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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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SIGNATURE SUSAN J HAEDT
TITLE CONTROLLER
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<PAGE>
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<NAME> IAI GROWTH - INCOME FUND
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<PERIOD-START> APR-01-1994
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<PAGE>
[LETTERHEAD OF INVESTMENT ADVISERS, INC.]
Susan Haedt
Vice President
Funds Controller
612.376.2723
This report is signed on behalf of the registrant (or depositor or trustee) in
the City of Minneapolis and State of Minnesota on the 26th day of May, 1995.
IAI INVESTMENT FUNDS VII, INC.
(IAI Growth & Income Fund)
/s/ Michael P. McGurran /s/ Susan J. Haedt
Witness:_____________________________ By:______________________________
Michael P. McGurran Susan J. Haedt
Supervisor Vice President, Controller
Mutual Fund Accounting Mutual Fund Operations
SH/mp
[LETTERHEAD OF INVESTMENT ADVISERS, INC.]
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK LLP]
INDEPENDENT AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROL
The Board of Directors and Shareholders
IAI Investment Funds VII, Inc.:
In planning and performing our audit of the financial statements of IAI Growth
and Income Fund (a separate portfolio of IAI Investment Funds VII, Inc.) for the
year ended March 31, 1995, we considered its internal control structure,
including procedures for safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form N-SAR, not to provide
assurance on the internal control structure.
The management of the Company is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
March 31, 1995.
[LETTERHEAD OF KPMG PEAT MARWICK LLP]
<PAGE>
2
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/ KPMG Peat Marwick LLP
-----------------------------
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 12, 1995
