate of the Investment Adviser is paid 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
management of the property.

Northridge Mall has been adversely affected by a perception that it
is an unsafe place to shop. This perception has resulted in
declining sales and occupancy over the past several years.
Compounding the problem of declining sales are the high operating
costs for tenants due to the high real estate taxes at the shopping
center. By contesting the real estate taxes, the manager of the
property was able to achieve a reduction in taxes in 1995.
Occupancy has also been affected by continuing tenant bankruptcies.
To counter the negative image for Northridge Mall, N/S Associates
made certain capital improvements including parking lot lighting
and improved interior lighting, and implemented operational
programs to improve the shopping center's safety and appearance, as
well as instituted certain marketing efforts to enhance its image.
In addition, N/S Associates continues to seek to increase occupancy
by aggressively marketing space for new and renewal tenants through
leasing incentives, as well as cooperating with existing tenants
who need short-term rent reductions in order to maintain occupancy
of their space. Certain positive sales trends appear to indicate a
modest improvement, however, elimination of the negative perception
is expected to take some time.

The following is a schedule of expiration of leases (exclusive of
storage space and assuming no renewals or cancellations) and
current annual base rents allocable thereto as of March 1996:

Year of Number Current Percentage of
Expiration of Square Annual Current Annual
of Leases Tenants Feet Base Rent Base Rent
1996.......... 27 58,409 $378,840 5.7%
1997.......... 14 67,676 533,352 8.1
1998.......... 19 45,216 1,312,896 19.8
1999.......... 24 49,155 1,274,904 19.2
2000.......... 12 20,966 617,496 9.3
2001.......... 8 19,177 523,632 8.0
2002.......... 10 26,401 646,812 9.7
2003.......... 3 16,620 492,144 7.4
2004.......... 4 12,899 299,088 4.5
2005.......... 3 4,548 147,972 2.2
2006.......... 3 7,369 199,836 3.0
2008.......... 1 7,500 208,800 3.1 <PAGE>
PAGE 27
Southridge Mall
Greendale/Greenfield (Milwaukee),
Wisconsin

Southridge Mall, completed in 1970, is located in the Village of
Greendale and City of Greenfield south of Milwaukee, Wisconsin.
The mall shops and five adjacent department stores comprising the
shopping center contain approximately 1,295,000 square feet of
gross leasable area, of which N/S Associates owns approximately
435,000 square feet, including the space leased to Kohl's
Department Store, one of the anchor tenants, and approximately
2,000 square feet of storage space. The remaining approximately
860,000 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. These four stores are Younkers, which
leases its store from an unaffiliated third party (approximately
203,000 square feet), Boston Store (approximately 221,000 square
feet), Sears (approximately 251,000 square feet) and J.C. Penney
(approximately 185,000 square feet). Existing operating covenants
for occupancy of their stores by Younkers extend through January
1999 and by Boston Store through 2000. J.C. Penney and Sears,
whose operating covenants have expired, continue to operate their
respective stores at Southridge Mall.

The proposed acquisition of Younkers by Proffitt's, Inc. should
eliminate the need for a possible anchor replacement at both
Northridge and Southridge malls. Carson, Pirie Scott & Co. had
made a bid to purchase the Younkers chain, which operates stores at
both malls. Carson's already operates the Boston Store at
Northridge and Southridge, and had indicated that they would not
continue operating the Younkers store. The acquisition by
Proffitt's should eliminate the need for an anchor replacement at
both centers and should continue to provide the malls with an
anchor similar to the existing Younkers in quality and type of
merchandise.

The shopping center is located on an approximately 105-acre site,
of which N/S Associates owns approximately 34 acres, at the
intersection of West Grange Avenue and South 76th Street in
Milwaukee County. It is a two-level center of masonry construction
and contains a large center court atrium with a fountain and
skylights. The entire parking lot contains parking for
approximately 6,900 automobiles.

Real estate taxes on the portion of the shopping center owned by
N/S Associates were approximately $4,048,000 for the 1995 tax year
and are estimated to be approximately $4,062,000 for the 1996 tax
year.

<PAGE>
PAGE 28
The portion of the shopping center owned by N/S is currently
approximately 97 percent leased and occupied by 138 tenants.
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 has been extended from 2001 until 2015 and
the tenant space has been 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 to be determined after the tenant has occupancy of the
entire leased space. N/S Associates is responsible for paying the
costs of asbestos removal for the tenant space, which is estimated
to be approximately $1,250,000. Kohl's is obligated to pay other
costs associated with the leased space, including tenant
improvements and lease buy-out and relocation costs, if any, of
other tenants (one of whose lease continues until 2001) that
currently occupy a portion of the expansion space. 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 stabilize the shopping center on a long-term
basis by ensuring Kohl's continued occupancy and therefore its
continued contribution to customer traffic. Other tenant leases
(exclusive of storage space) have minimum terms, not including
renewal options, ranging from 3 to 15 years, with current annual
base rents ranging from $8.00 to $116.00 per square foot. The
current average annual base rent (exclusive of storage space) is
approximately $20.40 per square foot.

The average annual occupancy rates (based upon occupancy at the end
of each month during the year) and approximate average annual base
rents per square foot for tenant space (inclusive of Kohl's
Department Store but exclusive of storage space) for the past five
years are as follows:

Average Annual
Average Annual Base Rent
Year Occupancy Rate Per Square Foot
1991 94% $19.30
1992 87 20.90
1993 90 21.20
1994 91 20.90
1995 95 20.40

Substantially all of the leases contain provisions pursuant to
which N/S Associates is entitled to participate in tenant gross
receipts above certain minimum amounts and to receive tenants'
contributions for operating expenses and real estate taxes. N/S
Associates acquired its interest in the shopping center in April
1988 for a purchase price of approximately $96,865,000 paid in cash
at closing, subject to the existing first mortgage loan with a then
outstanding balance of approximately $18,536,000. N/S Associates<PAGE>
PAGE 29
established a reserve of approximately $7,250,000 which has been
used for certain capital improvements at the shopping center
including, among other things, asbestos abatement and center and
side court improvements. For 1996, N/S Associates has currently
budgeted approximately $1,818,000 for tenant improvements, asbestos
abatement and other capital costs at Southridge Mall. Such amount
is expected to be paid out of proceeds from the refinancing of the
mortgage loan secured by the property and cash flow from the
property.

In February 1995, N/S Associates repaid the mortgage loan secured
by Southridge Mall, as well as the two mortgage loans secured by
Northridge Mall, out of the proceeds of a new loan in the principal
amount of $35,000,000 secured by a mortgage on Southridge Mall. In
addition, approximately $2,900,000 of net proceeds from the new
mortgage loan were used to pay for tenant improvements and other
capital costs incurred for Northridge and Southridge Malls. 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
aggregating approximately $2,923,000 per annum prior to maturity in
February 2002, when the entire principal amount and any accrued and
unpaid interest will be due and payable. The new mortgage loan
permits only a prepayment in full, subject to the payment of a
premium of the greater of 1 percent of the outstanding principal
balance of the loan and an amount calculated pursuant to a defined
yield maintenance formula. The remedies under the new mortgage
loan are generally limited to the property securing the loan.

The portion of the shopping center owned by N/S Associates is being
managed by an affiliate of the Investment Adviser under an
agreement pursuant to which it is obligated to manage the property
and collect all receipts from operations of the property. The
affiliate of the Investment Adviser is paid a fee equal to 3.75
percent of the gross receipts of the property plus reimbursement of
certain direct expenses in connection with the management of the
property.

The following is a schedule of expiration of leases (inclusive of
Kohl's Department Store but exclusive of storage space and assuming
no renewals or cancellations) and current annual base rents
allocable thereto as of March 1996:

Year of Number Current Percentage of
Expiration of Square Annual Current Annual
of Leases Tenants Feet Base Rent Base Rent
1996.......... 13 21,553 $526,488 6.1%
1997.......... 7 20,016 462,600 5.4
1998.......... 21 52,549 1,552,764 17.9
1999.......... 14 24,361 568,764 6.6
2000.......... 23 45,263 1,406,172 16.3
2001.......... 18 41,032 993,204 11.5
2002.......... 8 16,714 585,036 6.8
2003.......... 8 32,651 810,444 9.4
2004.......... 6 25,126 611,904 7.1
2005.......... 9 21,072 652,764 7.6
2006.......... 2 9,105 249,984 2.9
2009.......... 1 7,507 210,192 2.4 <PAGE>
PAGE 30
Monmouth Mall
Eatontown, New Jersey

In October 1988 Monmouth Associates (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)
made a first mortgage loan to the owner of the shopping center
secured by the leasehold estate and the improvements thereon. The
borrower under the first leasehold mortgage loan and lessee under
the ground lease (hereinafter the "borrower/lessee") is a
partnership whose partners are not affiliated with Monmouth
Associates or any of its joint venture partners.

The shopping center is being reconfigured in connection with the
renovation discussed below. Upon completion of the renovation, the
shopping center will contain approximately 1,503,000 square feet of
gross leasable area, of which approximately 614,000 square feet
will consist of mall shops (approximately 470,000 square feet), a
fifteen screen cinema (approximately 77,000 square feet), outparcel
buildings (approximately 17,000 square feet) and storage and
basement area (approximately 50,000 square feet). The remaining
gross leasable area includes four department stores, which are
Macy's (approximately 262,000 square feet), J.C. Penney
(approximately 203,000 square feet), Abraham & Straus
(approximately 265,000 square feet) and Lord & Taylor
(approximately 159,000 square feet). Existing operating covenants
of the anchor department stores for reimbursement of a specified
amount of common area maintenance expenses and operation of a
retail business at their stores (which may be different from the
current retail business), generally extend to 1998 for Abraham &
Straus, 2005 for Macy's and Lord & Taylor, and 2006 for J.C.
Penney, with certain option or renewal rights thereafter in favor
of Abraham & Straus and Lord & Taylor.

Federated Department Stores, which owns Abraham & Straus, completed
its merger with Macy's, and in January 1995 Federated Department
Stores announced that it would close the entire Abraham & Straus
chain of stores and either convert them to other stores or sell
them. Federated Department Stores converted the Abraham & Straus
store at Monmouth Mall to a Stern's store in the spring of 1995, as
permitted under the terms of its operating agreement. Macy's
covenant to operate a department store (in addition its covenant to
operate a retail business) expired in 1995. Preliminary
discussions with Macy's continue regarding a possible extension of
their operating covenant, but there can be no assurance any such
extension will be finalized. The Macy's store continues to operate
at Monmouth Mall.

The shopping center is located on an approximately 104-acre site
located at the intersection of Routes 35 and 36 and Wyckoff Road in
Eatontown, New Jersey. Macy's owns its own department store and
approximately 2 acres of underlying land, and J.C. Penney owns its
own store and approximately 12 acres of underlying land. The
remaining approximately 90 acres of land underlying the shopping
center were acquired by Monmouth Associates subject to the right of
Stern's to acquire the land underlying its store. Stern's, which
currently leases its store and the approximately 14 acres of<PAGE>
PAGE 31
underlying land for nominal base rent, has the right to acquire the
underlying land at any time after 1998 and to acquire its store at
any time after 2028, in each case for nominal consideration. The
shopping center is a multi-level super regional center constructed
of structural steel framing with concrete block facing. The entire
parking lot (a portion of which is owned by certain of the
department stores) contains combined surface and deck parking for
approximately 8,225 automobiles.

The Lord & Taylor lease provides for annual base rent of
approximately $60,400 and an initial term of 16 years ending in
2006 with six 10-year renewal options at the same annual base rent.
Each of Lord & Taylor and Stern's pays a percentage of its gross
receipts above a certain minimum amount as well as a pro rata share
of the real estate taxes as additional rent. Sony Theaters operates
the cinema under a lease that commenced in 1994 and provides for an
initial term of 21 years with a current annual base rent of
approximately $711,000 with specified periodic increases. The
lease also requires the tenant to pay a specified amount of
operating expense reimbursements and a pro rata share of the real
estate taxes, as well as a percentage of its gross receipts above a
certain minimum amount as additional rent. The lease also provides
for five 5-year renewal options with specified increases in annual
base rent. In addition to its own department store, Macy's also
leases approximately 36,400 square feet of space from the
borrower/lessee for its children's store at the shopping center.

Real estate taxes on the portion of the shopping center owned by
the borrower/lessee were approximately $1,882,000 for the 1995 tax
year and are budgeted to be approximately $1,965,000 for the 1996
tax year. The shopping center is subject to competition from other
retail properties in the area, including an approximately 1,300,000
square foot shopping center that opened in the general vicinity in
August 1990. In the opinion of the Investment Adviser, the portion
of the shopping center owned by the borrower/lessee is adequately
insured.

The mall shops and outparcel space at the shopping center are
currently 86 percent leased by 167 tenants with current annual base
rents ranging from approximately $1.00 to $186.00 per square foot
and a current average annual base rent of approximately $22.34 per
square foot. Leases for mall shops and outparcel space have
minimum terms, not including renewal options, ranging from 5 to 15
years. Due to the renovation of the shopping center discussed
below, the current occupancy of the mall shops and outparcel space
is approximately 77 percent. However, the mall shops and outparcel
space are currently approximately 90 percent leased including
leases whose terms will commence after renovation of tenant space
permits occupancy. The average annual occupancy rates (based upon
occupancy at the end of each month during the year) and approximate
average annual base rents per square foot for the mall shops and
outparcel space for the past five years are as follows:
<PAGE>
PAGE 32
Average Annual
Average Annual Base Rent
Year Occupancy Rate Per Square Foot
1991 83% $18.25
1992 82 19.85
1993 81 19.95
1994 67 21.40
1995 69 24.76

Substantially all of the leases contain provisions pursuant to
which tenants are required to pay specified percentages of their
gross receipts above certain minimum amounts as additional rent and
to pay their pro rata share of the operating expenses and real
estate taxes of the shopping center.

The Limited owns a number of apparel store tenants who have the
following leases of mall space at Monmouth Mall:

Current
Square Annual Original
Tenant Feet Base Rent Term
The Limited 8,470 $99,522 12 years
The Limited Too 3,952 92,872 12 years
Lerner New York 7,045 140,900 12 years
Compagnie International Express 10,957 128,745 12 years
Structure 5,849 137,451 12 years
Victoria's Secret 6,908 162,338 12 years
Lane Bryant 4,137 60,000 13 years
Mozzarellas Cafe 5,051 114,425 15 years

In October 1988, Monmouth Associates (i) purchased approximately
88.5 acres of land underlying the shopping center (subject to the
right of Stern's to acquire the approximately 14 acres
underlying its store) for $13,000,000 paid in cash; (ii) leased the
land back to the borrower/lessee pursuant to a long-term ground
lease; and (iii) made a first mortgage loan in the principal amount
of $128,920,000 to the borrower/lessee secured by the leasehold
estate and the improvements thereon. The ground lease, which has a
term of 75 years commencing in October 1988 (subject to earlier
termination in the event of a sale of the land as described below),
provides for monthly base rent aggregating $1,170,000 annually with
minimum payments of $650,000. The ground lease also provides for
contingent rent (payable quarterly out of the excess, if any, of
substantially all of the gross receipts from the operations of the
shopping center received by the borrower/lessee over certain base
amounts) equal to the sum of (x) a specified annual amount
(commencing in the fourth lease year at $390,000 per annum and
increasing in the sixth lease year to $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 ground lease and the "interest
shortfall amount" under the first leasehold mortgage loan as
described below.
<PAGE>
PAGE 33
The first leasehold mortgage loan has a term of 15 years to October
2003, which may be extended from time to time at the option of
Monmouth Associates for up to an additional 20 years, subject to
acceleration of the loan in the event of a joint sale of the
property or a purchase by either Monmouth Associates or the
borrower/lessee of the other party's entire interest in the
property.

The first leasehold mortgage loan provides for monthly payments of
base interest at a base rate of 5.98 percent per annum for the
first two loan years, 7.97 percent per annum for the third loan
year and 5 percent per annum for each loan year thereafter. The
first leasehold mortgage loan also provides for quarterly payments
of contingent interest (payable out of the excess, if any, of
substantially all of the gross receipts from the operations of 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 is
5.98 percent per annum for the first two loan years, 7.97 percent
per annum for the next three loan years and 8.97 percent per annum
for each loan year thereafter.

In May 1994, Monmouth Associates agreed to finance the cost of a
renovation of Monmouth Mall. The maximum amount of the renovation
loan is $29,100,000 and as of December 31, 1995 fundings of
$21,476,000 have been made. Certain of the fundings for the
renovation loan have been made out of cash reserves and the cash
flow of Monmouth Associates as well as out of additional capital
contributions to Monmouth Associates made pro rata based upon the
respective interests of its joint venture partners. The Account's
share of such additional capital contributions would be
approximately $727,000 based on its approximate 6.97 percent
interest in Monmouth Associates of which $685,000 had been
contributed as of December 31, 1995. The renovation of the
shopping center includes, among other things, the addition of a
food court and cinema and the re-merchandising of approximately
300,000 square feet of space and has been substantially completed
as of December 31, 1995.

The renovation loan will mature contemporaneously with the first
leasehold mortgage loan in October 2003, subject to (i)
acceleration in the event of default or certain other events,
including a joint sale of the entire fee and leasehold interests in
Monmouth Mall, or (ii) extension of the loan maturity by Monmouth
Associates under certain circumstances for up to 20 years on the
same loan terms prior to the extension (other than the maturity
date). The renovation loan is secured by a leasehold mortgage
subordinated to the leasehold mortgages securing the first
leasehold mortgage loan and certain other loans made for tenant <PAGE>
PAGE 34
improvements or other ordinary capital expenditures and is cross-
defaulted with those loans as well as the ground lease. The
remedies under the renovation loan are generally limited to the
property securing the obligation. Payment of principal and accrued
interest of the renovation loan is subordinated to the payment of
certain other amounts payable to Monmouth Associates in connection
with the ground lease and the first leasehold mortgage loan.

Under the terms of the ground lease, as amended in connection with
the renovation loan, upon a joint sale or refinancing of the land
and the improvements thereon, Monmouth Associates generally will be
entitled to receive out of the proceeds of such sale or refinancing
the sum of (a) any accrued and unpaid rent shortfall amount plus
$13,000,000 (and any other amounts invested in the land), plus (b)
after payment of principal and any accrued and unpaid base interest
on the first leasehold mortgage loan and the renovation loan, the
return to the borrower/lessee of payments made to cover any cost
overruns in connection with the renovation, and payment of any
outstanding additional loans by Monmouth Associates and any
advances by the borrower/lessee to pay the cost of certain capital
or tenant improvements described below, together with any accrued
and unpaid interest thereon, 17.5 percent of such remaining sale or
refinancing proceeds until Monmouth Associates has received
aggregate payments under the ground lease equal to an internal rate
of return of 11 percent per annum on its investment in the land,
plus (c) thereafter, 12.5 percent of any such remaining sale or
refinancing proceeds. In general, the remedies under the ground
lease are limited to the property securing such obligation.

Under the terms of the first leasehold mortgage loan, as amended in
connection with the renovation loan, upon a joint sale or
refinancing of the land and the improvements thereon, Monmouth
Associates will be entitled to receive out of the proceeds of such
sale or refinancing, after deducting the accrued and unpaid rent
shortfall amount plus $13,000,000 (and any other amounts invested
in the land) payable to Monmouth Associates pursuant to the terms
of the ground lease, the sum of (a)(i) any accrued and unpaid
interest shortfall amount, (ii) the outstanding principal amount of
the first leasehold mortgage loan plus any accrued and unpaid base
interest thereon, and (iii) after repayment of the outstanding
principal amount of the renovation loan, and any accrued and unpaid
interest thereon, the return to the borrower/lessee of payments
made to cover any cost overruns in connection with the renovation,
and repayment of any additional loans by Monmouth Associates and
any advances by the borrower/lessee to pay the cost of certain
capital or tenant improvements described below, together with any
accrued and unpaid interest thereon, 52.5 percent of such remaining
sale or refinancing proceeds until Monmouth Associates has received
aggregate payments under the first leasehold mortgage loan equal to
an internal rate of return of 11 percent per annum on the principal
amount of such loan, plus (b) thereafter, 37.5 percent of any such
remaining sale or refinancing proceeds. In the event that the loan
continues until its stated maturity date (as it may be extended
from time to time) without a joint sale of the property or a sale
of Monmouth Associates' entire interest in the property, Monmouth
Associates will be entitled to receive an amount that would provide
<PAGE>
PAGE 35
it the same consideration payable to it as the first leasehold
mortgage lender (but not as the ground lessor) under a joint sale
of the property described above, assuming that the property were
sold for its appraised fair market value. Aggregate interest
payable may not exceed a specified simple interest rate per annum.
In general, except for a prepayment in connection with a joint sale
of the property or a sale to the borrower/lessee of Monmouth
Associates' entire interest in the property as described below, no
prepayment of the first leasehold mortgage loan may be made. In
general, the remedies under the first leasehold mortgage loan are
limited to the property securing such obligation. The
borrower/lessee is obligated, at its own expense, to remove any
asbestos from the portion of the shopping center owned by the
borrower/lessee under certain circumstances.

Monmouth Associates also is required to make other additional loans
to finance the cost of 60 percent of tenant improvements or other
ordinary capital expenditures that exceed the amounts reserved by
the borrower/lessee for such expenditures, provided that the
borrower/lessee advances the remaining 40 percent of such
expenditures.

The interest payable on any such additional loans (as well as on
any advances made by the borrower/lessee) is to be at the greater
of the applicable rate under the first leasehold mortgage loan as
in effect from time to time or the market rate of interest charged
by institutional lenders for similar loans. These additional loans
generally require payments of interest only until maturity of the
first leasehold mortgage loan (including any extension thereof
described above), at which time the outstanding principal and any
accrued and unpaid interest under the additional loans will be due
and payable. The additional loans may be prepaid prior to maturity
without a prepayment charge. Pursuant to such requirements,
Monmouth Associates has loaned the borrower/lessee an aggregate of
approximately $3,085,000 at fixed interest rates ranging from 8.25
percent to 10.5 percent per annum in connection with the cost of
tenant improvements and ordinary capital expenditures, including
tenant lease expenditures and termination payments. In connection
with the termination of a previous department store lease, Monmouth
Associates has advanced an additional $1,250,000 as an
expansion/renovation loan, which together with accrued interest
through October 1991, bears interest at 13 percent per annum, and
has permitted the borrower/lessee to defer payment of approximately
$729,000 of base interest, which also bears interest at 13 percent
per annum on the deferred amount. These loan amounts have been
advanced out of interest and lease payments received under the
first leasehold mortgage loan and ground lease along with the
reserves of Monmouth Associates.

The mortgage loan and renovation loan, as well as the ground lease,
all discussed above, accrue interest at a higher rate than the
actual cash payments of interest. In April 1992 Monmouth
Associates put these loans on non-accrual, based on the uncertainty
as to the collectibility of such contingent interest. During 1995,
accrued interest, from the periods prior to April 1992, totaling
$3,576,000 was written off due to the uncertainty as to
collectibility of these accrued amounts.
<PAGE>
PAGE 36
Under the terms of the ground lease, at any time after October 2001
Monmouth Associates has the right, and at any time after October
2002 the borrower/lessee has the right, to cause a joint sale of
the land and the portion of the shopping center owned by the
borrower/lessee, subject to the right of first refusal of the other
party to the ground lease to acquire the entire interest in the
property of the party proposing such joint sale. In the event that
the first leasehold mortgage loan continues until its stated
maturity date (including any extension of such maturity date
described above), the borrower/lessee has the option to purchase
Monmouth Associates' interest in both the land and the first
leasehold mortgage loan for an aggregate amount that
would provide Monmouth Associates the same consideration payable to
it as ground lessor and first leasehold mortgage lender under a
joint sale of the property described above, assuming that the
property were sold for its appraised fair market value.

In general, except for certain transfers by Monmouth Associates to
an affiliate, each of Monmouth Associates and the borrower/lessee
may only transfer its entire respective interest in the property
(including its interest in the first leasehold mortgage loan),
subject to the consent of the other party and the other party's
right of first refusal to acquire such interest. In general,
neither Monmouth Associates nor the borrower/lessee may transfer a
portion of its interest in the property.

The portion of the shopping center owned by the borrower/lessee is
being managed by an affiliate of the borrower/lessee under a
long-term agreement pursuant to which it is obligated to manage the
property and collect all receipts from operations of the property
for a fee equal to 3.5 percent of the base and percentage rents
from the property. In addition, the manager is entitled to
compensation for leasing and re-leasing services at the shopping
center. The following is a schedule of expiration of present
leases for the mall shops and outparcel space exclusive of storage
and basement space and assuming no renewals or cancellations) and
current annual base rents allocable thereto as of March 1996:

Year of Number Current Percentage of
Expiration of Square Annual Current Annual
of Leases Tenants Feet Base Rent Base Rent
1996.......... 7 15,108 $529,028 5.1%
1997.......... 5 12,971 298,022 2.9
1998.......... 6 16,166 432,877 4.2
1999.......... 5 5,640 187,401 1.8
2000.......... 8 51,917 809,807 7.8
2001.......... 11 18,206 838,594 8.1
2002.......... 10 27,461 980,415 9.5
2003.......... 11 34,842 1,111,468 10.7
2004.......... 8 7,690 363,332 3.5
2005.......... 29 39,202 1,704,977 16.4
2006.......... 17 52,995 1,384,050 13.3
2007.......... 8 44,150 846,828 8.2
2009.......... 1 15,680 147,000 1.4
2010.......... 3 11,729 247,521 2.4
2011.......... 1 42,500 425,000 4.1
2015.......... 1 12,625 64,125 0.6
<PAGE>
PAGE 37
1225 Connecticut Avenue
Washington, D.C.

In May 1990 the Account acquired an interest in a newly formed
Delaware corporation (the Corporation) owned jointly with certain
other persons, as described below. The Corporation has acquired an
office building located in Washington, D.C. known as 1225
Connecticut Avenue, N.W. (1225 Connecticut), an eight-story
reinforced concrete frame building containing 183,530 square feet
of rentable office space, 18,438 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 building, which was completed in 1968, is located on an
approximately 33,000 square foot site that fronts Connecticut
Avenue, 18th Street and "N" Street, N.W.

The office and retail space of 1225 Connecticut is currently 100
percent leased and occupied under leases having original minimum
terms (not including renewal options) which vary in duration from
5-1/2 to 12 years with current annual base rents ranging from
approximately $17.50 to $48.90 per rentable square foot. The
current average annual base rent for the office and retail space is
approximately $30.29 per square foot. The storage space is
currently 59 percent leased and occupied under leases having
original minimum terms (not including renewal options) that vary in
duration from 5 to 12 years with the current annual base rents
ranging from approximately $11.05 to $15.00 per square foot. The
current average annual base rent for the storage space is
approximately $11.30 per square foot. The average annual occupancy
rates (based upon occupancy at the end of each month during the
year) and approximate average annual base rents per square foot for
the office and retail space for the past five years are as follows:

Average Annual
Average Annual Base Rent
Year Occupancy Rate Per Square Foot
1991 99% $20.05
1992 99 20.35
1993 95 28.60
1994 96 32.60
1995 100 30.29

Substantially all of the office and retail leases contain
provisions, subject to certain limitations, requiring tenants to
pay, in addition to their annual base rent, their pro-rata share of
real estate taxes and operating expenses over certain base amounts.
In addition, leases covering a majority of the office and retail
space contain provisions, subject to certain limitations, pursuant
to which rents may be increased based upon changes in a consumer
price index from a base year.

Ernst & Young currently leases approximately 80 percent of the
office space. Effective January 1, 1995 per the terms of the Third
Amendment to the Ernst and Young lease, the lease term of the
fourth floor premises consisting of 26,328 square feet was amended
to expire on June 30, 2007. In addition, the amendment modified <PAGE>
PAGE 38
the monthly base rent to $33.82 per average square foot for the
total leased premises of 159,664 square feet. Effective August 1,
1995, Ernst and Young entered into a Fourth Amendment to occupy
2,023 square feet of retail space to expire June 30, 2007. As a
result, the Ernst & Young leases generally are as follows:

Current
Annual
Square Base Expiration
Tenant Feet Rent Date
Ernst & Young:
Ground Floor 1,676 $17.50 June 2007
2nd,4th,5th,6th,7th,
& 8th floors 157,968 34.00 June 2007
Retail Space 2,023 24.00 June 2007

In connection with the extension and expansion of its leases, Ernst
& Young received certain leasing incentives, including a tenant
improvement allowance and a rent credit for its fourth floor space
for a portion of the lease term commencing in 1995. The primary
lease for Ernst & Young covers approximately 157,968 square feet of
space, not including the ground floor and retail space.

The real estate and vault taxes on 1225 Connecticut were
approximately $885,000 for the tax year ended September 30, 1995.
Such taxes are expected to be approximately $1,039,000 for the tax
year ended September 30, 1996. 1225 Connecticut is subject to
competition from several other commercial projects in its vicinity,
including a number of office buildings owned by entities either
sponsored or advised by an affiliate of the Investment Adviser. In
the opinion of the Investment Adviser, the building is adequately
insured.

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 taxable 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 corporations on its taxable income, whether or
not distributed. Because it is a corporation, it will not be
subject to the District of Columbia franchise tax on unincorporated
businesses, which is imposed on any trade or business conducted
within the District by an unincorporated person, including a
partnership.

The Account owns approximately 16.3 percent of the outstanding
shares of common stock of the Corporation. Approximately 44
percent of the outstanding shares of common stock of the
Corporation are owned by a publicly held real estate limited
partnership affiliated with the Investment Adviser. There is no
other class of stock of the Corporation authorized or outstanding, <PAGE>
PAGE 39
and no other shares of common stock may be issued without the
consent of shareholders owning at least 96 percent of the then
outstanding shares of common stock of the Corporation. The major
shareholders of the Corporation (including the Account) owning in
excess of 99 percent of the Corporation's outstanding stock have
entered into a shareholders' agreement which provides, among other
things, that upon a proposed sale of shares the non-selling major
shareholders shall have a right of first refusal to buy out the
selling major shareholders' shares in the Corporation; the approval
of shareholders owning at least 96 percent of the outstanding
common stock of the Corporation is required to make certain major
decisions; and, in the event of a disagreement regarding a proposed
sale of 1225 Connecticut, the major shareholders not desiring to
sell would have a right of first refusal to purchase the other
major shareholders' shares in the Corporation and if all of such
shares are not acquired pursuant to the exercise of such right of
first refusal, the Corporation may conclude a sale of the property.

The Corporation purchased 1225 Connecticut from the seller for a
purchase price of approximately $54,125,000, consisting of
$51,425,000 paid in cash and approximately $2,700,000 of mortgage
indebtedness then encumbering the property. In connection with the
acquisition of 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.

In January 1994 the Corporation refinanced its mortgage loan, which
had an outstanding principal balance of approximately $1,667,000 at
the time of refinancing, with a new first mortgage loan in the
principal amount of $7,000,000 that bears 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 entire outstanding 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 based upon the present value
of the difference, if any, between the remaining scheduled monthly
payments on the loan at the date of prepayment and the amount such
monthly payments would be if the interest rate on the loan were
equal to the yield on a U.S. government security with a comparable
maturity date. 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 excess net
proceeds from the refinancing in the amount of approximately
$5,300,000 are being used to pay a substantial portion of the costs
for lobby and other common area renovation costs, a sprinkler
system and certain tenant improvement costs related to the Ernst &
Young lease extension. Approximately $4,900,000 has been spent
through December 31, 1995 for those costs with an additional
$855,000 expected to be spent in 1996.
<PAGE>
PAGE 40
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 the property. The manager is
paid a fee equal to 2.5 percent of the gross revenues of the
property, plus reimbursement for certain direct expenses of the
manager. The property had been managed by JMB Properties Company,
an affiliate of the Investment Adviser, until December 1994, when
JMB Properties Company sold substantially all of its assets to an
unaffiliated third party, and certain management personnel of JMB
Properties Company became management personnel of the third party.
As a result of sale, the successor to JMB Properties Company's
assets now acts as manager of 1225 Connecticut on the same terms
that existed prior to the sale.

1225 Connecticut leases approximately 80% of the available space of
the property to one tenant under leases, all with terms of 12
years. For the year ended December 31, 1995 such tenant
represented approximately 77% 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 1997. The lease
provides for a fixed rent payment of $485,000 a year (which
reflects an increase at the end of 1993 from $430,000 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.

The following is a schedule of expiration of leases for office and
retail space (assuming no renewals or cancellations) and current
annual base rents allocable thereto:

Year of Current Percentage of
Expiration Number of Square Annual Current Annual
of Leases Tenants Feet Base Rent Base Rent
2000.......... 3 22,103 $781,008 11.4%
2001.......... 1 3,026 114,636 1.7
2002.......... 1 9,909 297,264 4.3
2005.......... 1 5,263 233,328 3.4
2007.......... 1 161,667 5,448,912 79.2

Riverpoint Center
Chicago, Illinois

The Account entered into a participation agreement to fund up to
$3,000,000 of a first mortgage loan in the maximum principal amount
of $29,250,000. The remaining portion of the loan has been funded
by JMB Mortgage Partners, Ltd.-IV and JMB Mortgage Partners,
Ltd.-III, which are affiliates of the Investment Adviser. (The
Account, JMB Mortgage Partners, Ltd.-IV and JMB Mortgage Partners,
Ltd.-III are collectively called the Lenders). The loan is secured
by a first mortgage on a shopping center known as Riverpoint Center
and located on an approximately 17-acre site at the intersection of
Wood Street and Fullerton Avenue in Chicago, Illinois. The
shopping center is owned by a partnership (the Borrower) whose
general partners are not affiliated with any of the Lenders and is
managed by an affiliate of the Borrower.<PAGE>
PAGE 41
The initial funding (the Initial Funding) of the loan, in the
amount of $26,000,000 (of which the Account's share was
$2,666,660), occurred in August 1989. Additional amounts,
aggregating approximately $2,040,000 (of which the Account's share
was approximately $209,000), have been funded since the Initial
Funding. The Borrower did not qualify for any additional fundings
above the $28,040,000 which has been funded to date, and no
additional fundings will be made by the Lenders. The shopping
center, which was completed in June 1989, has masonry walls with
interior steel frames and a brick facade with metal detailing and
includes a parking lot for approximately 860 cars. Real estate
taxes on the shopping center were approximately $1,084,000 for the
1994 tax year and are expected to be approximately $1,106,000 for
the 1995 tax year, the most recent year of assessment.

In the opinion of the Investment Adviser, the shopping center is
adequately insured. The shopping center is subject to competition
from other retail properties in the area.

The shopping center, which is currently approximately 95 percent
leased and occupied by 22 tenants, consists of approximately
200,800 square feet of gross leasable area. Existing tenant leases
have minimum terms, not including renewal options, ranging from 3
to 20 years with current annual base rents ranging from $11.60 to
$29.00 per square foot. The current average annual base rent is
approximately $17.58 per square foot.

Substantially all existing leases contain provisions pursuant to
which each tenant is required to pay its pro-rata share of
operating expenses and real estate taxes of the shopping center and
additional rent in the form of a percentage of tenant gross
receipts above a certain base amount.

The first mortgage loan requires periodic payments of interest
only, matures 10 years after the date of the Initial Funding, and
bears interest as follows:

(1) Basic Interest: Basic Interest is payable monthly in advance
at the rates per annum set forth below:

Loan Years Interest Rate
1............ 8.84%
2-3.......... 8.75
4-6.......... 9.25
7-10.......... 9.50

(2) Accrual Interest: In addition to Basic Interest, interest
accrues at a simple rate of 2.0 percent per annum. The
Accrual Interest is due at maturity (subject to earlier
payment upon sale of the shopping center or prepayment of the
loan). The Accrual Interest is reduced dollar-for-dollar by
the amount of Additional Interest paid as described below.
<PAGE>
PAGE 42
(3) Additional Interest: The Lenders are entitled to receive
Additional Interest for each calendar year (or portion
thereof) equal to 50 percent of the gross income (exclusive of
tenant reimbursements of expenses) from the shopping center in
excess of a base amount of $2,737,000. The Lenders are also
entitled to receive Additional Interest equal to 50 percent of
the amount by which the value of the shopping center exceeds
$28,040,000, to be paid as follows: (i) upon sale (if any) of
the shopping center, an amount equal to 50 percent of the
amount by which the gross sale proceeds from such sale (net of
customary closing prorations and seller's closing expenses)
exceed the greater of (A) $28,040,000, or (B) the highest
gross proceeds from any single prior sale made after the
Initial Funding in connection with which Additional Interest
was paid, and (ii) at maturity or upon prepayment, an amount
equal to 50 percent of the amount by which the then current
fair market value of the shopping center (determined by
appraisal) exceeds the greater of (A) $28,040,000, or (B) the
highest gross proceeds from any single prior sale made after
the Initial Funding in connection with which Additional
Interest was paid. Aggregate interest payable over the term
of the loan may not exceed that which would be obtained from a
certain specified simple interest rate per annum.

The loan is generally non-recourse to the Borrower and its
partners. The entire principal balance of the loan and all Accrual
and Additional Interest not previously paid will be due at
maturity. In the event that the Borrower sells or further
encumbers the shopping center without the Lenders' consent, the
Lenders will have the option to accelerate the loan. The loan is
not prepayable by the Borrower for eight years following the
Initial Funding. Thereafter, the loan may be prepaid in full upon
payment of a prepayment charge in an amount equal to 7 percent of
the loan's principal balance in the ninth loan year and 4 percent
in the first six months of the tenth loan year. Thereafter, no
prepayment charge will be due. Any action taken or consent to be
given by the Lenders under the loan documents generally requires
the vote or consent of the Lenders representing a majority of the
principal amount of the loan outstanding. In general, in the event
that a Lender proposes to sell or transfer its interest in the
loan, the other Lenders will have a right of first refusal to
acquire such interest. The following is a schedule of expiration
of leases (assuming no renewals or cancellations) and current
annual base rents allocable thereto:

Year of Number Current Percentage of
Expiration of Square Annual Current Annual
of Leases Tenants Feet Base Rent Base Rent
1996.......... 1 1,430 $24,310 1.7%
1997.......... 2 3,335 65,268 4.5
1998.......... 2 3,220 55,536 3.8
1999.......... 5 14,557 331,790 23.0
2000.......... 4 11,211 199,344 13.8
2001.......... 7 25,837 435,183 30.1
2002.......... 2 6,707 145,228 10.1
2003.......... 1 9,460 187,024 13.0
<PAGE>
PAGE 43
West Springfield
Terrace Apartments
Fairfax County, Virginia

In August 1989, the Account acquired a 244-unit garden apartment
complex known as the West Springfield Terrace Apartments, which is
located on an approximately 13.2-acre site at the intersection of
Old Keene Mill Road and Bauer Road in Springfield, 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. Each unit has either a patio or
balcony and a washer/dryer. The complex contains a swimming pool,
tennis court, clubhouse and approximately 380 parking spaces. The
complex at present is approximately 96 percent occupied. The
average annual occupancy rates (based upon occupancy at the end of
each week during the year) and approximate average monthly rents
per unit for the past five years are as follows:

Average Monthly
Average Annual Base Rent Per
Year Occupancy Rate Unit
1991 92% $793
1992 95 797
1993 96 806
1994 95 837
1995 95 808
Current monthly rentals range from $755 to $1,015 per unit.
Real estate taxes on the complex were approximately $180,000 for
the 1995 tax year and are expected to be approximately $198,000 for
the 1996 tax year.

The complex is subject to competition from other apartment
complexes in the area. The Investment Adviser estimates that there
is at present an approximate 10 percent vacancy rate in the area
for apartment complexes that have sufficient operating experience
after initial rent-up and that might be deemed competitive. In the
opinion of the Investment Adviser, the apartment complex is
adequately insured.

The Account paid $15,222,278 for the apartment complex in cash at
closing (exclusive of closing costs and prorations). In connection
with the acquisition of the property, the Account paid a prepayment
charge at closing of $92,221 to the lender that held the mortgage
loan on the property at the time of its purchase. 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 in 1992 at a cost of approximately $1,900,000. For 1996,
<PAGE>
PAGE 44
approximately $207,000 has been budgeted for painting, carpet
replacement and other capital costs.

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 current outstanding balance of the
loan is approximately $7,770,000. The loan has a term of seven
years and bears interest at a rate of 9.50 percent per annum. The
loan required monthly payments of interest only until November 1992
and thereafter is amortizable over a 27-year schedule through
monthly payments of principal and interest aggregating $824,400 per
annum through November 1996 when the remaining principal balance of
approximately $7,704,000, together with accrued and unpaid
interest, is due and payable. The loan permits a prepayment in
whole or in part upon payment of a prepayment charge equal to the
present value of the difference, if any, between the remaining
scheduled monthly payments on the loan at the date of prepayment
and the amount such monthly payments would be if the interest rate
on the loan were equal to the yield on a U.S. Treasury obligation
with a comparable maturity date, plus 1 percent per annum. In
general, the remedies under the first mortgage loan are limited to
the property securing such obligation.

The apartment complex is being managed for a fee equal to 5 percent
of the gross revenues from the property, plus reimbursement of
certain direct expenses. Under the terms of the management
agreement, the manager is obligated to manage the complex, collect
all receipts from operations and, to the extent available from such
receipts, pay all expenses of the property. The property had been
managed by JMB Properties Company, an affiliate of the Investment
Adviser, until December 1994, when JMB Properties Company sold
substantially all of its assets to an unaffiliated third party, and
certain management personnel of JMB Properties Company became
management personnel of the third party. As a result of sale, the
successor to JMB Properties Company's assets now acts as manager of
the apartment complex on the same terms that existed prior to the
sale.

For a description of all types of fees and compensation payable by
the Account to IDS Life or the Investment Adviser in connection
with the acquisition or placement of real estate related
investments on behalf of the Account, see Compensation of IDS Life,
the Investment Adviser and their Affiliates in Connection with Real
Estate Related Services under the Description of the Investment
Adviser and Affiliates section.

For further information regarding the Account's real estate related
investments and their operations see the Management's Discussion
and Analysis of Financial Condition and Results of Operations
section.

Risk Factors

There are certain risk factors that may affect owners participating
in the Account or the Account's investments.
<PAGE>
PAGE 45
General Risks of Real Property Investments

The real property investments will be subject to the risks
generally incident to the ownership of real property, including the
uncertainty of cash flow to meet obligations, adverse changes in
national economic conditions, changes in the investment climate for
real estate, adverse changes in local market conditions due to
changes in general or local economic conditions and neighborhood
characteristics, changes affecting rental rates and property values
arising from changes in interest rates and in the availability,
cost and terms of mortgage funds, the need for unanticipated
renovations, particularly in older structures, changes in real
estate tax rates and other operating expenses, adverse changes in
governmental rules and fiscal policies, acts of God such as
earthquakes or other natural disasters or man-made events such as
environmental hazards (that may result in uninsured losses), the
financial condition of the sellers and tenants of properties and
other factors that are beyond the control of the Account. The
holding of real estate is also subject to increases in the cost of
ownership. For example, unexpected increases in the cost of energy
that could not be passed through to tenants could reduce the
operating income for some properties. Currently, earthquake
insurance coverage for the full value of real properties is
generally not available on economic terms. Earthquake insurance
for the Account's real property investments is generally provided
under a blanket policy that includes coverage for various
properties in which the Account or entities affiliated with, or
sponsored, advised or managed by, the Investment Adviser or its
affiliates have an interest, and coverage may be diluted over time
as a result of the acquisition of additional properties. In
certain areas, it is possible that real estate taxes or other
expenses will increase at more rapid rates than in the past. Most
of the Account's real property investments will be in rental
properties and are subject to the risk of inability to attract or
retain tenants, with a consequent decline in rental income, as a
result of adverse changes in local real estate markets or other
factors and the risk of inability of tenants to meet their lease
obligations, whether as a result of bankruptcy or other adverse
business or economic events, with a consequent decline in rental
income, as a result of adverse conditions or events affecting their
business operations. In certain real estate markets, available
space currently exceeds the demand for such space. Consequently,
Account investments in these markets may rent-up or re-lease more
slowly, and operating income for such investments may be less than
anticipated.

To the extent that the Account's rental income is based on a
percentage of the gross receipts of retail tenants, its cash flow
is dependent on the retail success achieved by such tenants.

While one of the Account's objectives is to obtain reinvestment of
cash flow from investments, there can be no guarantee that the
Account's investments will generate sufficient revenue to cover
operating and other expenses of the Account. The opportunities for
sale, and the profitability of any sale, of any particular
investment by the Account will be subject to the risk of adverse
changes in real estate market conditions, which may vary by the
size, location and type of such investments.<PAGE>
PAGE 46
Risks Related to the Financial Condition and Operations of Tenants
and to the Retail Industry

Certain of the Account's real estate related investments have major
tenants, including department store tenants, or department stores
that own one or more of their own stores at the properties. See
the discussions of the individual properties under the Real Estate
Related Investments section. The Account's investments could be
adversely affected by a bankruptcy or insolvency, or a downturn in
the business of, any of the major tenants or department stores at
the properties, or by the failure of any major tenants or
department stores to continue, extend or renew its lease (in the
case of a major tenant) or its operating covenant (in the case of a
department store). Generally, a department store that owns its own
store agrees to operate the store and pay part of common area
expenses for a specified period of time pursuant to such operating
covenants. A filing for protection from creditors under the
bankruptcy laws by a tenant or department store could result in the
rejection and termination of the tenant's lease or the department
store's operating covenants. During the past two years, leases of
certain mall tenants at Northridge Mall were terminated in
connection with their filings for protection from creditors under
the bankruptcy laws while other mall tenants at the property have
been granted short-term rent reductions. There is no assurance
that any tenants or department stores at the properties in which
the Account has invested will not file for bankruptcy protection
and terminate their obligations under their leases or operating
covenants. In addition, any such tenant and department store may,
from time to time, experience a downturn in its business, which may
result in a reduction or failure to make payments when due. In the
event of a default by a tenant or department store under its
obligations, there may be delays in enforcing the rights against
such tenant or department store and substantial costs may be
incurred associated with the protection of the Account's investment
in the affected property, including costs incurred in renovating
and re-leasing the property or obtaining a replacement department
store.

The retailing industry in recent years has been affected by
consolidations among large retail store owners. These
consolidations in some instances have resulted in store closings
and other reductions in existing operations. Federated Department
Stores, which has merged with R.H. Macy and Company, the owner of
Macy's, has announced that it intends to close its Abraham & Straus
store chain and either convert those existing stores to other units
within the Federated group or sell them. The Abraham & Straus
store at Monmouth Mall has been converted to a Stern's store.
While N/S Associates has certain rights under operating covenants
to require stores to be operated through January 1999, it is
possible that N/S Associates could incur costs in connection with
replacement department stores at those shopping centers. In
addition, certain of the other department stores at Northridge and
Southridge Malls are not subject to an operating covenant requiring
them to operate their department stores for any specified period of
time, although they have not indicated an intention to cease
operating any of their stores. See the discussions of Northridge,
Southridge and Monmouth Malls under the Real Estate Related <PAGE>
PAGE 47
Investments Section. Consolidations or reduced operations by
department stores or other retail owners may have an adverse effect
on the retail properties in which the Account has invested through
decreased revenues and higher operating costs due to greater
vacancies and additional costs for renovation and re-leasing of
properties or incentive contributions for replacement department
stores.

Mortgage Loans

All mortgage loans are subject to the risk of default by the
borrowers, in which event the Account may be required to foreclose,
or pursue other remedies, on the underlying property to protect the
value of its investment. The borrower's ability to make mortgage
payments and the amount realizable by the Account upon default
depend on the risks generally associated with real estate
investments as described above under the General Risks of Real
Property Investments section, as well as under the Uninsured Losses
section below.

Generally, mortgage loans will not be personal obligations of the
borrower, so the Account will generally rely solely on the value of
the property as security for the obligations of the borrower to the
Account. If the Account must foreclose, there can be no assurance
as to the amount of investment that will be recovered. Also, there
may be additional delays in receiving payments during any period of
default or foreclosure.

The principal amount due under a mortgage loan typically will be
payable in a lump sum payment at the end of the loan term, and the
borrower's ability to make such repayment may, particularly in the
absence of a borrower with substantial additional assets, be
dependent upon the borrower's ability to refinance the mortgage
loan with another lender. A borrower's inability to obtain such
refinancing may require a modification or extension of the existing
loan made by the Account or a foreclosure by the Account.
Volatility in interest rates during the investment period may
result in a delay in the making of mortgage loans or possibly a
lower yield to the Account on its mortgage loans. Because a
mortgage loan is a long-term investment, the receipt of interest
payments by the Account during the term of the loan might be below
what it would otherwise be able to receive under the then
prevailing market conditions. Volatility in interest rates after
investment by the Account may result in prepayment of mortgage
loans to the extent not prohibited by the terms of such
investments.
<PAGE>
PAGE 48
Mortgage loans made by the Account to finance an owner or developer
of a property that is newly constructed, under construction or
under contract for development will generally involve greater risks
than mortgage loans made to finance a property with an operating
history. The Account's commitment to make a mortgage loan may be
permitted to be pledged to a construction lender, and the proceeds
to be disbursed under the commitment may be placed in escrow at a
fixed interest rate in connection with such pledge.

The Investment Adviser will obtain an independent appraisal of the
appraised value of the real estate subject to each mortgage loan in
connection with the placement of such loan. It should be noted,
however, that appraisals are only estimates of value, and there can
be no assurance that, in the event of a default, the Account will
realize an amount equal to the amount of its mortgage loan. In the
event of a default by a borrower that requires the Account to
foreclose upon the property or otherwise pursue its remedies in
order to protect the Account's investment, the Investment Adviser
may seek to obtain a purchaser for the property upon such terms as
the Investment Adviser deems reasonable. However, there can be no
assurance that the amount realized upon any such sale of the
property underlying a mortgage loan will result in financial profit
or prevent loss to the Account. In addition, because of potential
adverse changes in the real estate market for residential,
commercial or industrial properties, locally or nationally, the
Account may be forced to operate the property for a period of time
to protect the value of its investment. In that event, the Account
may be required to invest additional sums to maintain and manage
the property. Under certain circumstances, the Account may retain
and operate the property on its own behalf.

Wrap-around and junior mortgage loans and subordinated land
sale-leaseback transactions of the Account, if any, will be subject
to greater risks than first mortgage loans and unsubordinated land
sale-leaseback transactions because such investments are
subordinate to the liens of senior mortgages or ground leases. All
mortgage loans, including first mortgage loans, may in certain
circumstances be subordinate to mechanics', materialmen's, brokers'
or government liens. The Account may elect to make payments, if it
has the legal right to do so, on a prior lien, including a senior
mortgage, in the event of a default by the borrower, in order to
prevent a default on such prior lien or to discharge it entirely.
In the event that the Account forecloses upon a junior or
wrap-around mortgage loan or subordinated land sale-leaseback after
a default by the borrower or lessee, it is possible that a "due on
sale" clause contained in a senior mortgage or ground lease, which
accelerates the outstanding principal balance under such senior
mortgage or terminates a ground lease in the case of a sale of
property, may be deemed to apply, increasing the risk of an
insufficient amount of funds being available to the Account after a
foreclosure sale. To the extent that the Account invests in
leasehold mortgage loans that are subordinate to ground leases not<PAGE>
PAGE 49
owned by the Account, a default by the tenant in its payments under
the lease to the lessor may result in the Account losing all or
part of its investment.

The Account, as the holder of a preferred position in the event of
a default, should be entitled to foreclose a mortgage and/or
terminate a lease. However, debt moratoria and other restrictions
on lenders (such as those in some jurisdictions on "due on sale"
clauses) may restrict the Account's ability to enforce specifically
the terms of the obligations of its borrowers. In addition, under
some circumstances the Account might be treated as liable, along
with the owner-borrower, to third parties. Further, the amount of
interest that may be charged by the Account may be limited by state
usury laws, the violation of which may result in various remedies,
including restitution of excessive interest and unenforceability of
loans. While the Investment Adviser will use diligence in
determining whether interest rates comply with applicable laws,
uncertainties may exist with respect to interest payable to the
Account, including additional interest based upon a percentage of
the gross revenues, income or sale or refinancing proceeds from the
underlying property.

Land Sale-Leaseback Transactions

In land sale-leaseback transactions, land and improvements may be
subject to the lien of a first mortgage and other mortgages that
may have priority over the Account's equity interest in the land.
If the ground lessee is unable to meet its mortgage payments, the
Account may be forced to make such payments to prevent foreclosure
and possible loss of investment. If the ground lessee subleases
space to subtenants, the ground lessee's ability to meet its
mortgage payments and rental obligations is subject to the risk
that subtenants may be unable to meet their sublease payments to
the ground lessee. In addition, subleases with subtenants may have
shorter terms than the ground lease and the ground lessee's ability
to meet its mortgage payments and rental obligations may be subject
to its ability to obtain renewals of existing subtenant leases or
to enter into new subtenant leases. The financial stability,
business judgment and management skill of the ground lessee may
provide additional risks.

As with mortgage loans, in the event of default under a ground
lease the Account may be unable to recover its investment and,
additionally, there may be a delay in receipt of payments and loss
of revenues in the event of default or subsequent exercise of
default remedies. Also, because the ground lessee's ability to
repay the Account may be affected by the ground lessee's recovery
of rental payments from subtenants, the Account's ultimate ability
to collect will be affected by all normal rental risks, as set
forth in the General Risks of Real Property Investments section and
by all other risks routinely inherent in real estate investments.

Because a land sale-leaseback is a long-term investment, the
receipt of payments by the Account during the lease term might be
below what it would otherwise be able to receive under the then
prevailing market conditions. However, to the extent the Account
is able to enter into participating ground leases, such risks may
be reduced.<PAGE>
PAGE 50
Participations

In seeking participations as described under Mortgage Loans --
Participations in the Investment Objectives of the Account section,
the Account may accept a lower base interest or rental rate in
order to obtain such participations and the potential benefit that
could result therefrom. Such benefit could be in the form of a
participation in property appreciation or increases in rental
income. The value of any participations depends on the success of
the borrower or lessee in the leasing of the underlying property,
the management and operation of such property by the borrower or
lessee, the market value of such property and the factors generally
affecting real estate investments described in the General Risks of
Real Property Investments section. As a result, there can be no
assurance as to how much may be realized by the Account from
participations. Additionally, it is possible that the Account's
interest through participations in certain proceeds may result in
the characterization of the Account as a partner or a joint
venturer with the borrower or lessee, and the Account could,
accordingly, lose the priority of its security interest or position
as lender or lessor that it would otherwise have and may be subject
to liabilities that it would otherwise not have as a lender or
lessor. Care will be exercised in the negotiation of
participations to reduce this risk, but there may be a greater risk
in these situations than if there were no participations.

Liquidity Considerations

Real property investments, mortgage loans and land sale-leaseback
investments generally are illiquid compared to investments more
commonly made by insurance company annuity separate accounts. The
investments of the Account will produce cash flow on a periodic
basis. Additionally, the liquid assets (see the Investment
Objectives of the Account -- Liquid Assets section) will provide
certain protection against illiquidity. However, there can be no
assurance that such short-term investments will be sufficient to
meet the requirements of the Account. Over the past few years the
Account has experienced substantial contract surrenders in excess
of contract purchase payments. In addition, contract charges and
deductions (except for surrender charges) and funding obligations
of its joint venture investments will deplete the Account's liquid
assets, while cash flow from the Account's investments will
increase the Account's liquid assets. The Account may have to
pledge its real estate related investments for additional
borrowings or dispose of those assets in order to replenish its
liquid assets. IDS Life is purchasing accumulation units in order
to increase the Account's liquidity. Therefore, IDS Life, as a
holder of accumulation units, participates in the increase or
decrease in the value of the Account's investments in the same
manner as any other holder of accumulation units. However, IDS
Life does not purchase a Contract and is not subject to a surrender
charge at any time in connection with any redemption of its
accumulation units. See the Management's Discussion and Analysis
of Financial Condition and Results of Operations section.

<PAGE>
PAGE 51
If a disposition of assets should be required, the Account may not
be able to dispose of its investments promptly or on commercially
reasonable terms. To avoid a sale on unreasonable terms or if a
sale cannot be made on a timely basis, it may be necessary to
suspend payments to be made under the Contracts. See the
Suspension and Delay of Payments section. During the period of any
suspension, the mortality and expense risk fee, the asset
management fee and other charges provided for in the Contracts will
continue to accrue. Even with a suspension of payments, it may not
be possible to generate sufficient cash to replenish the Account's
liquid assets or to meet its obligations, and a forced liquidation
of assets might be necessary. A liquidation in these circumstances
could result in a realization of less than the full value of the
assets so liquidated. Therefore the Account could experience
substantial losses. Because of its liquidity situation, including
the substantial net contract redemptions over the past several
years, the Account does not intend to acquire additional real
estate related investments. See the Management's Discussion and
Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources section for additional information
on the Account's liquidity situation.

Competition in Investments

The Account's real property investments, mortgage loans and land
sale-leasebacks compete with those of numerous other entities, as
well as with individuals, corporations, real estate partnerships
and other entities engaged in real estate investment activities,
including certain affiliates of the Investment Adviser and IDS
Life. See the Conflicts of Interest -- Competition by the Account
with Affiliates of the Investment Adviser and IDS Life for Real
Property Investments, Mortgage Loans and Land Sale-Leasebacks
section.

Competition among private and institutional investors of real
property investments, mortgage loans and land sale-leasebacks has
increased substantially over the years, with resulting increases in
the purchase price paid for real property and consequent higher
fixed costs in the case of equity investments in real property and
potentially greater credit risks assumed and reduced yields
available in connection with mortgage lending and land
sale-leaseback investments for such properties. There is no
assurance regarding the Account's success in obtaining suitable
investments for the purchase payments.
<PAGE>
PAGE 52
Risks of Leverage

The real property investments of the Account may be leveraged,
i.e., the Account may finance a portion of the cost of the
acquisition of properties by borrowing. See the Other Investment
Policies -- Borrowing Policies section.

The Account may refinance various properties, consequently
increasing the aggregate leverage of the Account's investments
beyond that currently contemplated. Such borrowing permits the
acquisition of properties of greater aggregate cost than could have
been financed solely from the Account's capital, but it also
increases the Account's exposure to losses. The degree of risk
associated with leverage could increase if the Account were to
purchase a property subject to an indebtedness that had a non-fixed
interest rate or a shorter maturity with a resulting balloon
payment. Mortgages requiring balloon payments involve greater
risks than mortgages in which the principal amount is fully
amortized over the term of the loan, since the ability of the
Account to repay at maturity the outstanding principal amount of
the balloon loan may be dependent upon the Account's ability to
obtain adequate refinancing. This ability will in turn be
dependent upon economic conditions and the availability of mortgage
money in general and the value of the underlying properties in
particular, all of which will be beyond the control of the Account.
There is no assurance that financing will be available to refinance
such balloon payments or that any such financing available will be
on favorable terms. Principal and interest payments on such
indebtedness will generally have to be made regardless of rental
income from the Account's investment. If mortgage payments are not
paid when due, the Account may sustain a loss on its investment as
a result of foreclosure by the mortgagee. See the Other Investment
Policies -- Borrowing Policies and Conflicts of Interest -- Receipt
of Commissions, Fees and Other Compensation by IDS Life, the
Investment Adviser and Affiliates sections.

At the time of acquisition of real property investments, aggregate
mortgage indebtedness in connection with the purchase of all real
property investments by the Account is not expected to exceed 50
percent of the purchase price (i.e., total consideration paid for
properties including all liens and mortgages on the properties, but
excluding points and prepaid interest) plus other initial cash
payments in connection with the purchase of all properties.
<PAGE>
PAGE 53
Risks of Joint Ownership

Some of the Account's investments may be owned jointly by the
Account and the seller of the property (or an affiliate of the
seller), and/or through investments in which entities sponsored,
advised or managed by the Investment Adviser, IDS Life or their
affiliates own an interest in the property.

The investment by the Account in joint venture partnerships or
other entities that own properties or through other forms of joint
ownership, instead of investing directly in the properties
themselves, may under certain circumstances involve risks not
otherwise present, including, for example, risks associated with
the possibility that the Account's co-venturer in a property might
become bankrupt, that such co-venturer may at any time have
economic or business interests or goals that are inconsistent with
the business interests or goals of the Account, that the
co-venturer may be in a position to take actions contrary to the
instructions or requests of the Account or contrary to the
Account's policies or objectives that may subject the properties
and consequently the Account to liabilities greater than those
contemplated or that the joint ownership arrangement or a
co-venturer may limit the Account's ability to transfer its
interest in the joint form of ownership. In connection with such
joint ownership arrangements, the co-venturer may have the right to
take certain actions with respect to the jointly owned property,
including under some circumstances the right to determine whether
and when the property will be sold. Ownership of real estate
related investments through joint ownership arrangements may be
even more illiquid than direct ownership of such investments, and
as a consequence the Account may experience difficulties or delays
in attempting to sell such joint ownership investments or may be
unable to obtain the full value of such investments in a sale when
such time comes. The Account may enter into joint ownership
arrangements with entities sponsored, advised or managed by the
Investment Adviser, IDS Life or their affiliates. See the
Conflicts of Interest -- Possible Joint Venture Investments with
Affiliates of the Investment Adviser or IDS Life section.

In connection with such an investment, the joint owners may be
required to approve some or all of the major decisions concerning
the investment by voting on the basis of their respective capital
contributions to, or shareholdings or ownership interests in, the
joint venture or otherwise. Thus, there exists the possibility of
an impasse in the event the joint owners disagree. The Investment
Adviser, on behalf of the Account, will attempt to negotiate a
right of first offer or refusal to enable the Account, in the event
of a disagreement regarding a proposed sale of the investment, to
purchase the joint owner's interest in the investment in the event
the Account does not wish to sell the investment. However, there
is no assurance that a right of first offer or refusal can be
obtained in all cases. The exercise of any right of first offer or
refusal would be subject to the Account's having the financial
resources to effect such a purchase, and there can be no assurance
that it would have such resources.

<PAGE>
PAGE 54
Reliance on IDS Life and the Investment Adviser

The owner of a Contract does not have a vote in determining any
policy of the Account. IDS Life, acting with the advice of the
Investment Adviser with respect to real estate related investments,
will make all decisions with respect to the management of the
Account, including the determination as to what real estate related
investments to make, subject to the investment restrictions. See
the Investment Restrictions section. Owners will have no right or
power to take part in the management of the Account. No person
should purchase the Contracts offered hereby unless such purchaser
is willing to entrust all aspects of the management of the Account
to IDS Life acting with advice from the Investment Adviser.

Evaluation and Appraisal Risk

There are risks associated with the method of valuing the assets of
the Account, including the fact that the valuations are based
substantially on appraisals to be made by independent real estate
appraisers and the application of formulae by the Investment
Adviser. Appraisals represent only the opinions of experts as to
the value of the property and may not represent the true or
realizable value of the investment. The Investment Adviser also
will make certain determinations regarding valuation of assets.
There may be variations between the amount realizable upon
disposition and the stated value of assets. Owners may be
adversely affected if the valuation method results in either
overvaluing or undervaluing the Account's investments. Both the
number of accumulation units credited at purchase and the amount
payable under a Contract are based on the value of the assets of
the Account. See the Valuation of Assets -- Real Property
Investments, Mortgage Loans and Land Sale-Leasebacks section.

If the Account investments are overvalued or undervalued, the fees
paid to IDS Life and the Investment Adviser and its affiliates will
be greater or less than the amount that should have been paid to
them.

Continuous Offering

Effective May 1, 1995, IDS Life discontinued new contract sales of
the Account. IDS Life will continue to accept and process
additional purchase payments into existing contracts in amounts
specified in the prospectus, whether by means of previously
established bank authorizations or otherwise. If there are
substantial and continuing purchase payments in excess of
redemptions, the Account will have additional funds. To the extent
that additional purchase payments are received, the Account may
have greater liquidity during certain periods and, at such times,
it is less likely that either premature sale of investments will be
forced or the suspension-of-payments provision will be invoked.

IDS Life purchases accumulation units in order to maintain the
Account and to increase its liquidity. IDS Life makes these
payments so that no contract holder is disadvantaged because sales
of new contracts have been discontinued. IDS Life will make
<PAGE>
PAGE 55
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 surrenders.

Size of Account

Effective May 1, 1995, IDS Life discontinued new contract sales of
the Account.

In the event that IDS Life were to sell a greater amount of
Contracts, the Account would be more diversified than would be the
case if fewer Contracts were sold, and the owners would be
proportionately less exposed to the risks of any particular
investment. In such case, the risk of loss to the Account and
owners from defaults by borrowers or tenants would be
proportionately smaller than if the Account's investments are less
diversified.

A significant amount of subsequent contract surrenders has the
effect of reducing the amount available for investments and
limiting diversification. Over the past few years the Account has
experienced substantial contract surrenders in excess of contract
purchase payments. As a result the Account does not expect to
acquire additional real estate related investments. See the
Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources section.

Uninsured Losses

The Investment Adviser will arrange for, or require proof of,
comprehensive insurance including liability, fire and extended
coverage, which is customarily obtained by owners of similar
properties for the real property investments and properties which
are security for the mortgage loans or subject to the land
sale-leaseback transactions of the Account. Generally, under the
terms of the mortgage or ground lease, such insurance will be
required to be maintained at the expense of the mortgagor or ground
lessee. However, there are certain types of losses, generally of a
catastrophic nature such as earthquakes, floods, wars or
environmental hazards or accidents, which are either uninsurable or
not economically insurable. Should such a disaster occur, the
Account could lose both its invested principal and anticipated
profits from investments.

Environmental and Regulatory Problems

The availability of suitable investments and the cost of
construction and operation of properties in which the Account may
invest may be adversely affected by legislative, regulatory,
administrative and enforcement action at the local, state and
national levels in the areas, among others, of housing and
environmental controls. In addition to possible increasingly
restrictive zoning regulations and related land use controls, such
restrictions may relate to air and water quality standards, noise
pollution and indirect environmental impacts such as increased
motor vehicle activity. In addition, the cost of, or liability
arising from, investments in properties (whether as owner, lender <PAGE>
PAGE 56
or lessor) may be increased as a result of current or future
environmental laws or regulations at the national or local level,
or environmental concerns, relating to, among other matters, the
use or presence of hazardous or toxic materials or waste; and the
ownership, sale, financing or refinancing of such properties, or an
interest therein held through a mortgage loan or land
sale-leaseback, may be adversely affected by such increased costs
or environmental liabilities.

Federal Income Tax Matters

IDS Life believes that the Contracts will be treated as annuities
under the Code, and that an owner will not be subject to Federal
income tax on any income or earnings of the Account until
distributions are made or a change of ownership of the Contract
occurs. However, an owner generally will be subject to Federal
income taxation on the portion of distributions received that
represents income to the owner and may be subject to an additional
10 percent penalty in certain circumstances related to early
withdrawals. IDS Life has not sought a ruling from the Internal
Revenue Service regarding any of the Federal income tax
consequences relevant to the ownership of the Contracts. See the
Certain Federal Income Tax Considerations section.

Investment Company Act of 1940

IDS Life proposes to operate the Account so that it will not be
subject to registration under the 1940 Act. This will require
monitoring the proportion of the Account's funds to be placed in
various investments so that the Account does not become subject to
the 1940 Act. As a result, the Account may forgo certain
investments that could produce a more favorable return for the
Account.

Conflicts of Interest

Competition by the Account with Affiliates of the Investment
Adviser and IDS Life for Real Property Investments, Mortgage Loans
and Land Sale-Leasebacks

IDS Life and the Investment Adviser will be subject to various
conflicts of interest in carrying out their responsibilities to the
Account. Affiliates of the Investment Adviser and IDS Life also
may be in competition with the Account in connection with the
acquisition, sale or operation of properties or the making of
mortgage loan or land sale-leaseback investments under some
circumstances.

The Investment Adviser, its affiliates and affiliates of IDS Life
currently perform investment management and advisory and other
services for other real estate investment funds (e.g., pension and
profit sharing trusts, corporations, partnerships and segregated
asset accounts) similar to the services to be performed for the
Account and expect to provide such services to additional real
estate investment funds in the future. Affiliates of the
Investment Adviser and IDS Life also invest in real estate for<PAGE>
PAGE 57
their own accounts. IDS Life, the Investment Adviser and their
affiliates may sponsor, advise or manage real estate investment
funds that have investment objectives nearly identical to the
Account's. The Investment Adviser, IDS Life or their affiliates
also may make investments meeting such investment objectives for
their own accounts. The Investment Adviser, IDS Life and such
affiliates and real estate investment funds sponsored, advised or
managed by the Investment Adviser, IDS Life or their affiliates may
be in competition with the Account for investments under certain
circumstances. Competition in the acquisition or placement of real
estate related investments could arise, for example, between the
Account and either the Investment Adviser, IDS Life or their
affiliates seeking to make an investment for their own account or
between the Account and another real estate investment fund
sponsored, advised or managed by the Investment Adviser, IDS Life
or their affiliates having investment objectives substantially
identical to the Account or even with different investment
objectives. The Account also may acquire properties adjacent to
properties owned by entities affiliated with, or advised or managed
by, the Investment Adviser or IDS Life or purchase a phase of a
multi-phase development in which an affiliated entity has or
subsequently acquires an investment interest in another phase. The
Account and one or more entities affiliated with, or advised or
managed by, the Investment Adviser or IDS Life may be competing in
certain geographical markets for commercial tenants. There also
may be similar sorts of competition for the sale of properties in
certain markets. The Investment Adviser, IDS Life and their
affiliates may provide services to, and otherwise deal or do
business with, persons who may be engaged in transactions with the
Account. In addition, the Account may borrow from, purchase goods
and services from and otherwise do business with persons who may be
engaged in transactions with the Investment Adviser, IDS Life and
their affiliates.

In the event the Investment Adviser, IDS Life or their affiliates
are presented with a potential investment that might be made by the
Account and another investment fund that the Investment Adviser,
IDS Life or an affiliate sponsors, advises or manages, the decision
as to the suitability of the investment by a particular fund may
take into account such factors as its cash flow, the effect of the
acquisition on diversification of its portfolio, the estimated
income tax effects of the investment on it, its policies relating
to leverage, any regulatory restrictions upon investment policies,
funds available for investment and other factors. Neither the
Investment Adviser, IDS Life nor any of their affiliates will be
obligated to present to the Account any particular investment
opportunity that comes to its attention, even if such opportunity
is of a character that might be suitable for investment by the
Account, and each of the Investment Adviser, IDS Life and their
affiliates shall have the right to take for its own account
(individually or otherwise) or to take for, or recommend to, others
any such particular investment opportunity.

Except as described under the Conflicts of Interest -- Possible
Joint Venture Investments with Affiliates of the Investment Adviser
or IDS Life section, the Account will not purchase from or sell to<PAGE>
PAGE 58
IDS Life, the Investment Adviser or their affiliates any real
estate related investments. The Account will not make mortgage
loans to IDS Life, the Investment Adviser or their affiliates and
will not obtain permanent mortgage financing from IDS Life or its
affiliates. The Account may obtain short-term financing from IDS
Life for working capital, liquidity or other purposes.

Other activities of the Investment Adviser, IDS Life and their
affiliates may utilize the time, effort, financial or other
resources of the Investment Adviser and IDS Life and their
personnel that might otherwise be available to the Account.

The Investment Adviser, IDS Life, their affiliates and any of their
employees, directors or officers, may engage from time to time for
their own account, or for the account of others, in other business
ventures of any nature, or render services of any kind to other
business ventures of any nature. No owner, by virtue of his
interest in the Account, will have any interest or be entitled to
participate in such other ventures.

Receipt of Commissions, Fees and Other Compensation by IDS Life,
the Investment Adviser and Affiliates

The Investment Adviser, its affiliates and IDS Life will receive,
directly or indirectly, acquisition and mortgage placement fees
from the Account for services and advice in connection with the
identification, evaluation, investigation, negotiation, selection
and acquisition or placement of the Account's initial investments
and in connection with any reinvestment of income and sale,
financing or refinancing proceeds of real property investments and
proceeds on the principal and interest or rent payments on mortgage
loans or land sale-leaseback investments. Since the Account is a
segregated asset account of IDS Life, the agreements and
arrangements relating to the compensation of IDS Life under the
Contracts are not the result of arm's-length negotiations. Because
the Investment Adviser, its affiliates and IDS Life will be
entitled to acquisition and mortgage placement fees upon
reinvestment of funds in real estate related investments, there may
be conflicts of interest in determining whether to invest in
shorter-term or longer-term investments, since the shorter the term
of investment the sooner funds will be available for reinvestment.
Conflicts of interest could arise between the Investment Adviser
and IDS Life, on the one hand, and the Account, on the other,
because the receipt of fees and other compensation by the
Investment Adviser, its affiliates and IDS Life may be affected by
various determinations made by IDS Life, with the advice of the
Investment Adviser, including whether to sell, finance or refinance
any real property investment and the timing of any such sale,
financing or refinancing.

Certain Account properties may be managed by JMB or affiliates of
JMB such as Urban Retail Properties Co. Under property management
agreements, the company employed to manage the property usually
collects the rental income on the property and deducts from such
income its fee and the costs of operating the property such as
insurance premiums, taxes, repairs and improvements and other costs<PAGE>
PAGE 59
related to the maintenance and operation of the property. The
balance of rental income is remitted to the owner of the property.
To the extent agreements are entered into with a JMB affiliate to
manage properties owned directly by the Account, such agreements
are subject to the approval of IDS Life and are expected to be on
terms no less favorable to the Account than those customarily
charged for similar services in the relevant geographical area.
For real property investments in which the Account owns an interest
through a joint venture, such agreements are subject to the
approval of the joint venture.

JMB Insurance Agency, Inc., an affiliate of JMB engaged in the
insurance brokerage business, may provide insurance brokerage
services in connection with the Account's investments. JMB
Insurance Agency, Inc. will receive commissions and/or fees for
such services at rates that are set by the insurance companies for
the classes of coverage involved.

In addition, JMB or its affiliates may provide mortgage brokerage
services in connection with the financing or refinancing of the
Account's real property investments. Since JMB or its affiliates
may receive a mortgage brokerage fee, conflicts of interest could
arise in determining whether any of the Account's real property
investments should be debt-financed or whether any such property
should be refinanced prior to its sale and the amount of any such
financing or refinancing.

The compensation of IDS Life and the Investment Adviser may be
affected by the timing of acquisitions, the valuation of the assets
of the Account, the amount of leverage employed in connection with
the Account's investments, the timing of the sale of properties of
the Account or other factors that are subject to the influence or
determination of the Investment Adviser and IDS Life, and as to
which the interests of the Investment Adviser, its affiliates or
IDS Life may under certain circumstances be different from those of
the Account.

In addition, to the extent that the investments of the Account are
overvalued at any time, the fees paid to IDS Life and the
Investment Adviser (including the incentive portion of the asset
management fee) and its affiliates will be greater than the amount
that should have been paid to them.

Affiliates of JMB also may provide other real estate related
services to the Account or its investments that may result in
conflicts of interest with respect to the provision of such
services.

Possible Joint Venture Investments with Affiliates of the
Investment Adviser or IDS Life

The Account may enter into joint ownership arrangements with
entities sponsored, advised or managed by IDS Life, the Investment
Adviser or their affiliates, including other segregated asset
accounts established by IDS Life or its affiliates or advised or
managed by the Investment Adviser or its affiliates. Other than as
described in the preceding sentence, the Account will not enter <PAGE>
PAGE 60
into joint venture investments with IDS Life, the Investment
Adviser or their affiliates investing for their own account except
for investments expected to be made on a temporary basis to
facilitate the making of the joint venture investment. IDS Life,
the Investment Adviser or their respective affiliates, as a result
of their relationships with more than one joint owner, may be
involved in various conflicts of interests with respect to the
acquisition, financing, operation or sale of any such joint
investment, including making decisions or rendering advice
regarding the timing of any financing, refinancing or sale of such
joint investment.

In connection with such an investment, the joint owners may be
required to approve some or all of the major decisions concerning
the property by voting on the basis of their respective capital
contributions to, or shareholdings or ownership interests in, the
joint venture or otherwise. Thus, there exists the possibility of
an impasse in the event the joint owners disagree or the
possibility that a joint owner may be able to take certain actions
with respect to the jointly owned investment. Additionally, under
some circumstances a joint owner may no longer be affiliated with
or advised or managed by either IDS Life or the Investment Adviser
or an affiliate thereof, as the case may be. See the Description
of the Investment Adviser and its Affiliates section for a
discussion of a transaction as a result of which certain of the
joint owners with the Account in its investments in N/S Associates,
Monmouth Associates and 1225 Investment Corporation are no longer
advised or managed by affiliates of the Investment Adviser. As a
result, such joint owners may in the future have different
investment policies or objectives. See the Real Estate Related
Investments section for a discussion of the relevant procedure in
the event there is a disagreement among these joint owners
regarding a sale of the investment.

The Investment Adviser, on behalf of the Account, generally will
attempt to negotiate a right of first offer or refusal to enable
the Account, in the event of a disagreement regarding a proposed
sale of the investment, to purchase the joint owner's interest in
the investment in the event the Account does not wish to sell the
investment. However, there is no assurance that such a right of
first offer or refusal can be obtained. The exercise of any right
of first offer or refusal would be subject to the Account having
the financial resources to effect such a purchase, and there can be
no assurance that it would have such resources.

Limitation on Liability

The Investment Advisory Agreement between IDS Life and the
Investment Adviser provides that the Investment Adviser will be
liable only for willful misfeasance, bad faith or negligence on the
part of the Investment Adviser in the performance of its
obligations or duties to the Account.

In addition, IDS Life has agreed to indemnify the Investment
Adviser and its affiliates, including their officers and directors,
against certain liabilities, including liabilities under the
Securities Act of 1933 (the 1933 Act). Any such indemnification by
IDS Life may be made out of the assets of the Account.<PAGE>
PAGE 61
IDS Life as Distributor of the Contracts

IDS Life is the principal distributor of the Contracts, and
accordingly there will be no independent review of the structure,
formation or operation of the Account conducted by a non-affiliated
broker-dealer acting as distributor.

The Contract -- Accumulation Period

The Contract accumulation period commences with the date on which
the Contract is issued and ends on the retirement date.

Purchase Payments

The minimum initial purchase payment for a Contract was $5,000; or
$2,000 if concurrently the owner agreed to make additional monthly
purchase payments of not less than $100 each by means of a bank
authorization. Additional purchase payments may be made by means
of a bank authorization, if not less than $100 per month.
Additional purchase payments of at least $2,000 each may be made,
and the maximum aggregate additional purchase payment in any one
contract year after the first year may not exceed $50,000.
However, additional purchase payments are not required under a
Contract. IDS Life, in its discretion, may agree to permit a
greater maximum initial purchase payment or greater maximum
aggregate additional purchase payments in certain instances.

Allocation of Purchase Payment and Contract Value

Purchase payments will be allocated to the Account at the price
determined for accumulation units as of the end of the valuation
period during which IDS Life receives each such purchase payment.
When a purchase payment is allocated to the Account, it is
converted into accumulation units. The number of accumulation
units to be credited to a Contract as a result of a purchase
payment is determined by dividing that purchase payment, after
deducting any applicable premium taxes, by the accumulation unit <PAGE>
PAGE 62
value on the date that the purchase payment is allocated to the
Account. The contract value on any valuation date can be
determined by multiplying the number of accumulation units credited
to the Contract by the value of an accumulation unit on that
valuation date.

Contract Surrender

An election to surrender a Contract may be made in writing to the
home office of IDS Life in Minneapolis, MN. If required by IDS
Life, the request for surrender must be accompanied by the Contract
if a request for the full surrender value is being made. An
election to surrender a Contract can be made only 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. The
surrender value is determined on the basis of the accumulation unit
value in effect on the date on which a request for surrender is
received by IDS Life in proper order.

A partial surrender request not exceeding $50,000 may be made by
contacting IDS Life by telephone. IDS Life has the authority to
honor any telephone partial surrender request it believes to be
authentic and will use reasonable procedures to confirm that they
are. This includes asking identifying questions and tape recording
calls. As long as the procedures are followed, neither IDS Life
nor its affiliates will be liable for any loss resulting from
fraudulent requests. At times when the volume of telephone
requests is unusually high, IDS Life will take special measures to
ensure your call is answered as promptly as possible. A telephone
surrender request will not be allowed within 30 days of a phoned-in
address change. You may request that telephone withdrawals not be
authorized from your account by writing IDS Life.

The surrender value will be paid within seven days after the date
on which a proper request is received by IDS Life, except that
under certain circumstances IDS Life may delay or suspend payments.
See the Suspension and Delay of Payments section.

An owner may surrender all or a portion of the contract value. Any
partial surrender must be for at least $250, and no partial
surrender can be made if it would reduce the contract value after
such surrender to less than $600.

Automated partial surrenders may be made through a one-time written
request (or other method acceptable to IDS Life). The minimum
surrender amount from the Contract is $50, and such surrender can
be made on a monthly, quarterly, semi-annual or annual basis. You
may start or stop this service at any time, but you must give IDS
Life 30 days' notice to change any automated surrender instructions
that are currently in place. Automated partial surrenders are
subject to all of the other contract provisions and terms.
Automated partial surrenders may be restricted by applicable law.
In addition, the payment of additional purchase payments, if
allowed under the Contract, while automated partial surrenders are
in effect, may not be appropriate and therefore is not permitted. <PAGE>
PAGE 63
Automated partial surrenders may result in taxes and penalties
being applied to all or a portion of the amount surrendered. See
the Certain Federal Income Tax Considerations section. You should
consult your tax adviser if you have any questions about the
taxation of your annuity.

No surrender can be made after the retirement date or the death of
the first to die of the annuitant or owner. Any amounts
surrendered and charges that may apply cannot be repaid. A
surrender charge, which is a contingent deferred sales charge, will
be imposed for any surrender made during the first eight payment
years of any purchase payment. The surrender charge applies
separately to the initial purchase payment and to each additional
purchase payment. Regardless of when a purchase payment is made,
the contract year in which a purchase payment is made is the first
payment year for that purchase payment, and succeeding payment
years continue to be measured separately for that purchase payment.

For a partial surrender, accumulation units attributable to the
earliest payment year are surrendered first. The surrender charge
is 8 percent of the amount surrendered during the first payment
year and decreases by 1 percent per year thereafter to 1 percent in
the eighth payment year. There is no surrender charge on amounts
surrendered after the eighth payment year. In no event will the
aggregate surrender charges imposed exceed 8.5 percent of the
aggregate purchase payments received. IDS Life may, in its
discretion, reduce or eliminate surrender charges for certain group
sales of the Contracts. See the Contract Charges and Deductions --
Surrender Charges section. Owners should also be aware that, under
certain circumstances, a surrender before the owner has reached the
age of 59-1/2 may be subject to a penalty under the Code. See the
Certain Federal Income Tax Considerations section.

Contract Charges and Deductions

The following sets forth the deductions from purchase payments and
the charges against the Account provided for in the Contract. See
the Notes to the Financial Statements of the Account for further
information concerning fees paid by the Account to IDS Life and the
Investment Adviser.

Mortality and Expense Risk Fee

This charge is applied daily to the Account. The fee equals 1
percent of the average daily asset value of the Account on an
annual basis. It covers the mortality risk and expense risk. IDS
Life estimates that approximately two-thirds of this fee is for
assumption of the mortality risk, and one-third is for assumption
of the expense risk. IDS Life will not be entitled to, and will
forgo, that portion of the mortality and expense risk fee
attributable to the use of indebtedness in excess of 40 percent of
the aggregate value of all of the Account's real property
investments.

<PAGE>
PAGE 64
The mortality risk is IDS Life's guarantee to make retirement
payments according to the terms of the Contract, no matter how long
a specific annuitant lives and no matter how long the entire group
of IDS Life annuitants live. If, as a group, IDS Life annuitants
outlive the life expectancy assumed in IDS Life's actuarial tables,
then IDS Life must take money from its general assets to meet its
obligations. If, as a group, IDS Life annuitants do not live as
long as expected, IDS Life will profit from the mortality risk fee.

The expense risk portion of the mortality and expense risk fee is
paid to IDS Life for its guarantee that the mortality and expense
risk fee, asset management fee and acquisition and mortgage
placement fee will not increase over the life of the Account and
that no new fees payable to IDS Life will be added to the Account.
To the extent such fee does not cover IDS Life's expenses (other
than any expenses that may be reimbursed as described under the
Organizational and Offering Expenses and Operational Expenses
section below), any deficit would have to be made up from IDS
Life's general assets. IDS Life also could profit from the expense
risk fee if it is more than sufficient to meet such expenses.

Asset Management Fee

IDS Life is paid an asset management fee for its services in
connection with the management of the assets of the Account. This
fee is accrued on a daily basis and deducted on a monthly basis and
is equal on an annual basis to 1.25 percent of the average daily
asset value of the investments of the Account, subject to increase
as described below. A portion of the asset management fee equal to
0.95 percent of the average daily asset value is paid by IDS Life
to the Investment Adviser for its services in connection with the
management of the assets of the Account. In the event that the
Account's real property investments have produced a rate of return
for the Account (measured for each calendar year) that exceeds the
rate of return as measured for such period by the FRC Property
Index (which is released in April of each year for the preceding
calendar year) by 0.5 percent per year, then the Investment Adviser
shall be entitled to an additional amount equal to 0.05 percent of
the average daily asset value of the Account for such calendar
year. The Investment Adviser also will be entitled to an
additional amount equal to 0.01 percent (up to a maximum of 0.2
percent) of the average daily asset value of the Account for each
0.1 percent by which the rate of return of the Account's real
property investments for such calendar year exceeds the rate of
return as measured for such period by such index plus 0.5 percent
per annum. Rate of return will be calculated on a quarterly basis
and in general will be the sum of all net income from operations of
the Account's real property investments (without deducting any
asset management fees or certain other expenses of the Account) and
realized and unrealized capital appreciation or depreciation on the
Account's real property investments (net of all acquisition and
mortgage placement fees) for the calendar quarter taken as a
percentage of the aggregate asset value of such investments (net of
all acquisition and mortgage placement fees) as of the beginning of
such calendar quarter.

<PAGE>
PAGE 65
IDS Life and the Investment Adviser will not be entitled to, and
will forgo, that portion of the asset management fee, as calculated
above, attributable to the use of indebtedness in excess of 40
percent of the aggregate value of all the Account's real property
investments.

The initial term of the investment advisory agreement extended
through the period ending July 1, 1993 and was renewed at the
option of the Investment Adviser for an additional five-year term.
The investment advisory agreement may be renewed at the option of
the Investment Adviser for additional three-year terms for as long
as the Account's real property investments have produced a rate of
return for the Account for the 10-year period (or, in the case of
the initial term, the five-year period) ending at the end of any
expiring term equal to or in excess of 90 percent of the rate of
return for such period as measured by the FRC Property Index or a
successor index. IDS Life may terminate the investment advisory
agreement upon six months' prior written notice in the event the
Account's rate of return does not equal or exceed 90 percent of the
rate of the return of such index as calculated above.

The investment advisory agreement may be terminated by IDS Life in
the event there is change in control of JMB under certain
circumstances or in the event there is a determination that the
Investment Adviser has acted with gross negligence, bad faith or
willful misfeasance in the performance of the duties of the
Investment Adviser under the terms of the investment advisory
agreement.

Acquisition and Mortgage Placement Fee

IDS Life will receive an acquisition and mortgage placement fee of
3.75 percent of the total cash investment to be paid or advanced by
the Account in connection with each real property investment,
mortgage loan and land sale-leaseback made by the Account. The
amount paid to IDS Life is measured by the cash investment to be
paid by the Account (including all cash down payments, interest,
points, special reserves and all other cash payments) for real
property investments or land sale-leasebacks or the amount to be
borrowed under a mortgage loan by the borrower for mortgage loans.
A portion of the acquisition and mortgage placement fee equal to
3.5 percent of the total cash investment to be paid or advanced by
the Account in connection with each real property investment,
mortgage loan and land sale-leaseback will be paid to the
Investment Adviser in consideration of the Investment Adviser's
services in connection with the identification, evaluation,
investigation, negotiation, selection and recommendation for
purchase or placement of real estate related investments for the
Account. In some instances, some or all of this fee may be paid by
the sellers of properties or borrowers. However, to the extent
that the seller or borrower pays less than 3.75 percent, that
amount will be paid directly by the Account to IDS Life.

<PAGE>
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Organizational and Offering Expenses and Operational Expenses

All organizational and offering expenses are charged to the
Account. All costs of acquisition, administration and disposition
of investments are charged to the Account. These costs include
brokerage fees and commissions, appraisal fees, attorneys' fees,
accountants' fees and other similar fees and expenses (such as
travel and travel-related expenses) incurred in connection with the
investment process.

Expenses incurred by IDS Life because of the existence of the
Account -- such as regulatory fees and reports, and taxes -- also
are charged to the Account. Under current law, IDS Life does not
expect to incur any tax because of the Account's investment income,
but IDS Life reserves the right to charge the Account for any taxes
IDS Life does incur. Finally, IDS Life will charge the Account for
expenses incurred in administering the assets of the Account.
These expenses include periodic valuation appraisal costs, legal,
accounting and auditing fees and expenses, interest, insurance
costs, data processing costs, taxes, mortgage servicing, mortgage
brokerage, property management, travel and travel-related expenses
and litigation costs. To the extent such services are provided by
officers or employees of IDS Life, the Investment Adviser or their
affiliates, the Account will reimburse such entities for
specifically identified direct costs (including salary and salary
related expenses) associated with administering the assets of the
Account.

Operational income and expenses will be estimated periodically and
credited or deducted ratably on a daily basis in determining
accumulation and annuity unit values with periodic adjustments, if
necessary, to credit or charge the differences between actual and
estimated operational income and expenses.

Premium Taxes

Certain state and local governments impose premium taxes. These
taxes generally range in an amount of up to 3.5 percent and depend
on the owner's state of residence or the state in which the
Contract was sold. In some cases, the premium taxes will be
deducted from the purchase payment before it is allocated to the
Account. In other cases, the deduction will not be made until the
owner surrenders the Contract or retirement payments begin.

Surrender Charges

A surrender charge, which is a contingent deferred sales charge
payable to IDS Life, will be assessed against the Contract after
the initial 10-day period of the Contract and during the first
eight years after any purchase payment. The surrender charge is 8
percent of the amount surrendered during the first payment year and
decreases by 1 percent per year thereafter to 1 percent in the
eighth payment year. There is no surrender charge on amounts
surrendered after the eighth payment year. See the Contract
Surrender section.

<PAGE>
PAGE 67
Suspension and Delay of Payments

IDS Life will attempt to make payments under the Contracts within
seven days whenever the Account has cash available. However, IDS
Life reserves the right to defer making any such payments under the
Contracts for up to six months. This reservation of the right to
suspend payments is only intended to be utilized in the emergency
circumstances set forth in the remainder of this section. Subject
to any suspension of payments described below, IDS Life guarantees
that payments on death of the first to die of the annuitant or
owner prior to the retirement date will be made within seven days
of receipt by IDS Life of its death claim requirements after the
death of the annuitant or owner, whichever occurs first. In
addition, payment of surrender values may be delayed if a check for
a purchase payment has not cleared the bank on which it was drawn.

IDS Life may suspend any payments due under the Contracts beyond
the seven-day period for up to six months when IDS Life determines
that there is insufficient cash available to meet all current
surrender requests and other payment obligations of the Account and
the sale of the real estate related assets of the Account could not
be made on a timely basis on commercially reasonable terms. In the
event of any suspension of payments, the cash available will be
used in the following order of priority:

First -- to meet any obligations the Account has other than
Contract obligations. Such obligations would include those
expenses necessary to continue the operation of the Account, other
than fees to IDS Life, which fees will be deferred until ALL
Contract obligations are satisfied.

Second -- to make annuity payments in full or pro rata depending on
the cash available. All annuitants will be treated as a class,
including those who annuitize during the suspension. No other
payments will be made until all unpaid annuity payments are made.

Third -- to make payments due on the death of the annuitant or the
owner that became due and payable after the declaration of
suspension. All payees of payments on death will be treated as a
class and payments may be made pro rata depending upon the cash
available.

Finally -- no payments of surrender values will be permitted during
such a suspension while any annuity payments or payments on death
remain unpaid. Depending upon the cash available, any payments of
surrender values during such suspension will be made in accordance
with the order in which surrender requests are received by IDS
Life.

If a payment of a surrender or an annuity payment is deferred, the
amount will be determined as of the end of the valuation period
during which the surrender request was received or the annuity
payment was due, and, with respect to such amount, participation in
<PAGE>
PAGE 68
the investment experience of the Account will cease. If IDS Life
defers a payment of a surrender or an annuity payment for 30 days
or more, IDS Life will credit interest on the amount of the payment
at a rate of 3 percent per year or such higher rate as IDS Life, in
its discretion, establishes. If IDS Life defers payment on death
for more than seven days, IDS Life will credit interest on the
amount of payment at a rate of 3 percent per year or such higher
rate as IDS Life, in its discretion, establishes or that which is
required by law.

Owners who remain in the Account will bear the investment risk that
real estate related investments of the Account will have to be sold
under emergency circumstances that could result in the realization
by the Account of less than the investment value of such
investments notwithstanding any suspension or delay in payments as
permitted under the Contracts.

Transfer of Ownership

The owner may transfer ownership of the Contract, at any time while
the annuitant is living, by filing a transfer of ownership with IDS
Life at its home office. IDS Life will not be bound by any
transfer of ownership until the written transfer in form and
substance acceptable to IDS Life is received by it. IDS Life is
not responsible for the validity of any transfer. A transfer will
be effective as of the date of request for the transfer, subject to
any action taken or payment made by IDS Life prior to receipt of
the transfer. IDS Life is not liable as to any payment or other
settlement made by it before receipt of the transfer.

INASMUCH AS A TRANSFER MAY BE A TAXABLE EVENT, OWNERS SHOULD
CONSULT THEIR OWN TAX ADVISERS SHOULD THEY WISH TO TRANSFER THEIR
CONTRACTS.

Beneficiary

The beneficiary is the party named by the owner, in a form
satisfactory to IDS Life, to receive the benefits of the Contract
if the owner or the annuitant dies while the Contract is in force.
Only those beneficiaries who are living when death benefits become
payable may share in the benefits, if any. If no beneficiary is
then living, IDS Life will pay the benefits to the owner, if
living, otherwise to the owner's estate. The owner may change the
beneficiary anytime while the annuitant is living by satisfactory
written request to IDS Life. Once the change is received by IDS
Life, it will take effect as of the date of the owner's request,
subject to any action taken or payment made by IDS Life before such
receipt.

If the annuitant or owner dies before the retirement date while the
Contract is in force, IDS Life will pay to the beneficiary:

1. the greater of the contract value or the purchase payments
paid less any amounts surrendered (if death occurred prior to
the annuitant's attaining age 75); otherwise
<PAGE>
PAGE 69
2. the contract value (if death occurred on or after the
annuitant reached age 75).

3. if, under a Contract issued to a resident of Pennsylvania, an
annuitant or owner dies before the retirement date while the
Contract is in force, IDS Life will pay to the beneficiary the
contract value only. This is true whether or not death occurs
prior to the annuitant attaining age 75 or after the annuitant
reaches age 75.

These amounts will be payable in a lump sum upon the receipt of IDS
Life's death claim requirements after the death of the annuitant or
owner, whichever occurs first.

In lieu of a lump sum payment, the beneficiary may elect to receive
payment under any annuity option available under the Contract
provided:

1. the beneficiary elects the plan within 60 days after IDS Life
receives due proof of death; and

2. payments begin no later than one year after the date of death;
and

3. the plan provides payments over a period which does not exceed
the life of the beneficiary or the life expectancy of the
beneficiary.

In this event, the reference to annuitant in the annuity provisions
shall apply to the beneficiary. Any amounts payable or applied by
IDS Life as described in this section will be based on the contract
value as of the valuation period during which IDS Life's death
claim requirements are fulfilled.

In order for the beneficiary to receive the death benefit, the
beneficiary must send, or have sent, due proof of death of the
annuitant or owner to IDS Life, IDS Tower 10, Minneapolis, MN
55440-0010. The beneficiary should clearly indicate whether a lump
sum payment is desired or if the beneficiary is selecting one of
the available annuity options under the Contract.

If the owner's death occurs prior to the retirement date, the
owner's spouse, if designated as sole beneficiary, may elect in
writing to forgo receipt of the death benefit and instead continue
the Contract in force as its owner. The election by the spouse
must be made within 60 days after IDS Life receives due proof of
death.

If the annuitant dies after the retirement date, the amount
payable, if any, will be as provided in the annuity option then in
effect.
<PAGE>
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Annuity Period

Variable Annuity

A variable annuity is an annuity with payments that are not
predetermined as to dollar amount. Payments will vary according to
the investment results of the Account. Annuity payments will be
made to the owner unless different instructions are specified in
writing. The owner may or may not be the annuitant. The choice is
made by the owner in the application for the Contract.

Retirement Date and Annuity Options

A retirement date is established at the time of application. An
owner must give IDS Life written instructions for paying retirement
benefits at least 30 days before the annuitant's retirement date.
In the event no instructions are given, IDS Life will make payments
under Plan B described below with 120 monthly payments guaranteed.

The retirement date may not be after the later of the annuitant's
85th birthday or the tenth Contract anniversary. The retirement
date cannot be earlier than the fifth Contract anniversary.

Change of Retirement Date or Annuity Option

An owner may change the retirement date or the annuity option on
written notice received at IDS Life's home office at least 30 days
prior to the current retirement date.

Settlement Value of Annuity

Retirement payments generally are made to the owner, who may be the
same as the annuitant. The amount available on the retirement date
is called the settlement value. The settlement value equals the
current value of your investment, called the contract value.
Before annuity payments begin, IDS Life will require satisfactory
proof that the annuitant is living. IDS Life also may require that
an owner exchange his Contract for a supplemental contract that
provides for annuity payments.

Because the investments of the Account fluctuate in value each day,
IDS Life will not guarantee that the settlement value or the total
of the retirement payments will exceed or even equal the amount of
the purchase payments.

The owners will receive statements on the value of their
investments and any other required information at least annually.
An owner has the right to determine whether annuity payments are to
be made on a fixed-dollar or variable basis, or a combination of
fixed and variable. A fixed annuity is one with payments that are
guaranteed by IDS Life as to dollar amount. Fixed annuity payments
after the first payment will never be less than the amount of the
first payment. At settlement, subject to the conditions then set
by IDS Life as to minimum dollar amounts and settlement rates, part
or all of the contract value may be used to provide a fixed-dollar
annuity. Only variable payments are described in the remainder of
this section.<PAGE>
PAGE 71
Annuity Options

The owner of a Contract has the right to decide how retirement
payments are to be made. The owner may select one of the
retirement payment plans outlined below, or IDS Life and the owner
may mutually agree on other payment arrangements. Amounts of
variable payments depend on:

` the annuity table in the Contract;
` the annuitant's age;
` the retirement payment plan selected; and
` the investment performance of the Account.

Because the performance of the Account will fluctuate, payments
will vary from month to month. The assumed investment rate
referred to in the following annuity options is 5 percent per year.

`Plan A -- Life Annuity -- No Refund -- Monthly payments are made
until the annuitant's death. Payments end with the last monthly
payment before the annuitant's death. No further payments will be
made. An owner should understand that if the annuitant dies after
even the first monthly payment, no more payments would be made.

`Plan B -- Life Annuity with Five, 10 or 15 Years Certain --
Monthly payments are made until the annuitant's death. However,
payments are guaranteed for five, 10 or 15 years, depending upon
the term selected by the owner. If the annuitant dies before those
guaranteed payments have been made, then IDS Life will keep on
making payments to a designated secondary payee. If a secondary
payee is not named, or if the secondary payee dies before the
annuitant, then the value of the remaining guaranteed payments,
based on the assumed investment rate, will be paid to the
annuitant's estate.

`Plan C -- Life Annuity -- Installment Refund -- Monthly payments
are made until the annuitant's death, with IDS Life's guarantee
that payments will continue for at least the number of months
determined by dividing the amount of the contract value being
applied under the plan by the amount of the first monthly payment.
If the annuitant dies before those guaranteed payments have been
made, IDS Life will continue to make payments to the designated
secondary payee. If a secondary payee is not named, or if the
secondary payee dies before the annuitant, then the value of the
remaining guaranteed payments, based on the assumed investment
rate, will be paid to the annuitant's estate.

`Plan D -- Joint and Last Survivor Life Annuity -- No Refund --
Monthly payments are made to the annuitant and a joint annuitant
while both are living. If either annuitant dies, monthly payments
continue at the full amount until the death of the surviving
annuitant. Payments end with the death of the second annuitant,
and no further payments will be made.

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PAGE 72
Minimum Annuity Payments

Annuity payments will be made monthly. The annuity's contract
value will be calculated at the retirement date. If the
calculations show that monthly payments would be under $20, IDS
Life reserves the right to pay the contract value in one lump sum.
For tax consequences of a lump sum payment, see the Certain Federal
Income Tax Considerations section.

First Variable Annuity Payment

When retirement payments are to begin, IDS Life will compute the
number of annuity units to be credited to the owner. This is
accomplished by determining the contract value of the annuity as of
the valuation date on or next preceding the seventh calendar day
before the retirement date and then deducting any applicable
premium tax.

The result is applied to the annuity table contained in the
Contract or another table at least as favorable. The lifetime
variable annuity payments are then calculated according to the
retirement payment plan chosen. The annuity table assumes an
investment rate of 5 percent and shows the amount of the first
monthly payment for each $1,000 of value according to the age and,
when applicable, sex of the annuitant (unisex table of settlement
rates will apply when required by law).

These calculations give the total of the first monthly payment.
This amount is divided by the annuity unit value on the valuation
date on or next preceding the seventh calendar day before the
retirement date. The result is the number of annuity units to be
credited to the owner.

Annuity Unit Value

The annuity unit value for the Account was originally set at $1.
IDS Life determines current annuity unit values by multiplying the
last annuity unit value by the product of:

`the net investment factor and
`the neutralizing factor.

The net investment factor measures the change in the Account's net
asset value from one valuation period to the next and is equal to
the quotient of the net asset value determined as of the current
valuation date divided by the net asset value on the immediately
preceding valuation date. See the Valuation of Assets section.
The purpose of the neutralizing factor is to offset the effect of
the assumed investment rate built into the annuity table. With an
assumed investment rate of 5 percent, the neutralizing factor is
0.999866 for a one-day valuation period.

The value of an annuity unit reflects the investment performance of
the Account and will vary.
<PAGE>
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Substitution of 3.5 Percent Annuity

If requested at least 30 days before the retirement date, IDS Life
will substitute an annuity table based upon an assumed 3.5 percent
investment rate for the 5 percent investment rate annuity table
contained in the Contract.

The assumed investment rate affects both the amount of the first
payment and the extent to which subsequent payments increase or
decrease. Using the 5 percent table results in a higher initial
payment, but later payments will increase more slowly when annuity
unit values are rising and decrease more rapidly when they are
declining.

Subsequent Variable Annuity Payments

The method of calculation of the first monthly payment is explained
in the First Variable Annuity Payment section above. Subsequent
variable payments will vary according to the investment performance
of the Account. Amounts of later monthly payments are calculated
by multiplying:

`the annuity unit value on the valuation date on or immediately
preceding the seventh calendar day before the payment is due; by

`the fixed number of annuity units credited to the owner.

Certain Federal Income Tax Considerations

The following summary is a general discussion of certain Federal
income tax consequences under present law that may involve owners.
This summary does not discuss all aspects of Federal income
taxation that may be relevant. Prospective investors should
consult their own tax adviser as to the specific Federal income tax
consequences of the ownership of the Contracts, as well as the
application of other Federal, state, local and foreign income and
other tax laws. IDS Life believes that the Contracts will be
treated as annuities under the Code, and, therefore, an owner
should not be subject to Federal income tax on any income or
earnings of the Account until distributions are made to such owner
or a change of ownership of the Contract occurs. IDS Life has not
sought a ruling from the Internal Revenue Service (the Service)
regarding the tax status of the Account. See the Risk Factors --
Federal Income Tax Matters section.

In addition, the qualification of the Contracts as annuities
depends upon IDS Life and the Account meeting the detailed factual
and legal requirements of the Code and regulations on a continuing
basis, including the maintenance of certain diversification
requirements as discussed below. No assurance can be given that
the actual operations of IDS Life and the Account will satisfy such
requirements or that the applicable law will not change and
adversely affect IDS Life, the Account or the owners.
<PAGE>
PAGE 74
Taxation of the Account

The Account is not a separate taxpayer for purposes of Federal
income taxation. Although investment income derived by the Account
is technically includable in IDS Life's gross income for Federal
income tax purposes, IDS Life is not expected to have any income
tax payable as a result of such investment income provided it
continues to comply with certain requirements. In the event IDS
Life does incur Federal or state income taxes attributable to the
Account, IDS Life will receive appropriate reimbursement from the
Account for such taxes.

Diversification Requirements

In order for the Contracts to be treated as annuities for Federal
income tax purposes, the Account must meet certain diversification
requirements regarding variable annuities contained in Section
817(h) of the Code and regulations promulgated thereunder. If the
Account does not satisfy these requirements, the owners would be
subject to current Federal income taxation on any earnings or
income derived by the Account.

IDS Life intends to maintain the Account's investments in such a
manner as to satisfy the diversification requirements contained in
Section 817(h) of the Code and regulations thereunder. In order to
do so, the Account must meet the following requirements: (i) no
more than 55 percent of its assets may be invested in any one
investment; (ii) no more than 70 percent of its assets may be
invested in any two investments; (iii) no more than 80 percent of
its assets may be invested in any three investments; and (iv) no
more than 90 percent of its assets may be invested in any four
investments. All interests in the same real property project will
be treated as a single investment for purposes of these
requirements. In addition, in the case of government securities,
each government agency or instrumentality shall be treated as a
separate issuer for purposes of these requirements. After an
initial start-up period, the Account must satisfy the above
requirements within 30 days after the end of each calendar quarter.

Taxation of Distributions

Section 72 of the Code governing distributions from annuity
contracts provides that the recipient of an annuity distribution
does not include in gross income that part of any amount received
as an annuity that bears the same ratio to such amount as the
investment in the contract on the annuity starting date (as
adjusted for any refund feature) bears to the expected return under
the contract. In the event that the total amount of payments to be
received under an annuity contract varies in accordance with the
investment experience of the variable annuity account after the
recipient's annuity starting date, the recipient will not include
in gross income any amount received in a taxable year to the extent
such amount does not exceed the recipient's investment in the <PAGE>
PAGE 75
contract (as adjusted for any refund feature) divided by the number
of years over which the payments are anticipated to be received.
Such exclusion from the recipient's gross income, however, cannot
exceed the recipient's unrecovered investment in the contract
immediately prior to the receipt of such amount. Any amount
received upon the surrender of an annuity contract (that may
include the proceeds of a loan when the annuity contract is used as
collateral) generally is included in the gross income of the
recipient to the extent that the cash value of the contract
(determined without regard to any surrender charge) exceeds the
investment in the contract.

In addition, the owner of an annuity contract may be subject to an
IRS penalty equal to 10 percent of the amount of a distribution
that is includable in gross income (in addition to income taxes),
unless, among other things, the distribution (1) is made on or
after the owner reaches the age 59-1/2; (2) is made on or after the
death of the owner of the contract or the primary annuitant if the
owner is not an individual; (3) is attributable to the owner
becoming disabled; or (4) is part of a series of substantially
equal periodic payments made at least annually for the life or life
expectancy of the owner.

Valuation of Assets

Accumulation unit value is determined as of the close of the
business day on each day that IDS Life is open for business.

The accumulation unit value for the Account was originally set at
$1. The current accumulation unit value is determined by taking
the last accumulation unit value for the Account and multiplying it
by the current net investment factor. The net investment factor
measures the Account's investment performance for the valuation
period. The net investment factor is determined by first
calculating the net investment income for the period (i.e., the
Account's income, net realized and unrealized capital gains or
losses on investments and expenses), items that may be estimated
periodically and credited or deducted ratably on a daily basis with
periodic adjustments to credit or charge the differences between
actual and estimated items of income, gains or losses as described
below. The Account's net investment income then is divided by the
Account's net asset value at the beginning of the valuation period
to determine the net investment rate. The Account's net asset
value is determined by calculating the total gross value of the
Account's assets and reducing that amount by any expenses or
liabilities, including tax liabilities, mortgage indebtedness,
administrative expenses, that portion of organizational and
offering expenses being amortized and the accrued but unpaid daily
charges for mortality and expense risk and asset management fees.
Finally, the net investment factor is calculated. The net
investment factor for any valuation period is the sum of one plus
the net investment rate. If the Account has a negative net
investment rate for the period, the net investment factor will be
less than one. Because the net investment factor may be greater or
less than one, the accumulation unit value may increase or
decrease.
<PAGE>
PAGE 76
Accumulation unit value will vary with the value of the underlying
assets in the Account and in accordance with the charges and
deductions assessed. These charges and deductions will be assessed
directly against the assets of the Account itself rather than by
liquidating accumulation units. Assessments of premium taxes and
the surrender charges are made separately for each Contract and do
not affect the accumulation unit value.

The amount of the Account's net income from its real estate and
other investments will be based upon estimates of the Account's
revenues and expenses for its real estate and other investments and
the Account's operations on a monthly basis. The value of the
Account's assets will be increased on a daily basis by a
proportionate amount of the estimated net income for the month.
The Account will receive on a periodic basis reports of the actual
operating results for its real estate and other investments, and
appropriate adjustments to credit or charge the differences between
actual and estimated operating results will be made to the
Account's assets. Because the daily accrual of estimated net
income is based on estimates that may not reflect the actual
revenues and expenses of the Account, owners will bear the risk
that this procedure will result in an overvaluing or undervaluing
of the Account's assets.

Real Property Investments, Mortgage Loans and Land Sale-Leasebacks

The asset values of the Account's real property investments and
mortgage loans and land sale-leaseback investments initially will
be their cost (including the acquisition and mortgage placement
fees, legal fees and expenses, closing costs and other acquisition
or placement expenses), unless circumstances otherwise indicate
that a different asset value should be used. Thereafter,
periodically or upon the occurrence of events that indicate a
change in the asset value of a real property investment, mortgage
loan or land sale-leaseback investment held by the Account, the
Investment Adviser will determine the asset value of such
investments in accordance with the procedures described below. The
Account's asset value will take into account the current values of
any notes receivable held by the Account in connection with the
previous sale of any real estate related investments. Such values
will be estimated by the application of discount rate or rates
deemed appropriate by the Investment Adviser in light of the then
current market conditions. The Account's asset value also will
include the income and expenses attributable to the real estate
related assets which will be determined or estimated periodically
and credited or deducted ratably on a daily basis with periodic
adjustments to credit or charge the differences between actual and
estimated income or expenses as described above. At the time of
purchase, and at least once every two years thereafter, the
Investment Adviser shall cause each real estate related investment
(other than fixed interest rate mortgage loans) owned by the
Account or the real property underlying such investment to be
appraised by an independent appraiser or appraisers or an existing
appraisal to be updated. The cost of such appraisals will be
charged to the Account.
<PAGE>
PAGE 77
The Investment Adviser will determine the asset values of the
Account's real property investments and its mortgage loans and land
sale-leaseback investments with participation features based upon
certain methodologies and various other factors. A discounted cash
flow methodology used by the Investment Adviser is based upon
various assumptions, including, but not limited to, occupancy
rates, rental rates, expense levels and capitalization rates upon
sale, which are used to make projections of each such investment's
estimated cash flow (including the fixed interest or fixed rental
income from a mortgage loan or land sale-leaseback with a
participation feature) over an 11-year period. For this purpose,
it also is assumed that the real property comprising or underlying
each such investment is sold at the end of the tenth year based on
the anticipated cash flow of the real property for the eleventh
year. (The use of this time period does not mean that such
investments will be held for any specific period but was chosen as
an acceptable frame of reference for estimating asset values.)
After these estimated cash flow and sale proceeds amounts are
calculated, they are discounted to their present value (using a
rate or rates then deemed appropriate by the Investment Adviser
based upon the current market conditions) in order to estimate what
a buyer would be willing to pay for each such real property on a
current basis.

Given the decline in the real estate markets generally over the
past few years and the consequent difficulty in estimating, among
other things, occupancy rates and rental rates over extended
periods of time, the Investment Adviser also employs a "direct
capitalization" methodology. Under this methodology, the
Investment Adviser generally determines the preliminary asset
values of the Account's real property investments and its mortgage
loans and land sale-leaseback investments with participation
features by estimating the stabilized annual Net Operating Income
After Average Capital Costs for the real property comprising or
underlying each such investment and applying a current
capitalization rate (as deemed appropriate by the Investment
Adviser for the particular real property and the relevant market
conditions) to such Net Operating Income After Average Capital
Costs. A preliminary asset value determined for a particular real
property as described above is reduced by the aggregate deficiency
(if any) in the estimated net operating income after capital costs
relative to the stabilized annual Net Operating Income After
Average Capital Costs of such real property for any year(s)
preceding the year in which the stabilized annual Net Operating
Income After Average Capital Costs is expected to be achieved in
order to estimate what a buyer would pay for such real property on
a current basis.

In addition to using the foregoing methodologies, the Investment
Adviser also considers a number of other factors, including, among
others, periodic independent appraisals of the real properties and
comparisons of existing rental rates relative to estimated market
rental rates. The relative weight to be given a particular <PAGE>
PAGE 78
methodology or any other relevant factors in determining the
estimated asset value of a particular real property will depend
upon the Investment Adviser's assessment of the existing and
anticipated market conditions and property specific factors
relevant to such real property. In the case of real property
investments jointly owned with other entities and mortgage loans
and land sale-leaseback investments with participation features,
the asset value of any such investment will be based on the
Account's share of the current asset value of each such real
property determined by its joint ownership or equity participation
arrangement.

The Account's fixed interest mortgage loans and fixed rental rate
land sale-leaseback investments without participation features are
valued by the Investment Adviser. The Investment Adviser
determines the value by comparing the interest rates on the
Account's mortgage loans or the rentals under the Account's ground
leases with interest rates on U.S. Treasury debt instruments, plus
an additional amount determined by the Investment Adviser
representing its judgment as to the differential between the amount
at which commercial lenders would make similar mortgage loans or
land sale-leaseback investments of such duration and the rate on
U.S. Treasury debt instruments. The differential is selected by
the Investment Adviser based upon the Investment Adviser's
evaluation of both the activities of commercial mortgage lenders at
such time and the features of the particular investment, including
the underlying property, its rent structure and the nature of its
tenants.

A formula is applied periodically to adjust the value based upon
changes in the U.S. Treasury debt instrument rates originally used
to value the investments. The valuation resulting from the formula
generally will continue in effect until the next periodic
application of the formula. The Investment Adviser will evaluate
quarterly (unless the Investment Adviser becomes aware of
circumstances that would warrant a more frequent evaluation) the
interest differential at which commercial lenders are making fixed
interest rate mortgage loans or fixed rental rate land
sale-leaseback investments to determine whether an adjustment needs
to be made in the formula. The Investment Adviser will obtain
information relative to commercial lenders by surveys of lending
institutions considered to be representative, as well as from other
sources.

It should be noted that the determination of the Account's asset
value will not necessarily reflect the true or realizable value of
the Account's assets. Although IDS Life and the Investment Adviser
believe that the assumptions, estimates and methodologies used in
determining the asset values of the Account's investments are
reasonable, there can be no assurance that such assumptions,
estimates and methodologies will in fact prove correct or that such
values would in fact be realized. In addition, it is unlikely that
all real properties in which the Account has an interest would be <PAGE>
PAGE 79
sold for cash, but rather certain properties may in fact be sold
for cash and notes. Furthermore, although at least once every two
years the Investment Adviser will use independent appraisals of the
real properties in determining asset values, appraisals are only
estimates and do not necessarily reflect the true or realizable
value of an investment. Moreover, such appraisals are only one
factor that is considered by the Investment Adviser to determine
the value of the real estate related investments of the Account.
In addition, the expenses that may be borne by the Account in
connection with the acquisition, placement or disposition of a real
estate related investment will not be deducted in determining asset
value by the Investment Adviser. The valuation of investments made
by the Account also may be adjusted by the Investment Adviser based
upon events that come to its attention affecting the real property
investments or the properties subject to mortgage loans or land
sale-leaseback investments, which it believes will increase or
decrease realizable value, or events or market conditions generally
affecting the values of the real property investments, mortgage
loans or land sale-leaseback investments. For example, adjustments
may be made for the events that affect the property comprising a
real property investment or the surrounding area or events
indicating an impairment of the borrower's or lessee's ability to
make payments with respect to a mortgage loan or land
sale-leaseback investment.

There can be no assurance that the factors for which an adjustment
should be made will come to the attention of the Investment
Adviser. Additionally, because the evaluation of such factors may
be subjective, there can be no assurance that adjustments will be
made in all cases in which the value of the real property
investments, mortgage loans or land sale-leaseback investments may
be affected. If the Investment Adviser believes it to be
necessary, more frequent appraisals will be conducted.

The above method of valuation may be changed by IDS Life (after
consultation with the Investment Adviser) should it determine that
another method would more accurately reflect the value of the
Account's investments. Changes in the method of valuation could
result in a change in the contract value that may have an adverse
effect on either or both existing owners and new purchasers of
Contracts. As a result of a change in the valuation method, there
may be variations between the values at which owners purchase
Contracts based upon a different valuation method adopted by IDS
Life. Written notice (included in this section of the prospectus
or otherwise) of any material change in the valuation method will
be mailed to all owners. Although the valuation method has been
selected because IDS Life and the Investment Adviser believe it
will provide a reasonable approximation of the value of the
Account's investments, there may be variations between the amount
realizable upon disposition and the stated value of such assets.
Owners may be adversely affected if the valuation method results in
either overvaluing or undervaluing the Account's investments. Both
the number of accumulation units credited to an owner at the time a
Contract is purchased and the amount payable under the Contract are
<PAGE>
PAGE 80
based on the value of the assets of the Account. Should the
valuation method overstate the value of the investments, a new
owner at the time of purchase will be credited with fewer
accumulation units than if the value were correctly stated and a
person receiving payments under the Contract during the time such
valuation is in effect will receive payments in excess of those to
which the person was entitled, to the detriment of other owners.

Alternatively, if the valuation method understates the value of the
assets, a new owner will be credited with more accumulation units
at the time of purchase, to the detriment of other owners, and a
person receiving payments under a Contract will receive less than
the person otherwise would receive had the assets been correctly
valued. See also the Risk Factors -- Evaluation and Appraisal Risk
and the Conflicts of Interest -- Receipt of Commissions, Fees and
Other Compensation by IDS Life, the Investment Adviser and
Affiliates sections.

Liquid Assets

The liquid assets of the Account, including accrued income, gains
or losses on such investments, also will be taken into account in
determining the Account's asset value. Short-term investments of
the Account will be held to maturity unless the circumstances
warrant otherwise. Instruments for which market quotations are
readily available are valued at the last reported sales price on
the principal market for the instrument. Other instruments are
valued at fair market value as determined in good faith by IDS
Life.

IDS Life has concluded that for short-term instruments with
remaining maturities of 60 days or less, including instruments with
penalties for early withdrawal, the fair market value shall be
their amortized cost value unless the particular circumstances of
an instrument indicate otherwise. If any short-term instrument
containing early withdrawal penalties is redeemed prior to
maturity, the related expense will be recorded as incurred.

Distribution of Contracts

The Contracts are offered by IDS Life. IDS Life is a broker-dealer
registered under the Securities Exchange Act of 1934 and a member
of the National Association of Securities Dealers, Inc. Sales of
the Contracts will be made by registered representatives of IDS
Life who are also licensed insurance agents. IDS Life will pay
from its general account commissions which may vary, but in the
aggregate are not anticipated to exceed an amount equal to 6
percent of the purchase payments. Registered representatives of
IDS Life may receive direct sales incentive items and may
participate in marketing incentive programs in connection with the
sale of the Contracts. It is possible that certain marketing
incentive programs may be based in part on the sale of Contracts
and in part on the sale of other securities. IDS Life will pay the
costs (or an allocable share of such costs) incurred for such sales
incentive items and marketing incentive programs.
<PAGE>
PAGE 81
State Regulation

IDS Life is subject to the laws of the State of Minnesota governing
insurance companies and to the regulations of the Department of
Commerce of the State of Minnesota. An annual statement in the
prescribed form is filed with the Department of Commerce of the
State of Minnesota each year covering IDS Life's operation for the
preceding year and its financial condition at the end of such year.
Regulation by the Department of Commerce of the State of Minnesota
includes periodic examination to determine IDS Life's contract
liabilities and reserves so that the Department of Commerce of the
State of Minnesota may certify that these items are correct. IDS
Life's books and accounts are subject to review by the Department
of Commerce of the State of Minnesota at all times. A full
examination of IDS Life's operations is conducted periodically by
the National Association of Insurance Commissioners. Such
regulation does not, however, involve any supervision of the
Account's management or IDS Life's investment practices or
policies. In addition, IDS Life is subject to regulation under the
insurance laws of other jurisdictions in which it operates.

Experts

The financial statements of the Account as of Dec. 31, 1995 and
1994 and for each of the years in the three-year period ended Dec.
31, 1995, were audited by KPMG Peat Marwick LLP.

The combined financial statements of N/S Associates, Monmouth
Associates and 1225 Investment Corporation (unconsolidated joint
ventures of the Account) as of Dec. 31, 1995 and 1994 and for each
of the years in the three-year period ended Dec. 31, 1995, were
audited by KPMG Peat Marwick LLP.

The consolidated financial statements of IDS Life Insurance Company
as of December 31, 1995 and 1994 and for each of the three years in
the period ended December 31, 1995, appearing in this Prospectus
and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of such firm as experts in
accounting and auditing.

All of the above financial statements have been included herein in
reliance on the reports of the respective independent auditors,
appearing elsewhere herein, and given upon the authority of their
report as experts in accounting and auditing.

Registration Statement

A registration statement has been filed with the Securities and
Exchange Commission under the 1933 Act with respect to the
Contracts. This prospectus does not contain all information set
forth in the registration statement, its amendments and exhibits,
to all of which reference is made for further information
concerning the Account, IDS Life and the Contract. Statements <PAGE>
PAGE 82
contained in this prospectus as to the content of the Contract and
other legal instruments are summaries. For a complete statement of
the terms thereof, reference is made to such instruments as filed.

Reports

Owners will receive a confirmation of each purchase payment made
with respect to the Contracts. Additionally, IDS Life will, at
least annually, mail a report containing such information as may be
required by any applicable law or regulation and a statement
showing the owner's current number of accumulation units or annuity
units, the accumulation unit value or annuity unit value and the
total contract value.

Financial Statements

The contract values under a Contract will be affected solely by the
investment results of the Account. Financial statements of IDS
Life included herein should be considered only as bearing on the
ability of IDS Life to meet its obligations under the Contract.

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.

<PAGE>
PAGE 83
Appendix A

The members of the Board of Directors and the principal executive
officers of IDS Life,* together with the principal occupation of
each during the last five years, are as follows:

Directors

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 of IDS Life Variable Annuity Funds A and 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.

Janis E. Miller
Born in 1951

Director and executive vice president, Variable Assets, since March
1994; vice president, AEFC, since June 1990. Director, Mutual
Funds Product Development and Marketing, AEFC, from May 1987 to May
1990. Director of IDS Life Series Fund, Inc. and member of the
board of managers of IDS Life Variable Annuity Funds A and B.

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.<PAGE>
PAGE 84
Stuart A. Sedlacek
Born in 1957

Director and executive vice president, Assured Assets, since March
1994; vice president, AEFC, since September 1988.

Melinda S. Urion
Born in 1953

Director and controller since September 1991; executive vice
president since March 1994; vice president and treasurer from
September 1991 to March 1994; senior vice president and chief
financial officer, AEFC, since November 1995; corporate controller,
AEFC, from April 1994 to November 1995; vice president, AEFC, from
September 1991 to November 1995; chief accounting officer, AEFC,
from July 1988 to September 1991.

Officers other than directors

Timothy V. Bechtold
Born in 1953

Vice president, Risk Management Products, since February 1995.
Vice president, Insurance Product Development from May 1989 to
February 1995. Vice President, Risk Management Products, AEFC.

David J. Berry
Born in 1944

Vice president since October 1989.

Alan R. Dakay
Born in 1952

Vice president, Institutional Insurance Marketing, since
September 1991. Vice president, Institutional Products Group,
AEFC, since March 1995; vice president, Institutional Marketing,
AEFC, from May 1990 to March 1995.

Robert M. Elconin
Born in 1957

Vice president since March 1994. Vice president, Government
Relations, AEFC.

Morris Goodwin Jr.
Born in 1951

Vice president and treasurer since March 1994; vice president and
corporate treasurer, AEFC, since July 1989; chief financial officer
and treasurer, American Express Trust Company, from January 1988 to
July 1989.

<PAGE>
PAGE 85
Lorraine R. Hart
Born in 1951

Vice president, Investments, since March 1992; member of the
investment committee. Vice president, Insurance Investments, AEFC,
since October 1989. Vice president-Investments, IDS Certificate
Company, IDS Property Casualty Insurance Company, AMEX Assurance
Company, American Enterprise Life Insurance Company and American
Partners Life Insurance Company.

James W. Jensen
Born in 1955

Vice President, Insurance Product Development, since February 1995.

Ryan R. Larson
Born in 1950

Vice president, Annuity Product Development, since September 1983.
Vice president, IPG Product Development, AEFC, since July 1989;
vice president, Product Development, American Centurion Life
Assurance Company, qualified actuary, American Enterprise Life
Insurance Company.

James R. Palmer
Born in 1945

Vice president, Taxes, since May 1989. Vice president, Taxes,
AEFC, since June 1995; vice president, Insurance Operations, AEFC,
from February 1987 to June 1995.

F. Dale Simmons
Born in 1937

Vice president, Real Estate Loan Management, since November 1993.
Vice president, senior portfolio manager, Insurance Investments,
AEFC, since August 1990. Vice president, real estate loan
management, American Enterprise Life Insurance Company, American
Partners Life Insurance Company, IDS Certificate Company; vice
president and assistant treasurer, IDS Life of New York.

William A. Stoltzmann
Born in 1948

Vice president, general counsel and secretary since 1985; 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.

* The address for all of the directors and principal officers is:
IDS Tower 10, Minneapolis, MN 55440-0010.
<PAGE>
PAGE 86
Appendix B

The directors, executive officers and certain other officers of JMB
Realty Corporation (JMB), the managing partner of the Investment
Adviser, are set forth 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, 58, is Chairman and Director of JMB, 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. Until December 1994 he was
also a trustee of JMB Group Trust I, JMB Group Trust II, JMB Group
Trust III, JMB Group Trust IV and JMB Group Trust V, which until
that time had been advised by an affiliate of the Investment
Adviser. Mr. Malkin has been associated with JMB since October
1969. Mr. Malkin is also a Director of Catellus Development
Corporation, a major diversified real estate development company.
He is a Certified Public Accountant.

Neil G. Bluhm, 58, is President and Director of JMB, 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. Until December 1994 he was
also a trustee of JMB Group Trust I, JMB Group Trust II, JMB Group
Trust III, JMB Group Trust IV and JMB Group Trust V, which until
that time had been advised by an affiliate of the Investment
Adviser. Mr. Bluhm has been associated with JMB since August 1970.
He is a member of the Bar of the State of Illinois and a Certified
Public Accountant.

Burton E. Glazov, 57, is Director of JMB and until December 1990
served as an 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 a Certified Public Accountant.

Stuart C. Nathan, 54, is Executive Vice President and Director of
JMB, 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, 49, is Director of JMB, a Director of Urban
Shopping Centers, Inc., an affiliate of JMB engaged in the business
of owning, managing and developing shopping centers, and until
December 1990 served as an 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 Partners,<PAGE>
PAGE 87
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 and its affiliates.
He holds a master's degree in business administration from the
Harvard University Graduate School of Business.

A. Lee Sacks, 62, is Director of JMB, 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, 47, is Chief Executive Officer and Executive Vice
President of JMB, 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.

Ira J. Schulman, 44, is Executive Vice President of JMB, an officer
of various JMB affiliates and a partner of various Associate
Partnerships. Mr. Schulman has been associated with JMB since
February 1983. He holds a master's degree in business
administration from the University of Pittsburgh.

Gary Nickele, 43, is Executive Vice President and General Counsel
of JMB, an officer and/or director of various JMB affiliates and a
partner of various Associate Partnerships. 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, 48, is Executive Vice President and Chief Operating
Officer of JMB, 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>
PAGE 88
Summary of Selected Financial Information

The following selected financial information of the Account has
been derived from the audited financial statements and should be
read in conjunction with those statements and the related notes to
financial statements.
<TABLE>
<CAPTION>
Years ended Dec. 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Contract Purchase Payments
(Terminations) net...................... $ 2,291,255 $(5,184,527) $(6,873,380) $(6,257,432) $ (575,134)
Net Income (loss)....................... $(2,378,521) $ (946,390) $ 1,816,417 $(5,761,830) $ 628,297
Total Contract Owners' Equity*.......... $35,906,465 $35,993,731 $42,124,648 $47,181,611 $59,200,873
Accumulation Units Outstanding*......... 36,353,929 34,238,180 39,000,431 45,475,432 51,202,112
Accumulation Unit Value................. $ .99 $ 1.05 $ 1.08 $ 1.04 $ 1.16

* As of Dec. 31, 1995, IDS Life's portion of the Total Contract Owners' Equity was $22,644,467 (63%) and IDS Life owned 22,955,910
(63%) of the Accumulation Units Outstanding.

</TABLE>
<PAGE>
PAGE 89
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Financial Condition and Results of Operations

For the Year Ended December 31, 1995 Compared to the Year Ended
December 31, 1994

Net assets decreased from $35,993,731 at December 31, 1994 to
$35,906,465 at December 31, 1995. During this same time period,
the accumulation unit value decreased from $1.05 to $.99. The
Account experienced net sales amounting to $2,291,255 for the year
ended December 31, 1995 compared to net terminations of $5,184,527
for the year ended December 31, 1994. 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, 1995 was
$2,378,521 compared to $946,390 for the year ended
December 31, 1994.

Interest income for the year ended December 31, 1995 primarily
represents income earned on the Account's investment in the
participation in a mortgage loan (Riverpoint Shopping Center).
Income generated from participation in the mortgage loan remained
relatively unchanged compared to the corresponding period in 1994.
Interest income for the year ended December 31, 1994 also included
interest earned on short-term investments of approximately $20,847.
The Silo Electronic store (12,100 sq. ft.) at Riverpoint Shopping
Center vacated its space in the third quarter 1995, and the
borrower is pursuing its legal remedies regarding such unpaid
amounts. The borrower has re-leased the space to a book store for
three months at a substantially lower rent. The borrower
subsequently leased the space for five years with rent commencing
on July 1, 1996. As a result of this vacancy, the borrower has
notified the lenders that it is experiencing financial difficulties
and has approached the lenders regarding a loan modification. The
lenders and borrower have reached an agreement in principle to
defer payment of debt service for a certain period of time.
However, there can be no assurance that such agreement will be
finalized under these terms or any others. As of the date of this
report, certain escrow payments and participation interest are due
to the lenders; however, the borrower is current in its monthly
debt service payments.

For the year ended December 31, 1995, the Account's recorded equity
in earnings of its unconsolidated joint ventures (N/S Associates,
Monmouth Associates and 1225 Connecticut) was $1,924,741, compared
to $2,094,682 for the year ended December 31, 1994. The decrease
in earnings was primarily the result of N/S Associates' reduced
earnings as a result of lower rental income achieved at Northridge
Mall due to lower occupancy and higher interest expense
attributable to prepayment charges incurred in the first quarter of
1995 in connection with the repayment and refinancing of the<PAGE>
PAGE 90
mortgage loans on Northridge and Southridge Malls. The decrease
was partially offset by the recognition in the first quarter of
1995 of income attributable to certain lease termination fees
received by N/S Associates in the prior quarter. In addition,
during 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 recorded prior to
April 1992, due to the uncertainty as to the collectibility of
these amounts.

In addition, the Account recorded rental income of $2,379,439 for
the year ended December 31, 1995 from its wholly-owned real estate
investment, West Springfield Terrace Apartments, compared to
$2,235,867 for the year ended December 31, 1994, primarily due to a
modest increase in effective rental rates. Expenses related to the
wholly-owned real estate investment totaled $1,756,139 for the year
ended December 31, 1995 compared to $1,792,255 for the
corresponding period in 1994.

For the year ended December 31, 1995, the Account recognized net
unrealized depreciation of participation in mortgage loan of
$27,817, and net unrealized appreciation on its investment in
wholly-owned real estate property of $138,764 due to a reduction in
estimated capital expenditures to be required in future years at
the property, and net unrealized depreciation on its investment in
unconsolidated joint ventures of $3,999,782. Approximately
$2,199,000, $1,748,000 and $53,000 of unrealized depreciation
recognized by the Account was attributable to the Account's
investments in N/S Associates (Northridge Mall and Southridge
Mall), Monmouth Mall and 1225 Connecticut, respectively. The
unrealized depreciation recognized is the result of reductions in
the estimated value of each of the investments. The decrease in
estimated value for the investment in Northridge Mall is attributed
to poor sales, a number of tenant bankruptcies, lower occupancy and
the leasing challenges it faces as discussed below. In addition,
the decrease in estimated value for the investment in Southridge
Mall is attributed to recent tenant bankruptcies and the amendment
of Kohl's lease as discussed below. In addition, the trend of
recent bankruptcies and general market conditions for retailers
could have an adverse effect on both revenues and occupancy at both
Northridge and Southridge Malls in the future. The decrease in
estimated value for the investment in Monmouth Mall is attributable
to lower sales, the slow lease up of renovated mall space, and the
uncertainty of Macy's renewing their operating covenant. While
Macy's has an obligation to operate a retail store at this location
through the year 2005, their obligation to operate the store as a
Macy's Department Store expired in 1995. The Macy's store
continues to operate at the Monmouth Mall.

For the year ended December 31, 1994, the Account recognized net
unrealized depreciation of investments in unconsolidated joint
ventures of approximately $2,362,000. Approximately $217,000,
$751,000 and $1,428,000 of unrealized depreciation recognized by
the Account was attributable to the Account's investments in the
1225 Connecticut office building, Monmouth Mall and Northridge
Mall, respectively, partially offset by a slight amount of<PAGE>
PAGE 91
unrealized appreciation of approximately $34,000 in the Account's
investment in Southridge Mall for the year.

Federated Department Stores converted the Abraham & Straus store at
Monmouth Mall to a Stern's store in early 1995. Monmouth
Associates may provide additional financing to the borrower/lessee
to pay future costs necessary for a long-term solution to replace
Abraham & Straus as a department store tenant at Monmouth Mall.
The recognition of unrealized depreciation in 1994 for the
Account's investment in Monmouth Mall primarily reflected the
Account's estimated share of the financing expected to be needed in
the future to pay these costs.

The decrease in the estimated value of the investment in the 1225
Connecticut office building in 1994 was primarily attributable to a
reduction in the assumed long-term rental rate growth that could be
achieved for the property in future years. The decrease in the
estimated value for the investment in the Northridge Mall in 1994
was primarily attributable to a reduction in anticipated leasing
activity and the expected rents to be achieved for the property.
In general, in 1994, it was expected that the vacancy at Northridge
Mall would lease up more slowly and the rents obtained would be
lower than previously anticipated.

To counter the negative perception of Northridge Mall, N/S
Associates has 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 has been extended from 2001 until 2015 and the<PAGE>
PAGE 92
tenant space has been 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 to
be determined after the tenant has occupancy of the entire leased
space. N/S Associates is responsible for paying the costs of
asbestos removal for the tenant space, which is estimated to be
approximately $1,250,000. Kohl's is obligated to pay other costs
associated with the leased space, including tenant improvements and
lease buy-out and relocation costs, if any, of other tenants (one
of whose lease continues until 2001) that currently occupy a
portion of the expansion space. 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 contribution to customer traffic.
As of December 31, 1995, occupancy of Southridge Mall which is
owned by N/S Associates was approximately 97%, including temporary
tenants under short-term leases.

The Account paid asset management and mortality expense risk fees
of $1,086,516 and $1,268,164 for the years ended December 31, 1995
and 1994, respectively. The decrease in fees is primarily due to
the payment of the incentive asset management fees of $137,299 paid
in 1994 to the Investment Adviser based upon the performance of the
Account's real property investments relative to the FRC Property
Index. No incentive asset management fee was payable in 1995.

For the Year Ended December 31, 1994 Compared to the Year Ended
December 31, 1993 -

Net assets decreased from $42,124,648 at December 31, 1993 to
$35,993,731 at December 31, 1994. During this same time period,
the accumulation unit value decreased from $1.08 to $1.05. The
Account experienced net terminations amounting to $5,184,527 for
the year ended December 31, 1994 compared to $6,873,380 for the
year ended December 31, 1993.

Net income (loss) for the year ended December 31, 1994 was
$(946,390) compared to $1,816,417 for the year ended
December 31, 1993. The difference was primarily due to the
Account's recognition of a greater amount of unrealized
depreciation on its investments in unconsolidated joint ventures
during 1994 than during 1993, as well as the recognition during
1993 of approximately $481,000 of unrealized appreciation on its
participation in the mortgage loan and wholly-owned real estate
investment.

<PAGE>
PAGE 93
Interest income represents income earned on the Account's
investment in short-term securities and the participation in a
mortgage loan. Interest generated from short-term investments
decreased to $20,847 from $161,348 for the years ended December 31,
1994 and 1993, respectively. This decrease is due primarily to a
lower average amount invested in short-term securities. Income
generated from participation in the mortgage loan for 1994 remained
relatively unchanged compared to that for 1993.

For the year ended December 31, 1994, the Account's equity in
earnings of its unconsolidated joint ventures (N/S Associates,
Monmouth Associates and 1225 Connecticut) was $2,094,682, which was
a decrease from $2,097,089 for the year ended December 31, 1993.
The decrease is primarily due to declining tenant occupancy at
Northridge Mall partially offset by lease termination fees received
during 1994. The operations of the other investment properties of
the unconsolidated joint ventures were relatively unchanged.

In addition, the Account generated rental income of $2,235,867 for
the year ended December 31, 1994 from its wholly-owned real estate
investment, West Springfield Terrace Apartments, compared to
$2,251,285 for the year ended December 31, 1993. Expenses related
to the wholly-owned real estate investment totaled $1,792,255 for
the year ended December 31, 1994 compared to $1,770,999 for 1993.
The increase in expenses was primarily due to higher utility
expenses resulting from severe weather in the first quarter of
1994. Capital expenditures for the property in 1994 were
approximately $111,000. These costs related primarily to plumbing,
tile and carpet replacement associated with weather-related damage
incurred in the first quarter of 1994.

For the year ended December 31, 1993, the Account recognized net
unrealized depreciation of investments in unconsolidated joint
ventures of approximately $188,000. This net unrealized
depreciation was primarily due to the recognition in the first
quarter of 1993 of unrealized appreciation of $327,000 related to a
slight adjustment of the capitalization rate used in valuing the
1225 Connecticut office building, offset by the recognition of
unrealized depreciation of the investment in N/S Associates during
the second quarter of 1993 in the amount of approximately $320,000,
which was related to a write down in the estimated value of
Northridge Mall, and by the recognition of unrealized depreciation
in the amount of approximately $173,000 relating to the 1225
Connecticut office building. This latter adjustment to 1225
Connecticut's estimated value was consistent with a valuation
performed by an independent appraiser.

For the year ended December 31, 1994, the Account recognized net
unrealized depreciation of investments in unconsolidated joint
ventures of approximately $2,362,000. Approximately $217,000,
$751,000 and $1,428,000 of unrealized depreciation recognized by
the Account were attributable to the Account's investments in the
1225 Connecticut office building, Monmouth Mall and Northridge
Mall, respectively, partially offset by a slight amount of
unrealized appreciation of approximately $34,000 in the Account's
investment in Southridge Mall for the year.

<PAGE>
PAGE 94
The decrease in the estimated value of the 1225 Connecticut office
building was primarily attributable to a reduction in the assumed
long-term rental rate growth that could be achieved for the
property in future years. The estimated value is consistent with a
recent independent appraisal obtained for the office building.

In December 1994, Federated Department Stores, which owns Abraham &
Straus, completed its merger with R. H. Macy and Company which owns
Macy's. In January 1995, Federated Department Stores indicated
that it intends to convert the Abraham & Straus store at Monmouth
Mall to a Stern's store in the spring of 1995. Monmouth Associates
may provide additional financing to the borrower/lessee to pay
future costs necessary for a long-term solution to replace Abraham
& Straus as a department store tenant at Monmouth Mall. The
recognition of unrealized depreciation in 1994 for the Account's
investment in Monmouth Mall primarily reflects the Account's
estimated share of the financing expected to be needed in the
future to pay these costs.

In 1992, Monmouth Associates discontinued the accrual of contingent
interest on the leasehold mortgage loan and contingent rent under
the ground lease as result of uncertainty as to the collectibility
of such amounts in light of the previous decrease in the estimated
value of Monmouth Mall.

The decrease in the estimated value for Northridge Mall was
primarily attributable to a reduction in anticipated leasing
activity and the expected rents that can be achieved for the
property. In general, it is expected that the vacancy at
Northridge Mall will lease up more slowly and the rents obtained
will be lower than previously anticipated. Due to these reduced
expectations, the current estimated value of Northridge Mall is
approximately 8 percent less than its estimated value in a recent
independent appraisal.

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 the past three
years. Compounding the problem of declining sales are the high
operating costs for tenants at the mall due to high real estate
taxes. Occupancy has also been affected by tenant bankruptcies
during 1993 and 1994. As of December 31, 1994, occupancy of the
mall shops was approximately 84%, including temporary tenants under
short term leases. Same store sales per square foot for mall
tenants decreased approximately 4.7 percent for 1994 as compared to
1993. The recognition of unrealized depreciation for the property
also reflects generally higher interest rates at the end of 1994.

Same store sales per square foot for mall tenants at Southridge
Mall increased approximately 3.4 percent for 1994 as compared to
1993. However, same store sales toward the end of 1994 were
relatively unchanged from those at the end of 1993. High operating
costs for tenants attributable to high real estate taxes for the
shopping center somewhat limits the ability of N/S Associates to
increase rents at Southridge Mall. The Account's investment in
Southridge Mall showed approximately $34,000 of unrealized
appreciation over all of 1994. Most of the unrealized appreciation
recognized in the second quarter of 1994 for the Account's
investment in Southridge Mall was offset by unrealized depreciation
recognized at the end of 1994. The year-end unrealized
depreciation was due to the increase in interest rates, which
resulted in an increase in the capitalization rate used in
estimating the value of the property, as well as the reduced rate
of sales increases achieved by mall tenants at the property.

The Account paid asset management and mortality expense risk fees
for the year ended December 31, 1994 of $1,268,164 compared to
$1,323,099 for 1993. The decrease in fees reflects a decrease in
the assets of the Account which is partially offset by an increase
in performance fees paid in 1994.

Liquidity and Capital Resources

For the Year Ended December 31, 1995 Compared to the Year Ended
December 31, 1994 -

At December 31, 1995, the Account had cash of approximately
$587,000 as compared to approximately $205,000 at December 31,
1994. The Account financed a portion of the contract terminations
during the third and fourth quarters of 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 the last three 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
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.
<PAGE>
PAGE 96
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, 1995, IDS Life had purchased approximately
22,955,910 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 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, 1995, Monmouth Associates had funded
approximately $21,476,000 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 <PAGE>
PAGE 97
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, including one made in
July 1995, 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, is currently expected to be approximately
$28,500,000. 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 1996.

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, 1995 was approximately 77 percent. However, the
mall shops and outparcel space are approximately 86 percent leased,
including leases whose terms will commence after renovation of the
tenant space permits occupancy.

The Account has a loan outstanding in the principal amount of
approximately $7,770,000 as of December 31, 1995, secured by its
wholly-owned real estate investment, West Springfield Terrace
Apartments. The loan has an original term of seven years and bears
interest at a rate of 9.5 percent per annum. The loan requires
monthly payments of principal and interest aggregating $824,000 per
annum until November of 1996 when the remaining principal balance
of approximately $7,704,000 and any accrued and unpaid interest
will be due and payable. The current budget for capital
expenditures during 1996 is approximately $207,000 for painting,
carpet replacement and other capital costs.

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
$4,369,000 in 1996 for tenant improvement, asbestos removal and
other capital items at Northridge and Southridge Malls. Actual
amounts expended in 1996 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<PAGE>
PAGE 98
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 $1,967,000 for tenant
improvements, asbestos removal and other capital projects in 1995.

At December 31, 1995, real property investments (through two
unconsolidated joint ventures, N/S Associates and 1225 Connecticut
and a wholly-owned property, West Springfield Terrace Apartments),
mortgage loan and land sale-leaseback investments (through an
unconsolidated joint venture, Monmouth Associates, and a
participation in the loan for Riverpoint Center) and short-term
investments represented 70.6 percent, 27.2 percent and 2.2 percent
of total assets, respectively. At December 31, 1994, real property
investments, mortgage loan and land sale-leaseback investments and
short-term investments represented 72 percent, 27.3 percent and .7
percent of total assets, respectively.

For the Year Ended December 31, 1994 Compared to the Year Ended
December 31, 1993 -

At December 31, 1994, the Account had cash and investments in
short-term securities of approximately $205,000 as compared to
approximately $2,665,000 at December 31, 1993. The decrease is
primarily attributable to net contract terminations of
approximately $5,185,000 during the year ended December 31, 1994.
The Account financed a portion of the net contract terminations
during 1994 through borrowings under its line of credit from IDS
Life, discussed below. The Account has experienced net contract
terminations in each of the last 13 quarters.

The liquidity requirements of the Account are generally 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
borrowings under the line of credit from 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, payments for contract terminations and contributions to pay
the Account's share of the financing of the Monmouth Mall
renovation discussed below.

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. The line of credit is for a
one-year term and is automatically renewed at each anniversary for
an additional one-year term subject to termination by one party
giving 30 days' prior written notice of termination to the other
party. Borrowings under the line of credit must be made in
increments (or multiples) of $100,000. Outstanding borrowings
under the line of credit bear interest at a floating rate equal to
the 30-day London Interbank Offered Rate (LIBOR), adjusted on a
monthly basis. The line of credit requires monthly payments of
interest only until the earlier of maturity or termination of the
line of credit, when the entire outstanding principal plus any
accrued and unpaid interest on the line of credit will be due and
payable. Outstanding principal may be repaid in whole or in part <PAGE>
PAGE 99
in increments (or multiples) of $100,000, together with any accrued
and unpaid interest thereon, at any time without premium or
penalty. Borrowings under the line of credit are generally
unsecured, although IDS Life will have a right to set off against
any deposits or credits of the Account held by IDS Life for
outstanding borrowings. As of March 24, 1995, $3,400,000 was
outstanding under the line of credit. The proceeds of these
borrowings were used to pay contract terminations.

If borrowings under the line of credit do not provide sufficient
liquidity, the Account expects to consider additional options,
which could include among other things, the purchase by IDS Life of
accumulation units in the Account or the sale of real estate
related investment(s). In the event that IDS Life purchases
accumulation units, it would participate in the increase or
decrease in the value of the Account's investments in the same
manner as any other holder of accumulation units. However, IDS
Life would not purchase a Contract and would not be subject to a
surrender charge at any time in connection with any redemption of
its accumulation units. A sale or sales of real estate related
assets could be made under circumstances that result in a
realization of more or less than the book value of the asset or
assets sold. The Account does not currently expect to acquire
additional real estate related investments unless and until its
liquidity situation is significantly improved, including the build
up of its liquid assets.

Distributions received from joint ventures decreased by $288,150
for the year ended December 31, 1994 as compared to 1993. The
decrease was primarily due to the reduction in distributions from
Monmouth Associates, which has used its cash reserves and cash flow
to provide funds for the initial draw downs under its renovation
loan, as discussed below. It is expected that Monmouth Associates
will continue to use its cash flow, to the extent available, to
fund amounts which are drawn down under the renovation loan, which
closed in May 1994. Distributions from 1225 Connecticut in 1994
included amounts previously held in reserves for capital
improvements and working capital. 1225 Connecticut is using
proceeds from the refinancing of its mortgage loan to pay tenant
improvement and other capital costs.

The renovation loan for Monmouth Mall is in the maximum principal
amount of $29.1 million and bears interest on the outstanding
principal amount at a rate of 10.5% per annum. Prior to completion
of the renovation (and subject to funding of the maximum amount of
the renovation loan), monthly interest on the loan may be accrued
and added to principal, and after completion of the renovation, the
loan requires monthly payments of interest only until maturity of
the loan when the entire principal balance and any accrued and
unpaid interest will be due. As additional consideration for
making the renovation loan, Monmouth Associates' participation in
certain levels of proceeds from a joint sale or refinancing of the
fee and leasehold interests in 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 first leasehold mortgage loan and the land subject to the <PAGE>
PAGE 100
ground lease. The renovation loan will mature contemporaneously
with the first leasehold mortgage loan in October 2003, subject to
(i) acceleration in the event of default or certain other events,
including a joint sale of the entire fee and leasehold interests in
Monmouth Mall, or (ii) extension of the loan maturity by Monmouth
Associates under certain circumstances for up to 20 years on the
same loan terms prior to the extension (other than the maturity
date). The renovation loan is secured by a leasehold mortgage
subordinated to the leasehold mortgages securing the first
leasehold mortgage loan and certain other loans previously made for
tenant improvements or other ordinary capital expenditures, and is
cross-defaulted with those loans as well as the ground lease. The
renovation loan is generally non-recourse to the borrower/lessee.
Payment of principal and accrued interest of the renovation loan
out of proceeds from a joint sale or refinancing of the fee and
leasehold interests in the property is subordinated to the payment
of certain other amounts payable to Monmouth Associates in
connection with the ground lease and the first leasehold mortgage
loan.

The estimated cost of the renovation is $28,500,000 including any
accrued interest on the loan added to principal. Through
December 31, 1994, Monmouth Associates had funded approximately
$7.8 million, and these fundings were made from cash reserves held
by Monmouth Associates and its cash flow from interest and ground
rent payments received from the borrower/lessee. Some of the
additional draw downs under the renovation loan are to be funded by
capital contributions. Based upon Monmouth Associates' current
estimated cash flow and its anticipated fundings of other loans
discussed below, the aggregate amount of these capital
contributions is expected to be up to approximately $10,430,000
made to Monmouth Associates by its joint venture partners pro rata
based upon their respective interests, including approximately
$3,350,000 made in January 1995. Based upon its 6.97% interest in
Monmouth Associates, the Account's share of the additional capital
contributions is expected to be approximately $727,000. 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, it is expected that Monmouth Associates will provide
additional financing to the borrower/lessee in order to pay costs
expected to be incurred in connection with the substitution of a
Stern's store and/or another department store tenant at Monmouth
Mall for the Abraham & Straus store, which will be closed in the
near future. The timing and amount of the financing that may be
needed are dependent upon negotiation and agreement with the
borrower/lessee and Federated Department Stores, which is the owner
of Abraham & Straus, as well as possibly another potential
department store tenant, and have not been determined. The
recognition of approximately $700,000 of the Account's unrealized
depreciation at the end of 1994 represents the current estimate of
the Account's share of such financing.

Until the Monmouth renovation is finished, currently anticipated to
be in the fourth quarter of 1995, it is expected that there will be
<PAGE>
PAGE 101
lower than normal occupancy at the shopping center. The occupancy
of mall shops and outparcel space at the shopping center as of
December 31, 1994 was approximately 64 percent, which represents a
decrease from 82 percent from the previous year due to the
continuing renovation. However, the mall shops and outparcel space
are approximately 82 percent leased, including leases whose terms
will commence after renovation of the tenant space permits
occupancy.

The Account has a loan outstanding in the principal amount of
approximately $7,852,000 as of December 31, 1994, secured by its
wholly-owned real estate investment, West Springfield Terrace
Apartments. The loan has an original term of seven years and bears
interest at a rate of 9.5 percent per annum. The loan requires
monthly payments of principal and interest aggregating $824,000 per
annum until November of 1996 when the remaining principal balance
of approximately $7,704,000 and any accrued and unpaid interest
will be due and payable. For 1995, approximately $119,000 has been
budgeted for painting, carpet replacement and other capital costs.

In 1993, Ernst & Young agreed to extend the original term of a
majority of its existing leased space at the 1225 Connecticut
office building to June 2007 and to increase the rent to $34 per
square foot. In 1994, Ernst & Young agreed to lease an additional
approximately 26,300 square feet of space at $34 per square foot
and approximately 1,700 square feet of first floor space at $17.50
per square foot through June 2007. As a result, Ernst & Young now
leases approximately 159,600 square feet or 87 percent of the
office space in the 1225 Connecticut office building. In
connection with the extension and expansion of its leases, Ernst &
Young received certain leasing incentives, including a tenant
improvement allowance and a rent credit for its fourth floor space
for a portion of the lease term commencing in 1995.

In January 1994, 1225 Connecticut refinanced its mortgage loan,
which had an outstanding principal balance of approximately
$1,665,000, with a new first mortgage loan in the principal amount
of $7,000,000 that bears interest at 6.98 percent per annum. The
new loan requires monthly payments of interest only aggregating
approximately $489,000 per annum until maturity in February 2001
when the entire principal amount together with accrued and unpaid
interest will be due and payable. 1225 Connecticut is using the
approximately $5,250,000 of excess proceeds from the refinancing to
pay for lobby and other common area renovation costs, a sprinkler
system and certain tenant improvement costs related to the Ernst &
Young lease extension. To date, approximately $4.3 million has
been spent for the renovation and other capital costs and leasing
commissions. It is currently anticipated that capital expenditures
for 1995 will be approximately $1,200,000. These amounts will be
primarily used to complete improvements to the sidewalks and
elevators and to pay for remaining tenant improvement costs. The
building is 100% occupied at December 31, 1994 and no significant
additional leasing costs are anticipated for 1995.

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 <PAGE>
PAGE 102
such asbestos removal generally will be provided out of cash flows
from the properties.

Amounts expended by N/S Associates for capital items in 1994 were
approximately $1,900,000, including amounts for replacement of an
escalator at Southridge Mall and improvement of interior lighting
and partial roof replacement at Northridge Mall. The amounts
expended during 1994 represented an approximate decrease of
$700,000 from the budgeted amount primarily due to lower than
anticipated leasing during the year at Northridge and Southridge
Malls, which resulted in lower than expected tenant improvement and
asbestos abatement costs. It is currently anticipated that capital
expenditures for 1995, including tenant improvements, asbestos
abatement and completion of the partial roof replacement at
Northridge Mall will be approximately $3,900,000. The anticipated
increase over the amount for 1994 is attributable primarily to
anticipated leasing related costs at Northridge Mall.

In February 1995, N/S Associates obtained a loan from an
institutional lender in the principal amount of $35 million to
refinance the previous mortgage loan secured by Southridge Mall.
Proceeds from the new loan were also used to repay the two mortgage
loans secured by Northridge Mall. The remaining net refinancing
proceeds are expected to be used to pay approximately $2.9 million
of the tenant improvement and other capital costs currently
expected to be incurred for Northridge and Southridge Malls during
1995. The new 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. The new loan is expected to result in a
cash flow savings since the current constants on the previous
mortgage loans averaged approximately 12 percent.

Carson Pirie Scott & Co., which owns a Boston Store at each of
Northridge and Southridge Malls, has made a bid to acquire
Younkers, which also has department stores at those shopping
centers. If it were to acquire Younkers, Carson Pirie Scott & Co.
would have two department stores at both Northridge and Southridge
Malls and could seek to sell or otherwise cease to operate some of
those stores. However, Younkers is subject to operating covenants
at each of the shopping centers that, with certain exceptions (such
as in the case of a sale of a store), requires a Younkers store to
be operated through 1999. N/S Associates expects to review the
possible alternatives in the event that Younkers is acquired.

Certain affiliates of the Investment Adviser have sold their assets
to an unaffiliated third party that acts as adviser to
institutional investors with respect to real estate investments.
In addition, certain management personnel of these affiliates also
became management personnel of the purchaser or its affiliates in
connection with the sale. These affiliates of the Investment
Adviser included JMB Properties Company, which acted as property
manager for the 1225 Connecticut office building and West
Springfield Terrace Apartments properties, and certain other
entities that acted as advisers to the institutional investors who
constitute all or some of the other partners or shareholders of N/S
Associates, Monmouth Associates, and 1225 Investment Corporation, <PAGE>
PAGE 103
which owns the 1225 Connecticut office building. As a result of
the sale, the successor to JMB Properties Company's assets now acts
as property manager of the 1225 Connecticut office building and
West Springfield Terrace Apartments on the same terms that existed
prior to the sale. Under the terms of the partnership agreements
for N/S Associates and Monmouth Associates, and under the terms of
a shareholders' agreement for 1225 Investment Corporation, major
decisions concerning the joint venture partnerships and their real
estate investments are to be made by the vote or approval of the
partner or partners holding a majority of the percent interests,
and certain major decisions concerning 1225 Investment Corporation
and its real estate investment are to made by shareholders owning
at least 96 percent of the corporation's outstanding stock. As a
result of the sale, the other partners in N/S Associates and
Monmouth Associates and certain of the other shareholders of 1225
Investment Corporation are no longer advised or managed by entities
affiliated with the Investment Adviser. This could result in such
other partners or shareholders having different investment policies
or objectives in the future. In addition, the officers and
directors of 1225 Investment Corporation are not currently
affiliated or associated with the Investment Adviser.

At December 31, 1994, real property investments (through two
unconsolidated joint ventures, N/S Associates and 1225 Connecticut
and a wholly-owned property, West Springfield Terrace Apartments),
mortgage loan and land sale-leaseback investments (through an
unconsolidated joint venture, Monmouth Associates, and a
participation in the loan for Riverpoint Center) and short-term
investments represented 72 percent, 27.3 percent and .7 percent of
total assets, respectively. The Account seeks to maintain an asset
mix of 50 percent to 70 percent in real property investments, 15
percent to 40 percent in mortgage loans or sale-leaseback
investments, and the remaining portion in short-term or
intermediate-term liquid debt securities.<PAGE>
PAGE 104
Index to Financial Statements

Page

IDS Life Account RE
Independent Auditors' Report............................
Balance Sheets
Dec. 31, 1995 and 1994...............................
Statements of Operations, years ended
Dec. 31, 1995, 1994 and 1993.........................
Statements of Changes in Contract Owners' Equity,
years ended Dec. 31, 1995, 1994 and 1993.............
Statements of Cash Flows, years ended
Dec. 31, 1995, 1994 and 1993.........................
Notes to Financial Statements...........................

N/S Associates, Monmouth Associates & 1225 Investment
Corporation (Unconsolidated Joint Ventures of IDS Life
Account RE)
Independent Auditors' Report............................
Combined Balance Sheets
Dec. 31, 1995 and 1994...............................
Combined Statements of Operations, years ended
Dec. 31, 1995, 1994 and 1993.........................
Combined Statements of Partners' Capital Accounts,
years ended Dec. 31, 1995, 1994 and 1993.............
Combined Statements of Cash Flows, years ended
Dec. 31, 1995, 1994 and 1993.........................
Notes to Financial Statements...........................

IDS Life Insurance Company
Report of Independent Auditors..........................
Consolidated Balance Sheets, Dec. 31, 1995 and 1994.....
Consolidated Statements of Income, years ended
Dec. 31, 1995, 1994 and 1993.........................
Consolidated Statements of Stockholder's Equity, years
ended Dec. 31, 1995, 1994 and 1993...................
Consolidated Statements of Cash Flows, years ended
Dec. 31, 1995, 1994 and 1993.........................
Notes to Consolidated Financial Statements..............
<PAGE>
PAGE 105
INDEPENDENT AUDITORS' REPORT

The Board 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. These financial statements are
the responsibility of the management of IDS Life Insurance Company.
Our responsibility is to express an opinion on these financial
statements 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, 1995 and 1994, and the results of
its operations and cash flows for each of the years in the three-
year period ended December 31, 1995 in conformity with generally
accepted accounting principles.

KPMG Peat Marwick LLP

Minneapolis, Minnesota
March 22, 1996
<PAGE>
PAGE 106
IDS LIFE ACCOUNT RE
of
IDS LIFE INSURANCE COMPANY

BALANCE SHEETS
<TABLE>
<CAPTION>

December 31, December 31,
1995 1994

<S> <C> <C> <C>
Assets:
Cash $ 586,729 $ 204,859
Receivable from IDS Life for contracts sold 300,000 5,225
Investments in unconsolidated joint ventures,
at fair value (cost of $35,858,482 and
$34,753,104 at December 31, 1995
and December 31, 1994, respectively) (Note 4) 24,150,472 27,044,876
Participation in mortgage loan, at fair
value (cost of $3,047,188 at December 31, 1995
and December 31, 1994) (Note 4) 2,966,206 2,994,023
Accrued interest on participation in mortgage loan (5,400) --
Investment in wholly-owned real estate
property (Note 5):
Building, at fair value (cost of $14,174,329
and $14,010,548 at December 31, 1995 and
December 31, 1994, respectively) 12,380,339 12,077,794
Land, at fair value (cost of $3,915,263
at December 31, 1995 and December 31, 1994) 3,915,263 3,915,263
Deferred borrowing costs, net of accumulated
amortization of $157,577 and $131,726 at
December 31, 1995 and December 31, 1994, respectively 23,879 49,730
Other assets 43,135 34,507

Total assets $44,360,623 $46,326,277

Liabilities:
Payable to IDS Life for:
Operating expenses $ 76,619 $ 58,400
Contract terminations 271,318 10,139
Revolving loan-principal -- 2,100,000
Revolving loan-interest -- 9,224
Accrued mortality and expense risk fee 40,420 40,136
Accrued asset management fee 50,525 50,171
Liabilities related to wholly-owned
real estate property (Note 5):
Accounts payable and other liabilities 244,937 212,197
Mortgage payable 7,770,339 7,852,279

Total liabilities 8,454,158 10,332,546

Contract Owners' Equity:
Net assets applicable to Variable Annuity
contracts in accumulation period $35,906,465 $35,993,731

Accumulation units outstanding 36,353,929 34,238,180

Net asset value per accumulation unit $ .99 $ 1.05

See accompanying notes to financial statements.
<PAGE>
PAGE 107
IDS LIFE ACCOUNT RE
of
IDS LIFE INSURANCE COMPANY

STATEMENTS OF OPERATIONS

For the years ended

December 31, December 31, December 31,
1995 1994 1993

Income (Note 4):
Interest income $ 264,581 $ 286,386 $ 428,480
Account's equity in earnings of
unconsolidated joint ventures 1,924,741 2,094,682 2,097,089
Rental income 2,379,439 2,235,867 2,251,285
Unrealized (depreciation) appreciation of
participation in mortgage loan (27,817) (1,577) 172,373
Unrealized (depreciation) of investments
in unconsolidated joint ventures (3,999,782) (2,361,701) (188,079)
Unrealized appreciation of investment in
wholly-owned real estate property 138,764 -- 308,240

Total income 679,926 2,253,657 5,069,388

Expenses (Note 3):
Asset management fee 603,620 765,557 773,849
Mortality and expense risk fee 482,896 502,607 549,250
Professional services 39,715 36,384 49,829
Amortization of deferred organizational
and borrowing costs 25,851 25,852 25,922
Salaries 28,218 34,091 37,980
Revolving loan interest 94,124 26,169 --
Other operating expenses 27,884 17,132 45,142
Operating expenses related to wholly-owned
real estate property:
Interest 741,811 749,268 756,051
Utilities 153,416 194,543 139,974
Repairs and maintenance 219,829 144,472 177,047
Property and other taxes 186,440 200,243 197,478
Salaries 181,540 216,137 243,220
Management fees 118,983 112,234 112,765
Other 154,120 175,358 144,464

Total expenses 3,058,447 3,200,047 3,252,971

Net income (loss) $(2,378,521) $ (946,390) $ 1,816,417

See accompanying notes to financial statements.
<PAGE>
PAGE 108

IDS LIFE ACCOUNT RE
of
IDS LIFE INSURANCE COMPANY

STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY

For the years ended

December 31, December 31, December 31,
1995 1994 1993

Net income (loss) $ (2,378,521) $ (946,390) $ 1,816,417
Contract purchase proceeds 24,922,267 1,452,798 1,766,368
Contract termination payments (22,631,012) (6,637,325) (8,639,748)

Decrease in net assets (87,266) (6,130,917) (5,056,963)

Contract owners' equity at
beginning of year 35,993,731 42,124,648 47,181,611

Contract owners' equity at end of year $ 35,906,465 $ 35,993,731 $ 42,124,648

Accumulation Unit Activity

Units purchased with proceeds from sale
of contracts 23,170,080 1,334,632 1,661,478
Units redeemed for contract terminations (21,054,331) (6,096,883) (8,136,479)

Net increase (decrease) in units 2,115,749 (4,762,251) (6,475,001)

Units outstanding at beginning of year 34,238,180 39,000,431 45,475,432

Units outstanding at end of year 36,353,929 34,238,180 39,000,431

See accompanying notes to financial statements.
<PAGE>
PAGE 109
IDS LIFE ACCOUNT RE
of
IDS LIFE INSURANCE COMPANY

STATEMENTS OF CASH FLOWS

For the years ended

December 31, December 31, December 31,
1995 1994 1993

Cash flows from operating activities:
Net Income (loss) $ (2,378,521) $ (946,390) $ 1,816,417
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Account's equity in earnings of
unconsolidated joint ventures (1,924,741) (2,094,682) (2,097,089)
Change in accrued interest on participation
in mortgage loan 5,400 -- 21,977
Amortization of organizational & borrowing costs 25,851 25,852 25,922
Change in cumulative discount amortization
on short-term investments -- 12,590 94,160
Change in unrealized depreciation of investments
in unconsolidated joint ventures 3,999,782 2,361,701 188,079
Change in unrealized depreciation (appreciation)
of participation in mortgage loan 27,817 1,577 (172,373)
Change in unrealized (appreciation)
depreciation of investment in wholly-owned
real estate property (138,764) -- (308,240)
Change in other assets (8,628) 1,505 67,708
Change in payable to IDS Life-operating expenses 18,219 (3,889) (5,746)
Change in accrued mortality and expense risk fees 284 (4,531) (5,803)
Change in accrued asset management fees 354 (5,663) (7,253)
Change in payables and other liabilities related
to wholly-owned real estate property 32,740 49,580 (3,795)
Change in payable to IDS Life for revolving
loan interest (9,224) 9,224 --
Total adjustments to net income (loss) 2,029,090 353,264 (2,202,453)
Net cash used in operating activities (349,431) (593,126) (386,036)

Cash flows from investing activities:
Net sales (purchases) of short-term securities -- 2,481,059 5,459,869
Capital improvements to wholly-owned real estate (163,781) (110,874) (24,825)
Distributions received from joint ventures 1,504,514 1,457,190 1,745,340
Net cash provided by investing activities 1,340,733 3,827,375 7,180,384

Cash flows from financing activities:
Proceeds from sales of contracts 24,627,492 1,448,173 1,777,709
Payments for contract terminations (22,369,833) (6,674,263) (8,654,423)
Decrease in mortgage payable (81,940) (74,542) (67,812)
Change in payable to IDS Life for revolving loan (2,100,000) 2,100,000 --
Contributions to Monmouth renovation (685,151) -- --
Net cash used in financing activities (609,432) (3,200,632) (6,944,526)
Net increase (decrease) in cash 381,870 33,617 (150,178)
Balance of cash at beginning of year 204,859 171,242 321,420
Balance of cash at end of year $ 586,729 $ 204,859 $ 171,242

Supplemental cash flow disclosure:
Cash paid for mortgage and revolving
loan interest $ 835,935 $ 775,437 $ 756,051

See accompanying notes to financial statements.

</TABLE>
<PAGE>
PAGE 110
IDS LIFE ACCOUNT RE
of
IDS LIFE INSURANCE COMPANY

December 31, 1995

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. 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 determined by JMB Annuity Advisers (the Investment<PAGE>
PAGE 111
Adviser). Procedures utilized to determine the estimated value
include the following: (i) 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,
(ii) various assumptions including, but not limited to,
occupancy and rental rates, expense levels, net operating
income, average capital costs and capitalization rates upon sale
will be used in determining the discounted present value of an
investment's estimated cash flow and its estimated sale proceeds
or its asset value under a direct capitalization methodology,
and (iii) for fixed interest rate mortgage loans and fixed
rental rate land sale-leaseback investments, estimated values
will be determined by comparison to current interest rates on
U.S. Treasury debt as adjusted for a risk differential of the
Account's investments. 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.
<PAGE>
PAGE 112
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, 1995, 1994 and
1993, the Account paid IDS Life a mortality and expense risk fee
of $482,896, $502,607 and $549,250, 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 FRC Property Index. The performance-
related portion of the fee is calculated and recorded on an
annual basis when the FRC Property Index is released each year
for the preceding calendar year. No performance fee was paid by
the Account in 1995 for 1994. The performance fee paid by the
Account in 1994 for 1993 was $137,299. The performance fee paid
by the Account in 1993 for 1992 was $87,287. Any performance
fee adjustment will be paid to the Investment Adviser. For the
years ended December 31, 1995, 1994 and 1993, the Account paid
total asset management fees of $603,620, $765,557 and $773,849,
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 1995, 1994 or 1993.

The Account pays for all operational expenses incurred on its
behalf. For the years ended December 31, 1995, 1994 and 1993,
IDS Life was reimbursed $56,102, $51,223 and $83,122,
respectively, for personnel-related expenses incurred in the
administration of the Account.

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<PAGE>
PAGE 113
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<PAGE>
PAGE 114
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 437,000 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 addition to the
purchase price, a reserve of approximately $7,250,000 was
established for capital improvements, all of which had been
used to pay for certain capital improvements made at the
shopping center. 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
<PAGE>
PAGE 115
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 (commencing in the fourth lease
year at $390,000 per annum and increasing in the sixth lease
year to $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
provides for monthly payments of base interest at a base rate of
approximately 5.98 percent per annum for the first two loan
years, approximately 7.97 percent per annum for the third loan
year and approximately 5.00 percent per annum for each loan year
thereafter. The first leasehold mortgage also provides for
quarterly payments of contingent interest, payable out of the<PAGE>
PAGE 116
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 is 5.98 percent per annum for
the first two loan years, 7.97 percent per annum for the next
three loan years and 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 1995, 1994 or 1993. 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 $28,500,000. As of December 31,
1995, Monmouth Associates had funded approximately $21,476,000,
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<PAGE>
PAGE 117
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<PAGE>
PAGE 118
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. The property had
previously been managed by JMB Properties Company, an affiliate
of the Investment Adviser. In December 1994, JMB Properties
Company sold substantially all of its assets to an unaffiliated
third party, and certain management personnel of JMB Properties
Company became management personnel of the third party. As a
result of the sale, the successor to JMB Properties Company's
assets became the property manager of the 1225 Connecticut
office building on the same terms that existed prior to the
sale.

1225 Connecticut leases approximately 80 percent of the
available space of the property to one tenant, all with terms
of 12 years. For the year ended December 31, 1995, such tenant
represented approximately 77 percent of total revenues.

Pursuant to a lease currently in effect, an unaffiliated third
party leases and operates the entire parking garage (subject to
certain parking rights provided for tenants of the property)
until November 1997. The lease provides for a fixed rent
payment of $485,000 a year (which reflects an increase at the
end of 1993 from $430,000 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.
<PAGE>
PAGE 119
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, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
As of and for As of and for
the year ended the year ended
Dec. 31, 1995 Dec. 31, 1994

<S> <C> <C>
Account's investment in Unconsolidated
Joint Ventures $ 24,150,472 $ 27,044,876

Account's share of net investment income from
Unconsolidated Joint Ventures $ 1,924,741 $ 2,094,682

Net depreciation in Unconsolidated Joint Ventures $ (3,999,782) $ (2,361,701)

Total net investment income of Unconsolidated
Joint Ventures $ 20,070,000 $ 27,482,000

Total assets of Unconsolidated Joint Ventures $ 346,343,000 $ 393,717,000

Total liabilities of Unconsolidated Joint Ventures $ 54,722,000 $ 48,558,000

</TABLE>

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 is
funded by affiliates of the Investment Adviser (herein, the
Account and said affiliates are collectively called the
Lenders). The Loan is secured by a first mortgage on a shopping
center known as Riverpoint Center in Chicago, Illinois. The
shopping center is owned by a partnership (the Borrower) whose
general partners are 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) have been
funded since the Initial Funding. The Borrower did not qualify
for any additional fundings above the $28,040,000 which has been
funded to date, and no additional fundings will be made by the
Lenders.

The ten-year loan requires periodic payments of interest only
and bears 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<PAGE>
PAGE 120
rate of 9.50 percent per annum, payable monthly in advance. The
loan also provides 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 provides 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 will be used
to offset, on a dollar-for-dollar basis, the amount of accrued
interest payable. The loan is generally non-recourse to the
Borrower and its partners.

The shopping center, completed in 1989, is located on
approximately 17 acres and consists of approximately 200,800
square feet of gross leasable area.

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. In
connection with the acquisition of the property, the Account
paid a prepayment charge at closing of $92,221 to the lender
that held the mortgage loan on the property. 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. To date the Account has paid
IDS Life and the Investment Adviser their respective portions of
<PAGE>
PAGE 121
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. At December 31,
1995, the current balance of the mortgage loan encumbering the
property was approximately $7,770,000. The loan has a term of
seven years and bears 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 is 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 of approximately $7,704,000 is due and payable.

The apartment complex is 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. The
property had previously been managed by JMB Properties Company,
an affiliate of the Investment Adviser, but since December 1994
has been managed on the same terms by an unaffiliated third
party that purchased substantially all of JMB Properties
Company's assets, as discussed in Note 4 in connection with the
1225 Connecticut office building.

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. For the year
ended December 31, 1995, IDS Life cumulatively contributed
$24,700,000 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, 1995, IDS Life's portion of the
Contract Owners' Equity was $22,644,467, which represents 63% of
total Contract Owners' Equity.
<PAGE>
PAGE 122

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. These combined
financial statements are the responsibility of the Investment
Adviser. Our responsibility is to express an opinion on these
combined financial statements 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, at December 31, 1995 and 1994 and the results of their
combined operations and combined cash flows for each of the years
in the three-year period ended December 31, 1995, in conformity
with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 22, 1996
<PAGE>
PAGE 123
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, 1995 and 1994

<TABLE>
<CAPTION>
Assets

1995 1994
<S> <C> <C> <C>
Investments in real estate $328,270,000 373,654,000
Cash and cash equivalents (note 1) 12,908,000 5,727,000
Short-term investments -- 7,589,000
Rents, interest, and other receivables 2,754,000 6,465,000
Other assets 2,411,000 282,000

$346,343,000 393,717,000

Liabilities and Partners' Capital Accounts

Mortgage notes payable (note 3) $ 42,000,000 37,929,000
Accounts payable and other accrued expenses 12,722,000 10,629,000

Total liabilities 54,722,000 48,558,000

Commitments and contingencies (notes 2 and 4)

Partners' capital accounts (notes 1 and 2):
IDS Life Account RE:
Capital contributions 32,856,000 32,171,000
Cumulative net investment income 13,783,000 11,858,000
Cumulative share of net unrealized depreciation (11,708,000) (7,708,000)
Cumulative cash distributions (10,781,000) (9,276,000)
24,150,000 27,045,000

Venture partners:
Capital contributions 379,954,000 370,809,000
Cumulative net investment income 166,032,000 147,887,000
Cumulative share of net unrealized depreciation (148,138,000) (86,200,000)
Cumulative cash distributions (130,377,000) (114,382,000)
267,471,000 318,114,000

Total partners' capital accounts 291,621,000 345,159,000

$346,343,000 393,717,000

See accompanying notes to combined financial statements.
<PAGE>
PAGE 124
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, 1995, 1994 and 1993

1995 1994 1993

Investment income:
Rental income $38,140,000 41,706,000 40,150,000
Interest 7,685,000 8,083,000 7,434,000

45,825,000 49,789,000 47,584,000

Investment expenses:
Mortgage and other interest 4,250,000 3,224,000 2,979,000
Real estate taxes 7,401,000 8,106,000 8,967,000
Property operating expenses 13,744,000 10,657,000 9,752,000
General and administrative 360,000 320,000 248,000

25,755,000 22,307,000 21,946,000

Net investment income $ 20,070,000 27,482,000 25,638,000

Unrealized depreciation on investments
in real estate (note 1) $(65,938,000) (34,437,000) (9,455,000)

See accompanying notes to combined financial statements.
<PAGE>
PAGE 125
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, 1995, 1994 and 1993

Combined IDS Life Venture
Total Account RE Partners

Balance at December 31, 1992 $375,139,000 28,605,000 346,534,000

Net investment income 25,638,000 2,097,000 23,541,000
Net unrealized depreciation on investments
in real estate (9,455,000) (188,000) (9,267,000)
Cash distributions and dividends (21,776,000) (1,745,000) (20,031,000)

Balance at December 31, 1993 369,546,000 28,769,000 340,777,000

Net investment income 27,482,000 2,094,000 25,388,000
Net unrealized depreciation on investments
in real estate (34,437,000) (2,361,000) (32,076,000)
Cash distributions and dividends (17,432,000) (1,457,000) (15,975,000)

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
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

See accompanying notes to combined financial statements.
<PAGE>
PAGE 126
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, 1995, 1994 and 1993

1995 1994 1993

Cash flows from operating activities:
Net investment income $ 20,070,000 27,482,000 25,638,000
Provision for uncollectible accrued interest 3,576,000 -- --
Adjustments to reconcile net investment
income to net cash provided by operating
activities represented by changes in:
Rents, interest and other receivables 135,000 (598,000) 378,000
Other assets (2,129,000) 222,000 (1,292,000)
Accounts payable and accrued expenses (1,713,000) (201,000) (1,309,000)

Net cash provided by operations 19,939,000 26,905,000 23,415,000

Cash flows from investing activities:
Net (purchases) sales of short-term investments 7,589,000 1,720,000 (9,309,000)
Additions to investments in real estate, net of
related accounts payable and accrued expenses (16,748,000) (14,834,000) (2,389,000)

Net cash provided by (used in)
investing activities (9,159,000) (13,114,000) (11,698,000)

Cash flows from financing activities:
Principal payments on mortgages payable (30,929,000) (2,843,000) (1,358,000)
Cash distributions to partners (13,000,000) (13,500,000) (18,000,000)
Cash contributions 9,830,000 -- --
Proceeds from mortgage note payable 35,000,000 7,000,000 --
Cash dividends paid to shareholders (4,500,000) (3,932,000) (3,776,000)

Net cash used in financing activities (3,599,000) (13,275,000) (23,134,000)
Net increase in cash and cash
equivalents $ 7,181,000 516,000 (11,417,000)
Cash and cash equivalents beginning
of year 5,727,000 5,211,000 16,628,000
Cash and cash equivalents end
of year $ 12,908,000 5,727,000 5,211,000

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest $ 3,759,000 3,201,000 2,989,000
Non-cash investing and financing activities:
Unrealized depreciation on
investments in real estate $(65,938,000) (34,437,000) (9,455,000)

See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
PAGE 127
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, 1995, 1994, and 1993

(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 ($2,200,000 and $5,989,000 at
December 31, 1995 and 1994, respectively) as cash equivalents with
any remaining amounts reflected as short-term investments.

Investments in real estate are stated at estimated fair
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
<PAGE>
PAGE 128
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)

Federal income tax purposes. The Corporation had no Federal income
tax liabilities for taxable years ended December 31, 1995, 1994 and
1993.

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.

Statement of Financial Accounting Standards No. 107 ("SFAS
107"), "Disclosures about Fair Value of Financial Instruments",
requires entities with total assets exceeding $150 million at
December 31, 1994 to disclose the SFAS 107 value of all financial
assets and liabilities for which it is practicable to estimate.
Value is defined in the Statement as the amount at which the
instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The
ventures believe the carrying amount of its assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107
value due to the relatively short maturity of these instruments.
There is no quoted market value available for any of the ventures'
other instruments. Based upon estimates of current market rates
for debt with similar terms, the ventures discounted the scheduled
loan payments to maturity. Based upon this calculation, the
ventures believe that the carrying value of the mortgage notes
payable approximate market value at December 31, 1995 and 1994.

(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, 1995. Such note is incorporated herein by
reference.
<PAGE>
PAGE 129
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, 1995 and 1994:

1995 1994
<S> <C> <C>
9.125% mortgage note due January 1, 2008 secured by Northridge
Mall; repaid in February 1995, reference is made to Note 3 (b) $ -- 15,058,000

10% mortgage note due October 1, 2012, secured by Northridge
Mall; repaid in February 1995, reference is made to Note 3 (b) -- 365,000

8.42% mortgage note due October 1, 2001, secured by Southridge
Mall; refinanced in February 1995, reference is made to Note 3 (b) -- 15,506,000

8.35% mortgage note, secured by Southridge Mall; payable in
monthly installments of $244,000 (interest only) until
maturity on February 1, 2002 (see 3 (b) below) 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 37,929,000
</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:

1996 . . . . . . . . . . $ --
1997 . . . . . . . . . . --
1998 . . . . . . . . . . --
1999 . . . . . . . . . . --
2000 . . . . . . . . . . --

(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>
PAGE 130
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:
1996 . . . . . . . . . . $ 21,306,282
1997 . . . . . . . . . . 20,488,269
1998 . . . . . . . . . . 18,517,784
1999 . . . . . . . . . . 16,734,147
2000 . . . . . . . . . . 14,709,466
Thereafter . . . . . . . 56,125,989
$147,881,937

Contingent rent (based on sales by property tenants) from the
retail investments included in rental income is $1,058,000,
$1,010,000 and $1,000,000 in 1995, 1994 and 1993, 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.

(5) Related Party Transactions

NS 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 $1,174,000 and $1,266,000 for the
periods ended December 31, 1995 and 1994, 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 $175,000 and $196,000 for the years ended
December 31, 1995 and 1994, respectively.
<PAGE>
PAGE 131
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) NS Associates

In February 1996, the Investment Adviser authorized and
paid a cash distribution to the partners aggregating
$2,125,000. Each partner received its proportionate
share based on its respective ownership percentage.

(b) 1225 Investment Corporation

In February 1996, 1225 Investment Corporation paid a
dividend of $1,250,000 ($22.67 per share) to the
shareholders of record as of December 31, 1995.
<PAGE>
PAGE 132

Report of Independent Auditors

The Board of Directors
IDS Life Insurance Company

We have audited the accompanying consolidated balance sheets of IDS
Life Insurance Company (a wholly owned subsidiary of American
Express Financial Corporation) as of December 31, 1995 and 1994,
and the related consolidated statements of income, stockholder's
equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of IDS Life Insurance Company at December 31, 1995 and
1994, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements,
the Company changed its method of accounting for certain
investments in debt and equity securities in 1994.

Ernst & Young LLP
February 2, 1996
Minneapolis, Minnesota
<PAGE>
PAGE 133
IDS Life Financial Information

The financial statements shown below are those of the insurance
company and not those of any other entity. They are included in
the prospectus for the purpose of informing investors as to the
financial condition of the insurance company and its ability to
carry out its obligations under its variable contracts.
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS

Dec. 31, Dec. 31,
ASSETS 1995 1994
(thousands)
<S> <C> <C>
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1995, $11,878,377; 1994 $10,694,800) $11,257,591 $11,269,861
Available for sale, at fair value (Amortized cost:
1995, $10,146,136; 1994 $8,459,128) 10,516,212 8,017,555
Mortgage loans on real estate
(Fair value: 1995, $3,184,666; 1994, $2,342,520) 2,945,495 2,400,514
Policy loans 424,019 381,912
Other investments 146,894 51,795

Total investments 25,290,211 22,121,637

Cash and cash equivalents 72,147 267,774
Receivables:
Reinsurance 114,387 80,304
Amounts due from brokers - 7,933
Other accounts receivable 33,667 49,745
Premiums due 5,441 1,594

Total receivables 153,495 139,576

Accrued investment income 348,008 317,510
Deferred policy acquisition costs 2,025,725 1,865,324
Deferred income taxes - 124,061
Other assets 36,410 30,426
Separate account assets 14,974,082 10,881,235

Total assets $42,900,078 $35,747,543
========== ==========
<PAGE>
PAGE 134

IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1995 1994
(thousands)

Liabilities:
Fixed annuities--future policy benefits $21,404,836 $19,361,979
Universal life-type insurance--future policy benefits 3,076,847 2,896,100
Traditional life insurance--future policy benefits 209,249 206,754
Disability income, health and long-term care
insurance--future policy benefits 327,157 244,077
Policy claims and other policyholders' funds 56,323 50,068
Deferred income taxes 112,904 -
Amounts due to brokers 121,618 226,737
Other liabilities 285,354 291,902
Separate account liabilities 14,974,082 10,881,235

Total liabilities 40,568,370 34,158,852

Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 278,814 222,000
Net unrealized gain (loss) on investments 230,129 (275,708)
Retained earnings 1,819,765 1,639,399

Total stockholder's equity 2,331,708 1,588,691

Total liabilities and stockholder's equity $42,900,078 $35,747,543
========== ==========

Commitments and contingencies (Note 6)

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PAGE 135
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Years ended Dec. 31,
1995 1994 1993
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 50,193 $ 48,184 $ 48,137
Disability income and long-term care insurance 111,337 96,456 79,108

Total premiums 161,530 144,640 127,245

Policyholder and contractholder charges 256,454 219,936 184,205
Management and other fees 215,581 164,169 120,139
Net investment income 1,907,309 1,781,873 1,783,219
Net realized loss on investments (4,898) (4,282) (6,737)

Total revenues 2,535,976 2,306,336 2,208,071

Benefits and expenses:
Death and other benefits - Traditional life
insurance 29,528 28,263 32,136
Death and other benefits - Universal life-type
insurance and investment contracts 71,691 52,027 49,692
Death and other benefits - Disability income,
health and long-term care insurance 16,259 13,393 13,148

Increase (decrease) in liabilities for future
policy benefits:
Traditional life insurance (1,315) (3,229) (4,513)
Disability income, health and
long-term care insurance 51,279 37,912 32,528

Interest credited on universal life-type
insurance and investment contracts 1,315,989 1,174,985 1,218,647
Amortization of deferred policy acquisition costs 280,121 280,372 211,733
Other insurance and operating expenses 211,642 210,101 241,974

Total benefits and expenses 1,975,194 1,793,824 1,795,345

Income before income taxes 560,782 512,512 412,726

Income taxes 195,842 176,343 142,647

Net income $ 364,940 $ 336,169 $ 270,079
========= ========= =========

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PAGE 136
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended December 31, 1995 (thousands)

Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $3,000 $ 22,000 $ 214 $1,223,151 $1,248,365
Net income 270,079 270,079
Change in net unrealized
gain (loss) on investments - - (100) - (100)
Capital contribution from parent - 200,000 - - 200,000
Cash dividends - - - (25,000) (25,000)

Balance, December 31, 1993 3,000 222,000 114 1,468,230 1,693,344
Net income - - - 336,169 336,169
Change in net unrealized
gain (loss) on investments - - (275,822) - (275,822)
Cash dividends - - - (165,000) (165,000)

Balance, December 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income - - - 364,940 364,940
Change in net unrealized
gain (loss) on investments - - 505,837 - 505,837
Capital contribution from parent - 56,814 - - 56,814
Loss on reinsurance transaction
with affiliate - - - (4,574) (4,574)
Cash dividends - - - (180,000) (180,000)

Balance, December 31, 1995 $3,000 $278,814 $230,129 $1,819,765 $2,331,708
====== ======== ======== ========== ==========

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PAGE 137
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended Dec. 31,
1995 1994 1993
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 364,940 $ 336,169 $ 270,079
Adjustments to reconcile net income to
net cash provided by operating activities:
Policy loan issuances, excluding universal
life-type insurance: (46,011) (37,110) (35,886)
Policy loan repayments, excluding universal
life-type insurance 36,416 33,384 29,557
Change in reinsurance receivable (34,083) (25,006) (55,298)
Change in other accounts receivable 16,078 (28,286) (1,364)
Change in accrued investment income (30,498) (10,333) (22,057)
Change in deferred policy acquisition costs, net (196,963) (192,768) (211,509)
Change in liabilities for future policy
benefits for traditional life, disability income,
health and long-term care insurance 85,575 55,354 79,695
Change in policy claims and other policyholders' funds 6,255 5,552 (5,383)
Change in deferred income taxes (33,810) (19,176) (44,237)
Change in other liabilities (6,548) (122) 56,515
Amortization of premium (accretion
of discount), net (22,528) 30,921 (27,438)
Net loss on investments 4,898 4,282 6,737
Premiums related to universal life--type insurance 465,631 409,035 397,883
Surrenders and death benefits related to
universal life--type insurance (306,600) (290,427) (255,133)
Interest credited to account balances related
to universal life--type insurance 162,222 150,955 156,885
Policyholder and contractholder charges, non-cash (140,506) (126,918) (115,140)
Other, net 2 (8,974) (1,907)

Net cash provided by operating activities $ 324,470 $ 286,532 $ 221,999
<PAGE>
PAGE 138

IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended Dec. 31,
1995 1994 1993
(thousands)

Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $(1,007,208) $ (879,740) $ -
Maturities, sinking fund payments and calls 538,219 1,651,762 -
Sales 332,154 58,001 -
Fixed maturities available for sale:
Purchases (2,452,181) (2,763,278) -
Maturities, sinking fund payments and calls 861,545 1,234,401 -
Sales 136,825 374,564 -
Fixed maturities:
Purchases - - (6,548,852)
Maturities, sinking fund payments and calls - - 3,934,055
Sales - - 487,983
Other investments, excluding policy loans:
Purchases (823,131) (634,807) (553,694)
Sales 160,521 243,862 123,352
Change in amounts due from brokers 7,933 (2,214) 14,483
Change in amounts due to brokers (105,119) (124,749) 92,832

Net cash used in investing activities (2,350,442) (842,198) (2,449,841)

Cash flows from financing activities:
Activity related to investment contracts:
Considerations received 3,723,894 3,157,778 2,843,668
Surrenders and death benefits (2,834,804) (3,311,965) (1,765,869)
Interest credited to account balances 1,153,767 1,024,031 1,071,917
Policy loan issuances, universal
life-type insurance (84,700) (78,239) (70,304)
Policy loan repayments, universal
life-type insurance 52,188 50,554 46,148
Capital contribution from parent - - 200,000
Cash dividend to parent (180,000) (165,000) (25,000)

Net cash provided by financing activities 1,830,345 677,159 2,300,560

Net (decrease) increase in cash and
cash equivalents (195,627) 121,493 72,718

Cash and cash equivalents at
beginning of year 267,774 146,281 73,563

Cash and cash equivalents at
end of year $ 72,147 $ 267,774 $ 146,281
========== ========== ==========

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PAGE 139
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ thousands)

1. Summary of significant accounting policies

Nature of business

IDS Life Insurance Company (the Company) is a stock life insurance
company organized under the laws of the State of Minnesota. The
Company is a wholly owned subsidiary of American Express Financial
Corporation, which is a wholly owned subsidiary of American Express
Company. The Company serves residents of all states except New
York. IDS Life Insurance Company of New York is a wholly owned
subsidiary of the Company and serves New York State residents. The
Company also wholly owns American Enterprise Life Insurance
Company, American Centurion Life Assurance Company (ACLAC), and
American Partners Life Insurance Company.

The Company's principal products are deferred annuities and
universal life insurance, which are issued primarily to
individuals. It offers single premium and annual premium deferred
annuities on both a fixed and variable dollar basis. Immediate
annuities are offered as well. The Company's insurance products
include universal life (fixed and variable), whole life, single
premium life and term products (including waiver of premium and
accidental death benefits). The Company also markets disability
income and long-term care insurance.

The Company's principal annuity product in terms of amount in force
is the fixed deferred annuity. The annuity contract guarantees a
minimum interest rate during the accumulation period (the time
before annuity payments begin), although the Company normally pays
a higher rate reflective of current market rates. The fixed
annuity provides for a surrender charge during the first seven to
ten years after a purchase payment is made. The Company has also
adopted a practice whereby the higher current rate is guaranteed
for a specified period. The Company also offers a variable annuity
product under the name Flexible Annuity. This is a fixed/variable
annuity offering the purchasers a choice among mutual funds with
portfolios of equities, bonds, managed assets and/or short-term
securities, and the Company's general account, as the underlying
investment vehicles. With respect to funds applied to the variable
portion of the annuity, the purchaser, rather than the Company,
assumes the investment risks and receives the rewards inherent in
the ownership of the underlying investment. The Flexible Annuity
provides for a surrender charge during the first six years after a
purchase payment is made.

The Company's principal insurance product is the flexible-premium,
adjustable-benefit universal life insurance policy. In this type
of insurance policy, each premium payment accumulates interest in
a cash value account. The policyholder has access to the cash
surrender value in whole or in part after the first year. The size
of the cash value of the fund can also be controlled by the
policyholder by increasing or decreasing premiums, subject only to
<PAGE>
PAGE 140
1. Summary of significant accounting policies (continued)

maintaining a required minimum to keep the policy in force.
Monthly deductions from the cash value of the policy are made for
the cost of insurance, expense charges and any policy riders.

Basis of presentation

The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, IDS Life
Insurance Company of New York, American Enterprise Life Insurance
Company, American Centurion Life Assurance Company and American
Partners Life Insurance Company. All material intercompany
accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles which vary in certain respects from reporting practices
prescribed or permitted by state insurance regulatory authorities.

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 amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Investments

Fixed maturities that the Company has both the positive intent and
the ability to hold to maturity are classified as held to maturity
and carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale
and carried at fair value. Unrealized gains and losses on
securities classified as available for sale are carried as a
separate component of stockholder's equity.

Management determines the appropriate classification of fixed
maturities at the time of purchase and reevaluates the
classification at each balance sheet date.

Mortgage loans on real estate are carried principally at the unpaid
principal balances of the related loans. Policy loans are carried
at the aggregate of the unpaid loan balances which do not exceed
the cash surrender values of the related policies. Other
investments include interest rate caps, equity securities and real
estate investments. When evidence indicates a decline, which is
other than temporary, in the underlying value or earning power of
individual investments, such investments are written down to the
fair value by a charge to income. Equity securities are carried
at market value and the related net unrealized appreciation or
depreciation is reported as a credit or charge to stockholder's
equity.

Realized investment gain or loss is determined on an identified
cost basis.<PAGE>
PAGE 141
1. Summary of significant accounting policies (continued)

Prepayments are anticipated on certain investments in mortgage-
backed securities in determining the constant effective yield used
to recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.

Statement of cash flows

The Company considers investments with a maturity at the date of
their acquisition of three months or less to be cash equivalents.
These securities are carried principally at amortized cost which
approximates fair value.

Supplementary information to the consolidated statement of cash
flows for the years ended Dec. 31 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $191,011 $226,365 $188,204
Interest on borrowings 5,524 1,553 2,661
</TABLE>

Recognition of profits on fixed annuity contracts and insurance
policies

The Company issues single premium deferred annuity contracts that
provide for a service fee (surrender charge) at annually decreasing
rates upon withdrawal of the annuity accumulation value by the
contract owner. No sales fee is deducted from the contract
considerations received on these contracts ("no load" annuities).
All of the Company's single premium deferred annuity contracts
provide for crediting the contract owners' accumulations at
specified rates of interest. Such rates are revised by the Company
from time to time based on changes in the market investment yield
rates for fixed-income securities.

Profits on single premium deferred annuities and installment
annuities are recognized by the Company over the lives of the
contracts and represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.

The retrospective deposit method is used in accounting for
universal life-type insurance. This method recognizes profits over
the lives of the policies in proportion to the estimated gross
profits expected to be realized.

Premiums on traditional life, disability income, health and long-
term care insurance policies are recognized as revenue when
collected or due, and related benefits and expenses are associated
with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association
is accomplished by means of the provision for future policy
benefits and the deferral and subsequent amortization of policy
acquisition costs.<PAGE>
PAGE 142
1. Summary of significant accounting policies (continued)

Deferred policy acquisition costs

The costs of acquiring new business, principally sales
compensation, policy issue costs, underwriting and certain sales
expenses, have been deferred on insurance and annuity contracts.
The deferred acquisition costs for single premium deferred
annuities and installment annuities are amortized based upon
surrender charge revenue and a portion of the excess of investment
income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal
life-type insurance are amortized over the lives of the policies as
a percentage of the estimated gross profits expected to be realized
on the policies. For traditional life, disability income, health
and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.

Liabilities for future policy benefits

Liabilities for universal life-type insurance, single premium
deferred annuities and installment annuities are accumulation
values.

Liabilities for fixed annuities in a benefit status are based on
the Progressive Annuity Table with interest at 5 percent, the 1971
Individual Annuity Table with interest at 7 percent or 8.25
percent, or the 1983a Table with various interest rates ranging
from 5.5 percent to 9.5 percent, depending on year of issue.

Liabilities for future benefits on traditional life insurance have
been computed principally by the net level premium method, based on
anticipated rates of mortality (approximating the 1965-1970 Select
and Ultimate Basic Table for policies issued after 1980 and the
1955-1960 Select and Ultimate Basic Table for policies issued prior
to 1981 and the 1975-1980 Select and Ultimate Basic Table for term
insurance policies issued after 1984), policy persistency derived
from Company experience data (first year rates ranging from
approximately 70 percent to 90 percent and increasing rates
thereafter), and estimated future investment yields of 4 percent
for policies issued before 1974 and 5.25 percent for policies
issued from 1974 to 1980. Cash value plans issued in 1980 and
later assume future investment rates that grade from 9.5 percent to
5 percent over 20 years. Term insurance issued from 1981 to 1984
assumes an 8 percent level investment rate, term insurance issued
from 1985-1993 assumes investment rates that grade from 10 percent
to 6 percent over 20 years and term insurance issued after 1993
assumes investment rates that grade from 8 percent to 6.5 percent
over 7 years.

Liabilities for future disability income policy benefits have been
computed principally by the net level premium method, based on the
1964 Commissioners Disability Table with the 1958 Commissioners
Standard Ordinary Mortality Table at 3 percent interest for persons
disabled in 1980 and prior, 8 percent interest for persons disabled
from 1981 to 1991, 7 percent interest for persons disabled in 1992
and 6 percent interest for persons disabled after 1992.<PAGE>
PAGE 143
1. Summary of significant accounting policies (continued)

Liabilities for future benefits on long-term care insurance have
been computed principally by the net level premium method, using
morbidity rates based on the 1985 National Nursing Home Survey and
mortality rates based on the 1983a Table. The interest rate basis
is 9.5 percent grading to 7 percent over ten years for policies
issued from 1989 to 1992, 7.75 percent grading to 7 percent over
four years for policies issued after 1992, 8 percent for claims
incurred in 1989 to 1991, 7 percent for claims incurred in 1992 and
6 percent for claims incurred after 1992.

Reinsurance

The maximum amount of life insurance risk retained by the Company
on any one life is $750 of life and waiver of premium benefits plus
$50 of accidental death benefits. The maximum amount of disability
income risk retained by the Company on any one life is $6 of
monthly benefit for benefit periods longer than three years. The
excesses are reinsured with other life insurance companies on a
yearly renewable term basis. Graded premium whole life and long-
term care policies are primarily reinsured on a coinsurance basis.

Federal income taxes

The Company's taxable income is included in the consolidated
federal income tax return of American Express Company. The Company
provides for income taxes on a separate return basis, except that,
under an agreement between American Express Financial Corporation
and American Express Company, tax benefit is recognized for losses
to the extent they can be used on the consolidated tax return. It
is the policy of American Express Financial Corporation to
reimburse a subsidiary for any tax benefit.

Included in other liabilities at Dec. 31, 1995 is $13,415 payable
to American Express Financial Corporation for federal income taxes.
Included in other receivables at Dec. 31, 1994 is $22,034
receivable from American Express Financial Corporation for federal
income taxes.

Separate account business

The separate account assets and liabilities represent funds held
for the exclusive benefit of the variable annuity and variable life
insurance contract owners. The Company receives investment
management and mortality and expense assurance fees from the
variable annuity and variable life insurance mutual funds and
separate accounts. The Company also deducts a monthly cost of
insurance charge and receives a minimum death benefit guarantee fee
and issue and administrative fee from the variable life insurance
separate accounts.

The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate
accounts will not be affected by future variations in the actual
life expectancy experience of the annuitants and the beneficiaries<PAGE>
PAGE 144
1. Summary of significant accounting policies (continued)
from the mortality assumptions implicit in the annuity contracts.

The Company makes periodic fund transfers to, or withdrawals from,
the separate accounts for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company
guarantees, for the variable life insurance policyholders, the
contractual insurance rate and that the death benefit will never be
less than the death benefit at the date of issuance.

Accounting changes

The Financial Accounting Standards Board's (FASB) SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," is effective January 1, 1996. The
new rule is not expected to have a material impact on the Company's
results of operations or financial condition.

The Company's adoption of SFAS No. 114 as of January 1, 1995 is
discussed in Note 2.

The Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The effect of adopting
the new rule was to increase stockholder's equity by approximately
$181 million, net of tax, as of January 1, 1994, but the adoption
had no impact on the Company's net income.

Reclassification

Certain 1994 and 1993 amounts have been reclassified to conform to
the 1995 presentation.

2. Investments

Fair values of investments in fixed maturities represent quoted
market prices and estimated values when quoted prices are not
available. Estimated values are determined by established
procedures involving, among other things, review of market indices,
price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial
files.

Net realized gain (loss) on investments for the years ended Dec. 31
is summarized as follows:

1995 1994 1993
Fixed maturities $ 9,973 $(1,575) $ 20,583
Mortgage loans (13,259) (3,013) (25,056)
Other investments (1,612) 306 (2,264)
$ (4,898) $(4,282) $ (6,737)

Changes in net unrealized appreciation (depreciation) of
investments for the years ended Dec. 31 are summarized as follows:

<PAGE>
PAGE 145
2. Investments (continued)
1995 1994 1993
Fixed maturities:
Held to maturity $1,195,847 $(1,329,740) $ --
Available for sale 811,649 (720,449) --
Investment securities -- -- 323,060
Equity securities 3,118 (2,917) (156)

The amortized cost, gross unrealized gains and losses and fair
values of investments in fixed maturities and equity securities at
Dec. 31, 1995 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency
obligations $ 64,523 $ 3,919 $ -- $ 68,442
State and municipal obligations 11,936 362 32 12,266
Corporate bonds and obligations 8,921,431 620,327 36,786 9,504,972
Mortgage-backed securities 2,259,701 42,684 9,688 2,292,697
$11,257,591 $667,292 $46,506 $11,878,377

Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value

U.S. Government agency
obligations $ 84,082 $ 3,248 $ 50 $ 87,280
State and municipal obligations 11,020 1,476 -- 12,496
Corporate bonds and obligations 2,514,308 186,596 3,451 2,697,453
Mortgage-backed securities 7,536,726 206,288 24,031 7,718,983
Total fixed maturities 10,146,136 397,608 27,532 10,516,212
Equity securities 3,156 361 -- 3,517
$10,149,292 $397,969 $27,532 $10,519,729
</TABLE>

The amortized cost, gross unrealized gains and losses and fair
values of investments in fixed maturities and equity securities at
Dec. 31, 1994 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency
obligations $ 21,500 $ 43 $ 4,372 $ 17,171
State and municipal obligations 9,687 132 -- 9,819
Corporate bonds and obligations 8,806,707 100,468 459,568 8,447,607
Mortgage-backed securities 2,431,967 10,630 222,394 2,220,203
$11,269,861 $111,273 $686,334 $10,694,800

Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value

U.S. Government agency
obligations $ 128,093 $ 756 $ 1,517 $ 127,332
State and municipal obligations 11,008 702 -- 11,710
Corporate bonds and obligations 1,142,321 24,166 7,478 1,159,009
Mortgage-backed securities 7,177,706 9,514 467,716 6,719,504
Total fixed maturities 8,459,128 35,138 476,711 8,017,555
Equity securities 4,663 -- 2,757 1,906
$8,463,791 $ 35,138 $479,468 $ 8,019,461
</TABLE>

<PAGE>
PAGE 146
2. Investments (continued)
The amortized cost and fair value of investments in fixed
maturities at Dec. 31, 1995 by contractual maturity are shown
below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.

Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 268,363 $ 272,808
Due from one to five years 1,692,030 1,783,047
Due from five to ten years 5,467,302 5,833,309
Due in more than ten years 1,570,195 1,696,516
Mortgage-backed securities 2,259,701 2,292,697
$11,257,591 $11,878,377

Amortized Fair
Available for sale Cost Value

Due in one year or less $ 118,996 $ 120,019
Due from one to five years 849,800 913,175
Due from five to ten years 1,301,191 1,397,237
Due in more than ten years 339,423 366,798
Mortgage-backed securities 7,536,726 7,718,983
$10,146,136 $10,516,212

During the year ended Dec. 31, 1995, fixed maturities classified as
held to maturity were sold with proceeds of $332,154 and gross
realized gains and losses on such sales were $14,366 and $15,720,
respectively. The sale of these fixed maturities was due to
significant deterioration in the issuers' creditworthiness. As a
result of adopting the FASB Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain
Investments in Debt and Equity Securities," the Company
reclassified securities with a book value of $91,760 and net
unrealized gains of $881 from held to maturity to available for
sale in December 1995.

In addition, fixed maturities available for sale were sold during
1995 with proceeds of $136,825 and gross realized gains and losses
on such sales were $nil and $5,781, respectively.

During the year ended Dec. 31, 1994, fixed maturities classified as
held to maturity were sold with proceeds of $58,001 and gross
realized gains and losses on such sales were $226 and $3,515,
respectively. The sale of these fixed maturities was due to
significant deterioration in the issuers' creditworthiness.

In addition, fixed maturities available for sale were sold during
1994 with proceeds of $374,564 and gross realized gains and losses
on such sales were $1,861 and $7,602, respectively.

At Dec. 31, 1995, bonds carried at $12,761 were on deposit with
various states as required by law.

Net investment income for the years ended Dec. 31 is summarized as
follows:<PAGE>
PAGE 147
2. Investments (continued)

<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Interest on fixed maturities $1,656,136 $1,556,756 $1,589,802
Interest on mortgage loans 232,827 196,521 175,063
Other investment income 35,936 38,366 29,345
Interest on cash equivalents 5,363 6,872 2,137
1,930,262 1,798,515 1,796,347
Less investment expenses 22,953 16,642 13,128
$1,907,309 $1,781,873 $1,783,219
</TABLE>

At Dec. 31, 1995, investments in fixed maturities comprised 86
percent of the Company's total invested assets. These securities
are rated by Moody's and Standard & Poor's (S&P), except for
securities carried at approximately $2.3 billion which are rated by
American Express Financial Corporation internal analysts using
criteria similar to Moody's and S&P. A summary of investments in
fixed maturities, at amortized cost, by rating on Dec. 31 is as
follows:

Rating 1995 1994

Aaa/AAA $ 9,907,664 $ 9,708,047
Aaa/AA 3,112 --
Aa/AA 279,403 242,914
Aa/A 154,846 119,952
A/A 3,104,122 2,567,947
A/BBB 871,782 725,755
Baa/BBB 4,417,654 3,849,188
Baa/BB 657,633 796,063
Below investment grade 2,007,511 1,719,123
$21,403,727 $19,728,989

At Dec. 31, 1995, 95 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of
any other issuer are greater than 1 percent of the Company's total
investments in fixed maturities.

At Dec. 31, 1995, approximately 11.6 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate at Dec. 31, 1995 and 1994 are as follows:
<TABLE><CAPTION>
Dec. 31, 1995 Dec. 31, 1994
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
<S> <C> <C> <C> <C>
East North Central $ 720,185 $ 67,206 $ 581,142 $ 62,291
West North Central 303,113 34,411 257,996 7,590
South Atlantic 732,529 111,967 597,896 63,010
Middle Atlantic 508,634 37,079 408,940 34,478
New England 244,816 40,452 209,867 23,087
Pacific 168,272 23,161 138,900 --
West South Central 61,860 27,978 50,854 --
East South Central 58,462 10,122 67,503 --
Mountain 184,964 16,774 122,668 18,750
2,982,835 369,150 2,435,766 209,206
Less allowance
for losses 37,340 -- 35,252 --
$2,945,495 $369,150 $2,400,514 $209,206<PAGE>
PAGE 148
2. Investments (continued)

Dec. 31, 1995 Dec. 31, 1994
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
Apartments $1,038,446 $ 84,978 $ 904,012 $ 56,964
Department/retail stores 985,660 134,538 802,522 88,325
Office buildings 464,381 62,664 321,761 21,691
Industrial buildings 255,469 22,721 232,962 18,827
Nursing/retirement homes 80,864 4,378 89,304 4,649
Mixed Use 53,169 -- -- --
Hotels/motels 31,335 48,816 32,666 --
Medical buildings 57,772 2,495 36,490 15,651
Other 15,739 8,560 16,049 3,099
2,982,835 369,150 2,435,766 209,206
Less allowance
for losses 37,340 -- 35,252 --
$2,945,495 $369,150 $2,400,514 $209,206
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds
the mortgage document, which gives the right to take possession of
the property if the borrower fails to perform according to the
terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage
interest rates currently offered for mortgages of similar
maturities. Commitments to purchase mortgages are made in the
ordinary course of business. The fair value of the mortgage
commitments is $nil.

As of January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan" (SFAS No. 114), as amended by Statement of
Financial Accounting Standards No. 118, "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures".
The adoption of the new rules did not have a material impact on the
Company's results of operations or financial condition.

SFAS No. 114 applies to all loans except for smaller-balance
homogeneous loans, that are collectively evaluated for impairment.
Impairment is measured as the excess of the loan's recorded
investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate,
or the fair value of collateral. The amount of the impairment is
recorded as a reserve for investment losses.

Based on management's judgment as to the ultimate collectibility of
principal, interest payments received are either recognized as
income or applied to the recorded investment in the loan until it
has been recovered. Once the recorded investment has been
recovered, any additional payments are recognized as interest
income.

The reserve for investment losses is maintained at a level that
management believes is adequate to absorb estimated credit losses
in the portfolio. The level of the reserve account is determined
based on several factors, including historical experience, expected
future principal and interest payments, estimated collateral
values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the
reserve for investment losses.<PAGE>
PAGE 149
2. Investments (continued)

At Dec. 31, 1995, the Company's recorded investment in impaired
loans was $83,874 with a reserve of $19,307. During the year, the
average recorded investment in impaired loans was $74,567.

The Company recognized $5,014 of interest income related to
impaired loans for the year ended Dec. 31, 1995.

The following table presents changes in the reserve for investment
losses related to all loans:

1995

Balance, January 1 $35,252

Provision for investment losses 15,900
Sales of related loans (6,600)
Loan payoffs (5,300)
Other (1,912)

Balance, Dec. 31 $37,340

At Dec. 31, 1995, the Company had commitments to purchase real
estate investments for $54,897. Commitments to purchase real
estate investments are made in the ordinary course of
business. The fair value of these commitments is $nil.

3. Income taxes

The Company qualifies as a life insurance company for federal
income tax purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance
companies.

Income tax expense consists of the following:

1995 1994 1993
Federal income taxes:
Current $218,040 $186,508 $180,558
Deferred (33,810) (19,175) (44,237)
184,230 167,333 136,321

State income taxes-current 11,612 9,010 6,326
Income tax expense $195,842 $176,343 $142,647

Increases (decreases) to the federal tax provision applicable to
pretax income based on the statutory rate are attributable to:

<PAGE>
PAGE 150
3. Income taxes (continued)

<TABLE>
<CAPTION>
1995 1994 1993
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $196,274 35.0% $179,379 35.0% $144,454 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (8,524) (1.5) (9,939) (2.0) (11,002) (2.7)
Other, net (3,520) (0.6) (2,107) (0.4) 2,869 0.7
Federal income taxes $184,230 32.9% $167,333 32.6% $136,321 33.0%
</TABLE>

A portion of life insurance company income earned prior to 1984 was
not subject to current taxation but was accumulated, for tax
purposes, in a policyholders' surplus account. At Dec. 31, 1995,
the Company had a policyholders' surplus account balance of
$20,114. The policyholder's surplus account balance increased in
1995 due to the acquisition of ACLAC. The policyholders' surplus
account is only taxable if dividends to the stockholder exceed the
stockholder's surplus account or if the Company is liquidated.
Deferred income taxes of $7,040 have not been established because
no distributions of such amounts are contemplated.

Significant components of the Company's deferred tax assets and
liabilities as of Dec. 31 are as follows:

1995 1994
Deferred tax assets:
Policy reserves $ 600,176 $533,433
Investments -- 116,736
Life insurance guarantee
fund assessment reserve 26,785 32,235
Total deferred tax assets 626,961 682,404

Deferred tax liabilities:
Derred policy acquisition costs 590,762 553,722
Investments 146,805 --
Other 2,298 4,621
Total deferred tax
liabilities 739,865 558,343
Net deferred tax assets
(liabilities) $(112,904) $124,061

The Company is required to establish a valuation allowance for any
portion of the deferred tax assets that management believes will
not be realized. In the opinion of management, it is more
likely than not that the Company will realize the benefit of the
deferred tax assets, and, therefore, no such valuation allowance
has been established.
<PAGE>
PAGE 151
4. Stockholder's equity

During 1995, the Company received a $39,700 capital contribution
from its parent, American Express Financial Corporation, in the
form of investments in fixed maturities and mortgage loans. In
addition, effective January 1, 1995, the Company began
consolidating the financial results of ACLAC. This change
reflected the transfer of ownership of ACLAC from Amex Life
Assurance Company (Amex Life), a former affiliate, to the Company
prior to the sale of Amex Life to an unaffiliated third party on
October 2, 1995. This transfer of ownership to the Company has
been reflected as a capital contribution of $17,114 in the
accompanying financial statements. The effect of this change in
reporting entity was not significant and prior periods have not
been restated.

As discussed in Note 5, the Company entered into a reinsurance
agreement with Amex Life during 1995. As a result of this
transaction, a loss of $4,574 was realized and reported as a
direct charge to retained earnings.

Retained earnings available for distribution as dividends to the
parent are limited to the Company's surplus as determined in
accordance with accounting practices prescribed by state
insurance regulatory authorities. Statutory unassigned surplus
aggregated $1,103,993 as of Dec. 31, 1995 and $1,020,981 as of Dec.
31, 1994 (see Note 3 with respect to the income tax effect of
certain distributions). In addition, any dividend distributions in
1996 in excess of approximately $290,988 would require approval of
the Department of Commerce of the State of Minnesota.

Statutory net income for the years ended Dec. 31 and capital and
surplus as of Dec. 31 are summarized as follows:

1995 1994 1993

Statutory net income $ 326,799 $ 294,699 $ 275,015
Statutory capital and surplus 1,398,649 1,261,958 1,157,022

Dividends paid to American Express Financial Corporation were
$180,000 in 1995, $165,000 in 1994, and $25,000 in 1993.

5. Related party transactions

The Company has loaned funds to American Express Financial
Corporation under two loan agreements. The balance of the first
loan was $25,800 and $40,000 at Dec. 31, 1995 and 1994,
respectively. This loan can be increased to a maximum of $75,000
and pays interest at a rate equal to the preceding month's
effective new money rate for the Company's permanent investments.
It is collateralized by equities valued at $122,978 at Dec. 31,
1995. The second loan was used to fund the construction of the IDS
Operations Center. This loan was paid off during 1994. The loan
was secured by a first lien on the IDS Operations Center property
and had an interest rate of 9.89 percent. The Company also had a
loan to an affiliate which was used to fund construction of the IDS
Learning Center. This loan was sold to the American Express <PAGE>
PAGE 152
5. Related party transactions (continued)

Financial Corporation during 1994. The loan was secured by a first
lien on the IDS Learning Center property and had an interest rate
of 9.82 percent. Interest income on the above loans totaled
$1,371, $2,894 and $11,116 in 1995, 1994 and 1993, respectively.

The Company purchased a five year secured note from an affiliated
company which had an outstanding balance of $19,444 and $23,333 at
Dec. 31, 1995 and 1994, respectively. The note bears a fixed rate
of 8.42 percent. Interest income on the above note totaled $1,937,
$2,278 and $2,605 in 1995, 1994 and 1993, respectively.

The Company has a reinsurance agreement whereby it assumed 100
percent of a block of single premium life insurance business from
Amex Life. The accompanying consolidated balance sheets at Dec.
31, 1995 and 1994 include $764,663 and $765,366, respectively, of
future policy benefits related to this agreement.

The Company has a reinsurance agreement to cede 50 percent of its
long-term care insurance business to Amex Life. The accompanying
consolidated balance sheets at Dec. 31, 1995 and 1994 include
$95,484 and $65,123, respectively, of reinsurance receivables
related to this agreement. Premiums ceded amounted to $25,553,
$20,360 and $16,230 and reinsurance recovered from reinsurers
amounted to $760, $62 and $404 for the years ended Dec. 31, 1995,
1994 and 1993, respectively.

The Company has a reinsurance agreement to assume deferred annuity
contracts from Amex Life. At October 1, 1995 a $803,618 block of
deferred annuities and $28,327 of deferred policy acquisition costs
were transferred to the Company. The accompanying consolidated
balance sheet at Dec. 31, 1995 includes $828,298 of future policy
benefits related to this agreement.

Until July 1, 1995 the Company participated in the IDS Retirement
Plan of American Express Financial Corporation which covered all
permanent employees age 21 and over who had met certain employment
requirements. Effective July 1, 1995, the IDS Retirement Plan was
merged with American Express Company's American Express Retirement
Plan, which simultaneously was amended to include a cash balance
formula and a lump sum distribution option. Employer contributions
to the plan are based on participants' age, years of service
and total compensation for the year. Funding of retirement costs
for this plan complies with the applicable minimum funding
requirements specified by ERISA. The Company's share of the total
net periodic pension cost was $nil in 1995, 1994 and 1993.

The Company also participates in defined contribution pension plans
of American Express Company which cover all employees who have met
certain employment requirements. Company contributions to the
plans are a percent of either each employee's eligible compensation
or basic contributions. Costs of these plans charged to operations
in 1995, 1994 and 1993 were $815, $957 and $2,008, respectively.
<PAGE>
PAGE 153
5. Related party transactions (continued)

The Company participates in defined benefit health care plans of
American Express Financial Corporation that provide health care and
life insurance benefits to retired employees and retired financial
advisors. The plans include participant contributions and service
related eligibility requirements. Upon retirement, such employees
are considered to have been employees of American Express Financial
Corporation. American Express Financial Corporation expenses these
benefits and allocates the expenses to its subsidiaries.
Accordingly, costs of such benefits to the Company are included in
employee compensation and benefits and cannot be identified on a
separate company basis. At Dec. 31, 1995 and 1994, the total
accumulated post retirement benefit obligation has been recorded as
a liability by American Express Financial Corporation.

Charges by American Express Financial Corporation for use of joint
facilities, marketing services and other services aggregated
$377,139, $335,183, and $243,346 for 1995, 1994 and 1993,
respectively. Certain of these costs are included in deferred
policy acquisition costs. In addition, the Company rents its home
office space from American Express Financial Corporation on an
annual renewable basis.

6. Commitments and contingencies

At Dec. 31, 1995 and 1994, traditional life insurance and universal
life-type insurance in force aggregated $59,683,532 and
$52,666,567, respectively, of which $3,771,204 and $3,246,608
were reinsured at the respective year ends. The Company also
reinsures a portion of the risks assumed under disability income
policies. Under the agreements, premiums ceded to reinsurers
amounted to $29,146, $29,489 and $28,276 and reinsurance recovered
from reinsurers amounted to $5,756, $5,505, and $3,345 for the
years ended Dec. 31, 1995, 1994 and 1993.

Reinsurance contracts do not relieve the Company from its primary
obligation to policyholders.

The Company is a defendant in various lawsuits, none of which, in
the opinion of Company counsel, will result in a material
liability.

The IRS has completed its audit of the Company's 1987 through 1989
tax years. The Company is currently contesting one issue at the
IRS Appeals Level. Management does not believe there will be a
material impact as a result of this audit.

7. Lines of credit

The Company has available lines of credit with three banks
aggregating $100,000 at 40 to 80 basis points over the banks' cost
of funds or equal to the prime rate, depending on which line of
credit agreement is used. Borrowings outstanding under these
agreements were $nil at Dec. 31, 1995 and 1994, respectively.
<PAGE>
PAGE 154
8. Derivative financial instruments

The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk, including
hedging specific transactions. The Company manages risks
associated with these instruments as described below. The Company
does not hold derivative instruments for trading purposes.

Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor
from which the instrument derives its value, primarily an interest
rate. The Company is not impacted by market risk related to
derivatives held for non-trading purposes beyond that inherent in
cash market transactions. Derivatives held for purposes other than
trading are largely used to manage risk and, therefore, the cash
flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.

Credit risk is the possibility that the counterparty will not
fulfill the terms of the contract. The Company monitors credit
exposure related to derivative financial instruments through
established approval procedures, including setting concentration
limits by counterparty and industry, and requiring collateral,
where appropriate. A vast majority of the Company's counterparties
are rated A or better by Moody's and Standard & Poor's.

The notional or contract amount of a derivative financial
instrument is generally used to calculate the cash flows that are
received or paid over the life of the agreement. Notional
amounts are not recorded on the balance sheet. Notional amounts
far exceed the related credit exposure.

Credit exposure related to interest rate caps is measured by the
replacement cost of the contracts. The replacement cost
represents the fair value of the instruments. Financial futures
contracts are settled in cash daily.
<TABLE>
<CAPTION>
Notional Carrying Fair Total Credit
Dec. 31, 1995 Amount Value Value Exposure
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $5,100,000 $26,680 $ 8,366 $ 8,366

Dec. 31, 1994
Assets:
Financial futures
contracts $ 159,800 $ 2,072 $ 2,072 $ --
Interest rate caps 4,400,000 29,054 42,365 42,365
$4,559,800 $31,126 $44,437 $42,365
</TABLE>

The fair values of derivative financial instruments are based on
market values, dealer quotes or pricing models. The financial
futures contracts expired in 1995. The interest rate caps expire
on various dates from 1996 to 2000.

<PAGE>
PAGE 155
8. Derivative financial instruments (continued)

Financial futures contracts and interest rate caps are used
principally to manage the Company's exposure to rising interest
rates. These instruments are used primarily to protect the margin
between interest rates earned on investments and the interest rates
credited to related annuity contract holders.

Changes in the fair value of financial futures contracts are
accounted for as adjustments to the carrying amount of the hedged
investments and amortized over the remaining lives of such
investments. The cost of interest rate caps is amortized to
interest expense over the life of the contracts and payments
received as a result of these agreements are recorded as a
reduction of interest expense when realized. The amortized cost of
interest rate cap contracts is included in other investments.

9. Fair values of financial instruments

The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practical
to estimate that value. Fair values of life insurance obligations,
receivables and all non-financial instruments, such as deferred
acquisition costs are excluded. Off-balance sheet intangible
assets, such as the value of the field force, are also excluded.
Management believes the value of excluded assets is significant.
The fair value of the Company, therefore, cannot be estimated by
aggregating the amounts presented.
<TABLE>
<CAPTION>
1995 1994
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $11,257,591 $11,878,377 $11,269,861 $10,694,800
Available for sale 10,516,212 10,516,212 8,017,555 8,017,555
Mortgage loans on
real estate (Note 2) 2,945,495 3,184,666 2,400,514 2,342,520
Other:
Equity securities (Note 2) 3,517 3,517 1,906 1,906
Derivative financial
instruments (Note 8) 26,680 8,366 31,126 44,437
Other 52,182 52,182 -- --
Cash and cash
equivalents (Note 1) 72,147 72,147 267,774 267,774
Separate account assets
(Note 1) 14,974,082 14,974,082 10,881,235 10,881,235

Financial Liabilities
Future policy benefits
for fixed annuities 20,259,265 19,603,114 18,325,870 17,651,897
Separate account
liabilities 14,208,619 13,665,636 10,398,861 9,943,672
</TABLE>

At Dec. 31, 1995 and 1994, the carrying amount and fair value of
future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $1,070,598 and $971,897,
respectively, and policy loans of $74,973 and $64,212,
respectively. The fair value of these benefits is based on the
status of the annuities at Dec. 31, 1995 and 1994. The fair value
of deferred annuities is estimated as the carrying amount less any <PAGE>
PAGE 156
9. Fair values of financial instruments (continued)

applicable surrender charges and related loans. The fair value for
annuities in non-life contingent payout status is estimated as the
present value of projected benefit payments at rates appropriate
for contracts issued in 1995 and 1994.

At Dec. 31, 1995 and 1994, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less any
applicable surrender charges and less variable insurance contracts
carried at $765,463 and $482,374, respectively.

10. Segment information

The Company's operations consist of two business segments; first,
individual and group life insurance, disability income, health and
long-term care insurance, and second, annuity products designed for
individuals, pension plans, small businesses and employer-sponsored
groups. The consolidated condensed statements of income for the
years ended Dec. 31, 1995, 1994 and 1993 and total assets at Dec.
31, 1995, 1994 and 1993 by segment are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net investment income:
Life, disability income, health
and long-term care insurance $ 256,242 $ 247,047 $ 250,224
Annuities 1,651,067 1,534,826 1,532,995
$ 1,907,309 $ 1,781,873 $ 1,783,219
Premiums, charges and fees:
Life, disability income, health
and long-term care insurance $ 384,008 $ 335,375 $ 287,713
Annuities 249,557 193,370 143,876
$ 633,565 $ 528,745 $ 431,589
Income before income taxes:
Life, disability income, health
and long-term care insurance $ 125,402 $ 122,677 $ 104,127
Annuities 440,278 394,117 315,336
Net loss on investments (4,898) (4,282) (6,737)
$ 560,782 $ 512,512 $ 412,726
Total assets:
Life, disability income, health
and long-term care insurance $ 6,195,870 $ 5,269,188 $ 4,810,145
Annuities 36,704,208 30,478,355 28,247,608
$42,900,078 $35,747,543 $33,057,753
</TABLE>

Allocations of net investment income and certain general expenses
are based on various assumptions and estimates.

Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits
by segment.

Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
<PAGE>
PAGE 157
STATEMENT OF DIFFERENCES

Difference Description

1) Headings. 1) The headings in the
prospectus are placed
in a strip at the top
of the page.

2) Footnotes for charts and 2) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.