IAI INVESTMENT FUNDS VII INC
NSAR-B, EX-99.77E, 2000-05-30
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Item 77-E

On February 25, 2000, a lawsuit was filed against Investment  Advisers,  Inc. by
Montauk  Partners L.P. in the Hennepin County  District  Court,  relating to the
sale of a restricted security  (MatrixOne,  Inc.) to Montauk Partners by the IAI
Growth and Income Fund. A settlement agreement was signed and the litigation was
dismissed on April 27, 2000, in accordance with the terms of the agreement.


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