IAI Investment Funds VII, Inc.
File No. 2-39560
SUPPLEMENT DATED FEBRUARY 17, 2000
TO THE JOINT PROSPECTUS DATED AUGUST 1, 1999
OF
IAI GROWTH & INCOME FUND
(A PORTFOLIO OF IAI INVESTMENT FUNDS VII, INC.)
Growth & Income Fund generally closed to new investors on February 17, 2000.
Shareholders of the Fund as of such closing date may continue to add to an
account through the reinvestment of dividends on any Fund shares owned, through
an existing systematic purchase or exchange plan, or through an existing
retirement plan allocation. No changes in these plans or allocations having the
effect of increasing current purchases of Fund shares will be permitted while
the Fund is closed.
Growth & Income Fund has historically invested a small portion of its assets
directly in privately held, early-stage developing companies. One such company
(the "Venture Company") has scheduled an initial public offering or "IPO". Using
a fair value methodology based on information available to IAI, the Fund's
investment adviser and manager, the Fund's Security Valuation Committee approved
an increase in the valuation of the Venture Company's securities because of the
IPO. This valuation has had several effects, including an increase in the Fund's
net asset value. Some of these effects, however, have resulted in increased
risks associated with investing in the Fund. Certain of these risks result from
the percentage of the Fund's net assets invested in the Venture Company
(approximately 4% as of February 17, 2000) and the percentage of the Fund's net
assets that are not readily marketable (approximately 5% as of February 17,
2000).
The Venture Company's securities held by the Fund may be subject to restrictions
on sale even after the Venture Company's IPO. Although IAI intends to attempt to
obtain the ability to sell the stock as quickly as possible after the IPO, at
this time it is unclear when that will occur. Until that time, the Fund will
remain closed as described above.
Although IAI expects the Venture Company's IPO to be a positive event for Fund
shareholders, the outcome is not guaranteed. There is a risk that the IPO could
be postponed or canceled. There is also a risk that the IPO could be very
successful, but that the Fund will not be able to sell the Venture Company's
securities, thereby increasing the percentage of the Fund's assets that are
invested in the Venture Company and are not readily marketable. These risks
could all result in substantial volatility for the Fund's net asset value.
IAI and the Fund's Securities Valuation Committee shall continue to value the
Venture Company's securities using a "fair value" methodology and to act in the
best interests of Fund shareholders with respect to the IPO.
