IAI Investment Funds II, Inc.
File No. 33-61834
IAI Investment Funds IV, Inc.
File No. 2-66885
IAI Investment Funds VI, Inc.
File No. 33-40496
IAI Investment Funds VII, Inc.
File No. 2-39560
IAI Investment Funds VIII, Inc.
File No. 2-84589
SUPPLEMENT DATED JUNE 20, 2000
TO THE JOINT PROSPECTUS DATED AUGUST 1, 1999
OF
IAICAPITAL APPRECIATION FUND (A PORTFOLIO OF IAI
INVESTMENT FUNDS VI, INC.) IAI EMERGING GROWTH FUND (A
PORTFOLIO OF IAI INVESTMENT FUNDS VI, INC.)
IAI GROWTH FUND (A PORTFOLIO OF IAI INVESTMENT
FUNDS II, INC.) IAI GROWTH AND INCOME FUND (A PORTFOLIO
OF IAI INVESTMENT FUNDS VII, INC.)
IAI MIDCAP GROWTH FUND (A PORTFOLIO OF IAI INVESTMENT
FUNDS VI, INC.) IAI REGIONAL FUND (A PORTFOLIO OF
IAI INVESTMENT FUNDS IV, INC.)
IAI LONG TERM GROWTH FUND (FORMERLY KNOWN AS IAI VALUE FUND) (A PORTFOLIO
OF IAI INVESTMENT FUNDS VIII, INC.)
PROPOSED COMBINATIONS WITH FEDERATED FUNDS
On June 12, 2000, the Board of Directors of the Funds named above approved
certain transactions (the "Reorganizations") in which the Funds will be combined
into certain funds (the "Federated Funds") which are advised by subsidiaries of
Federated Investors, Inc. ("Federated") and which have investment objectives and
policies substantially similar to those of the Funds. The Reorganizations were
proposed in conjunction with the sale by Investment Advisers, Inc. ("IAI"), the
investment adviser to the Funds, of its mutual fund advisory business to
Federated. On June 16, 2000 IAI and Federated reached a definitive agreement
covering such a sale.
In the Reorganizations, Fund shareholders will receive, in exchange for their
Fund shares, Class A shares of the corresponding Federated Funds which have an
equivalent net asset value at the closing date. The Federated Funds into which
the respective Funds are proposed to be combined are as follows:
IAI Capital Appreciation Fund Federated Aggressive Growth Fund IAI
Emerging Growth Fund Federated Aggressive Growth Fund IAI Growth Fund
Federated Large Cap Growth Fund IAI Growth and Income Fund Federated
American Leaders Fund IAI Midcap Growth Fund Federated Growth
Strategies Fund IAI Regional Fund Federated Capital Appreciation Fund
IAI Long Term Growth Fund (formerly Federated Aggressive Growth Fund
known as IAI Value Fund)
The Reorganizations are expected to be tax-free to Fund shareholders. In
addition, Fund shareholders will not bear any of the expenses of the
Reorganizations. After the Reorganizations, Fund shareholders will be permitted
to purchase additional shares of the Federated Funds and of other funds advised
by subsidiaries of Federated without paying any front-end sales loads.
The Reorganizations will take place only if Fund shareholders approve them. The
Funds' Board of Directors has called a special meeting of Fund shareholders to
be held on September 8, 2000, at which shareholders will vote on the
Reorganizations. Proxy materials for the special meeting will be mailed to
shareholders in July. These proxy materials will contain more complete
information concerning the Reorganizations, and you should review them carefully
before casting your vote on the Reorganizations. YOU DO NOT NEED TO TAKE ANY
ACTION REGARDING THE REORGANIZATIONS BEFORE YOU RECEIVE THESE PROXY MATERIALS.
If shareholders approve the Reorganizations, the Reorganizations are expected to
be completed shortly thereafter, assuming that other customary closing
conditions are satisfied.
Federated is one of the largest mutual fund companies in the United States,
managing over $125 billion in approximately 175 mutual funds and separate
accounts as of March 31, 2000. Federated, a publicly held company, was founded
in 1955 and is headquartered in Pittsburgh, Pennsylvania.
CHANGE IN NAME OF FORMER IAI VALUE FUND
Also on June 12, 2000, the Board of Directors approved changing the name of IAI
Value Fund to IAI Long Term Growth Fund. The Board also approved changes in
certain of this Fund's non-fundamental investment policies. As a result of these
changes, the Principal Investment Strategies and Principal Risks of the IAI Long
Term Growth Fund are the same as those for the IAI Capital Appreciation Fund set
forth at page 3 of the August 1, 1999 Prospectus.
