Filed Pursuant to Rule 497(e)
1933 Act Registration No. 33-61834
1933 Act Registration No. 2-66885
1933 Act Registration No. 33-40496
1933 Act Registration No. 2-39560
1933 Act Registration No. 2-84589
SUPPLEMENT DATED APRIL 1, 1996
TO THE JOINT PROSPECTUS DATED JANUARY 31, 1996
OF
IAI GROWTH FUND (a portfolio of IAI Investment Funds II, Inc.)
IAI REGIONAL FUND (a portfolio of IAI Investment Funds IV, Inc.)
IAI CAPITAL APPRECIATION FUND (a portfolio of IAI Investment
Funds VI, Inc.)
IAI EMERGING GROWTH FUND (a portfolio of IAI Investment Funds VI,
Inc.)
IAI MIDCAP GROWTH FUND (a portfolio of IAI Investment Funds VI,
Inc.)
IAI GROWTH AND INCOME FUND (a portfolio of IAI Investment Funds
VII, Inc.)
IAI VALUE FUND (a portfolio of IAI Investment Funds VIII, Inc.)
On March 21, 1996, the shareholders of the above-referenced
Funds (except Capital Appreciation Fund) approved IAI's proposal,
effective April 1, 1996, to eliminate each Fund's Plan of
Distribution and corresponding underwriting agreement with IAI
Securities, Inc. and to replace each Fund's management and
administrative agreements with a new contract between each Fund
and IAI. Under this new contract, IAI will provide, or arrange
for the provision of, all services required by a Fund in exchange
for one all-inclusive fee. The new contracts are not intended to
result in a fee change. Because of these changes, certain
portions of this Prospectus have been updated as set forth below.
FUND EXPENSE INFORMATION
The following replaces the material after the table
"Shareholder Transaction Expenses".
<TABLE>
<CAPTION>
Annual Fund Operating Expenses*
IAI
IAI IAI Grow IAI
Capital Emergi IAI th Midc IAI IAI
Appreci ng Grow and ap Regio Valu
ation Growth th Inco Grow nal e
Fund Fund Fund me th Fund Fund
Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee 1.25%**
1.23% 1.25 1.25 1.25 1.21% 1.25
% % % %
Rule 12b-1 Fee None
None None None None None None
Other Expenses None
None None None None None None
Total Fund 1.25%** 1.25 1.25
Operating Expenses 1.23% % 1.25 % 1.21% 1.25
% %
____________________________________________
<FN>
<FN1>
* as a percentage of average daily net assets
<FN2>
** after voluntary fee waiver
</FN>
</TABLE>
Example:
Based upon the levels of Total Fund Operating Expenses
listed above, you would pay the following expenses on a $1,000
investment, assuming a five percent annual return and redemption
at the end of each period:
<TABLE>
<C> <C> <C>
<C> <C>
Fund 1 Year 3 5 10
Years Years Years
Capital $ 13 $ 40 $ ---- $ ---
Appreciation
Emerging $ 13 $ 39 $ 68 $ 149
Growth
Growth $ 13 $ 40 $ 69 $ 151
Growth and $ 13 $ 40 $ 69 $ 151
Income
Midcap Growth $ 13 $ 40 $ 69 $ 151
Regional $ 12 $ 38 $ 66 $ 147
Value $ 13 $ 40 $ 69 $ 151
</TABLE>
The purpose of the above table is to assist you in
understanding the various costs and expenses that an investor in
a Fund will bear directly or indirectly. Capital Appreciation
Fund commenced operations on February 1, 1996. The fees set
forth in the table reflect estimated fees and expenses of such
Fund for its initial fiscal period ending March 31, 1996. For
the remaining Funds, effective April 1, 1996, the information in
the table has been restated to reflect each Fund's fees as
amended. The example should not be considered a representation of
past or future expenses. Actual expenses may be greater or less
than those shown.
With respect to Capital Appreciation Fund, the Fund's
investment adviser has voluntarily agreed to waive the Management
Fee in excess of 1.25% of the Fund's average daily net assets
until March 31, 1997. Absent such voluntary waiver, the Fund
would pay 1.40% of its average daily net assets as the Management
Fee.
Further information concerning fees paid by each Fund is set
forth in the section "Management" below and in the Statement of
Additional Information.
FINANCIAL HIGHLIGHTS
The following supplements the material currently contained
in this section.
The following information is based on the Financial
Highlights section of Funds' unaudited Semi-Annual Report for the
six month period ending September 30, 1995, which section is
incorporated by reference in (and is a part of) the Statement of
Additional Information. Such Semi-Annual Report may be obtained
by shareholders on request from a Fund at no charge.
<TABLE>
<CAPTION>
Grow
Emergin th Midca
g Growt and p Value
Growth h Growt Region Fund
Fund Fund Inco h al
me Fund Fund
Fund
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value:
Beginning of $15.83 $10.9 $14. $15.3 $21.56 $11.1
period 5 32 5 7
Operations:
Net investment (.04) -- .06 (.03) .12 .04
income (loss)
Net realized 4.86 1.46 1.83 1.91 3.13 1.39
and unrealized 4.82 1.46 1.89 1.88 3.25 1.43
gains (losses)
Total from
operations
Distributions to
Shareholders from:
Net investment -- (.03) (.05 -- (0.06) (.01)
income -- -- ) (.74) (.55) (.09)
Net realized -- (.03) -- (.74) (.61) (.10)
gains (.05
Total )
distributions
Net Asset Value:
End of period $20.65 $12.3 $16. $16.4 $24.20 $12.5
8 16 9 0
Total investment 30.45% 13.34 13.2 12.59 15.28% 12.89
return** % 5% % %
Net assets at end
of period (000's $517,50 $20,3 $87, $105, $556,2 $43,7
omitted) 5 30 579 813 27 27
Ratios:
Expenses to
average net 1.23% 1.25% 1.25 1.25% 1.23% 1.25%
assets* %
Net investment (0.53%) (.12% (.36% .99% 0.62%
income(loss) to ) .72% )
average net
assets* 31.9% 50.0% 27.8%
Portfolio 34.7% 44.4 15.3%
turnover rate %
(excluding short-
term securities)
________________________
<FN>
<FN1>
* Annualized
<FN2>
** Total investment return is based on the change in net asset
value of a share during the period and assumes reinvestment of
distributions at net asset value.
</FN>
</TABLE>
MANAGEMENT
The following replaces the discussion of Fund
administrative and advisory fees, as well as Fund costs, in
the sub-section "All Funds Other than Capital Appreciation
Fund".
Effective April 1, 1996, each Fund has entered into a
written agreement with IAI (the "Management Agreement"), under
which IAI provides each Fund with investment advisory services
and is responsible for the overall management of each Fund's
business affairs subject to the authority of the Board of
Directors. The Management Agreement also provides that, except
for brokerage commissions and other expenditures in connection
with the purchase and sale of portfolio securities, interest and,
in certain circumstances, taxes and extraordinary expenses, IAI
shall pay all of a Fund's operating expenses. As compensation
under the Management Agreement, each Fund will pay IAI 1.25% of
its average daily net assets, which fee declines to 1.10% (1.00%
for Growth and Growth and Income Funds) of average daily net
assets as the amount of assets in each Fund grows. Because IAI
is paying Fund operating expenses, these fees represent each
Fund's total expenses. With respect to certain of the services
for which it is responsible under the Management Agreement, IAI
may also pay qualifying broker-dealers, financial institutions
and other entities for providing such services to Fund
shareholders.
Under the replaced Advisory Agreements, for the fiscal year
ended March 31, 1996, each Fund paid IAI advisory fees as a
percentage of such Fund's average month-end net assets as
follows: Emerging Growth Fund: .72%; Growth Fund: .74%; Growth
and Income Fund: .75%; Midcap Growth Fund: .75%; Regional Fund:
.71%; and Value Fund: .75%. Under the replaced Administrative
Agreements, for the fiscal year ended March 31, 1996, each Fund
paid IAI .20% of such Fund's average month-end net assets.
The following replaces the discussion of Growth and Income
Fund's portfolio manager.
Donald Hoelting has responsibility for the management of
Growth and Income Fund. Mr. Hoelting is a Vice President of IAI
and has served as an equity portfolio manager since joining IAI
in April 1996. Prior to joining IAI, Mr. Hoelting was Chief
Investment Officer and Portfolio Manager for Jefferson National
Bank and Trust from 1989 to 1996.
PLAN OF DISTRIBUTION
The entire section, except the last paragraph, is
eliminated.
Filed Pursuant to Rule 497(e)
1933 Act Registration No. 33-61834
1933 Act Registration No. 2-66885
1933 Act Registration No. 33-40496
1933 Act Registration No. 2-39560
1933 Act Registration No. 2-84589
SUPPLEMENT DATED APRIL 1, 1996
TO THE STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 31, 1996
OF
IAI GROWTH FUND (a portfolio of IAI Investment Funds II, Inc.)
IAI REGIONAL FUND (a portfolio of IAI Investment Funds IV, Inc.)
IAI CAPITAL APPRECIATION FUND (a portfolio of IAI Investment
Funds VI, Inc.)
IAI EMERGING GROWTH FUND (a portfolio of IAI Investment Funds VI,
Inc.)
IAI MIDCAP GROWTH FUND (a portfolio of IAI Investment Funds VI,
Inc.)
IAI GROWTH AND INCOME FUND (a portfolio of IAI Investment Funds
VII, Inc.)
IAI VALUE FUND (a portfolio of IAI Investment Funds VIII, Inc.)
On March 21, 1996, the shareholders of the above-referenced
Funds (except IAI Capital Appreciation Fund) approved IAI's
proposal, effective April 1, 1996, to eliminate each Fund's Plan
of Distribution and corresponding underwriting agreement with IAI
Securities, Inc. and to replace each Fund's management and
administrative agreements with a new contract between each Fund
and IAI. Under this new contract, IAI will provide, or arrange
for the provision of, all services required by a Fund in exchange
for one all-inclusive fee. The new contracts are not intended to
result in a fee change. Because of these and other changes, this
Statement of Additional Information has been updated as set forth
below.
Management Agreement- All Funds Other Than Capital Appreciation
Fund
Effective April 1, 1996, each Fund entered into new written
agreement with IAI (the "Management Agreement"). Pursuant to the
Management Agreement between each Fund and IAI, IAI has agreed to
provide each Fund with investment advice, statistical and
research facilities, and certain equipment and services,
including, but not limited to, office space and necessary office
facilities, equipment, and the services of required personnel
and, in connection therewith, IAI has the sole authority and
responsibility to make and execute investment decisions for a
Fund within the framework of such Fund's investment policies,
subject to review by the directors of the Funds. In addition,
IAI has agreed to provide or arrange for the provision of all
required administrative, stock transfer, redemption, dividend
disbursing, accounting, and shareholder services including,
without limitation, the following: (1) the maintenance of a
Fund's accounts, books and records; (2) the calculations of the
daily net asset value in accordance with a Fund's current
Prospectus and Statement of Additional Information; (3) daily and
periodic reports; (4) all information necessary to complete tax
returns, questionnaires and other reports requested by a Fund;
(5) the maintenance of stock registry records; (6) the processing
of requested account registration changes, stock certificate
issuances and redemption requests; and (7) the administration of
payments and dividends and distributions declared by a Fund; (8)
answering shareholder questions, (9) providing reports and other
information and (10) other services designed to maintain
shareholder accounts. IAI may also pay qualifying broker-
dealers, financial institutions and other entities that provide
such services. In return for such services, each Fund has agreed
to pay IAI an annual fee as a percentage of such Fund's average
daily net assets as set forth below:
<TABLE>
<CAPTION>
Growth Fund and Growth and Income Fund
<C> <C>
Daily Net Assets Fee IAI Receives
Annually
For the first $100 million 1.25%
For the next $150 million 1.15%
For the next $250 million 1.10%
Above $500 million 1.00%
<CAPTION>
Emerging Growth Fund, Midcap Growth Fund, Value Fund, Regional
Fund
Daily Net Assets Fee IAI Receives
Annually
<C> <C>
For the first $250 million 1.25%
For the next $250 million 1.20%
Above $500 million 1.10%
Except for brokerage commissions and other expenditures in
connection with the purchase and sale of portfolio securities,
interest expense, and, subject to the specific approval of a
majority of the disinterested directors of a Fund, taxes and
extraordinary expenses, IAI has agreed to pay all of a Fund's
other costs and expenses, including, for example, costs incurred
in the purchase and sale of assets, taxes, charges of the
custodian of a Fund's assets, costs of reports and proxy material
sent to Fund shareholders, fees paid for independent accounting
and legal services, costs of printing Prospectuses for Fund
shareholders and registering a Fund's shares, postage, insurance
premiums, and costs of attending investment conferences. The
Management Agreement further provides that IAI will either
reimburse a Fund for the fees and expenses it pays to directors
who are not "interested persons" of such Fund or reduce its fee
by an equivalent amount. IAI is not liable for any loss suffered
by a Fund in the absence of willful misfeasance, bad faith or
negligence in the performance of its duties and obligations.
FINANCIAL STATEMENTS
For all Funds other than Capital Appreciation Fund, the
financial statements, included as part of the Funds' September
30, 1995 Semi-Annual Report to shareholders, are incorporated
herein by reference. Such Semi-Annual Report may be obtained by
shareholders on request from the Funds at no charge. Capital
Appreciation Fund has no financial statements at this time.
</TABLE>
