<PAGE> PAGE 1
000 B000000 01/31/96
000 C000000 0000806128
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 IAI INVESTMENT FUND III, INC.
001 B000000 811-4904
001 C000000 6123762600
002 A000000 3700 FIRST BANK PLACE, 601 2ND AVE SOUTH
002 B000000 MINNEAPOLIS
002 C000000 MN
002 D010000 55402
002 D020000 4327
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 Y
007 B000000 2
007 C010100 1
007 C020100 IAI INTERNATIONAL FUND
007 C030100 N
007 C010200 2
007 C020200 IAI DEVELOPING COUNTRIES FUND
007 C030200 N
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A00AA01 INVESTMENT ADVISERS, INC.
008 B00AA01 A
008 C00AA01 801-3784
008 D01AA01 MINNEAPOLIS
008 D02AA01 MN
008 D03AA01 55402
008 D04AA01 4327
008 A00AA02 IAI INTERNATIONAL, INC.
008 B00AA02 S
008 C00AA02 801-999999
008 D01AA02 LONDON
008 D05AA02 ENGLAND
010 A00AA01 INVESTMENT ADVISERS, INC.
010 B00AA01 8013784
<PAGE> PAGE 2
010 C01AA01 MINNEAPOLIS
010 C02AA01 MN
010 C03AA01 55402
010 C04AA01 4327
011 A00AA01 IAI SECURITIES, INC.
011 B00AA01 8-43310
011 C01AA01 MINNEAPOLIS
011 C02AA01 MN
011 C03AA01 55402
011 C04AA01 4327
012 A00AA01 INVESTMENT ADVISERS, INC.
012 B00AA01 84-1664
012 C01AA01 MINNEAPOLIS
012 C02AA01 MN
012 C03AA01 55402
012 C04AA01 4327
013 A00AA01 KPMG PEAT MARWICK, LLP
013 B01AA01 MINNEAPOLIS
013 B02AA01 MN
013 B03AA01 55402
014 A00AA01 IAI SECURITIES, INC.
014 B00AA01 8-43310
015 A00AA01 NORWEST BANK MINNESOTA, N.A.
015 B00AA01 C
015 C01AA01 MINNEAPOLIS
015 C02AA01 MN
015 C03AA01 55479
015 C04AA01 0065
015 E01AA01 X
018 00AA00 Y
019 A00AA00 Y
019 B00AA00 19
019 C00AA00 INVESTADVS
020 A000001 KLEINWORT BENSON
020 B000001 13-2647786
020 C000001 58
020 A000002 ANZ MCCAUGHAN OYSON, LONDON
020 B000002 13-3435545
020 C000002 38
020 A000003 BARCLAYS DE ZOETTE WEDD
020 B000003 13-3551367
020 C000003 35
020 A000004 ROBERT FLEMING
020 B000004 13-3298866
020 C000004 26
020 A000005 S.G. WARBURG
020 B000005 13-3340045
020 C000005 21
020 A000006 JAMES CAPEL
020 B000006 FOREIGN
020 C000006 19
<PAGE> PAGE 3
020 A000007 BARING SECURITIES
020 B000007 04-2455153
020 C000007 16
020 A000008 G.K. GOH SECURITIES
020 B000008 FOREIGN
020 C000008 16
020 A000009 A.B. ASESORES BURSALITES
020 B000009 FOREIGN
020 C000009 10
020 A000010 CROSBY SECURITIES
020 B000010 13-3431728
020 C000010 10
021 000000 329
022 A000001 SALOMON BROTHERS
022 B000001 13-3082694
022 C000001 20633
022 D000001 3567
022 A000002 MERRILL LYNCH
022 B000002 13-5674085
022 C000002 9740
022 D000002 13864
022 A000003 FIRST BOSTON
022 B000003 13-5659485
022 C000003 8834
022 D000003 13497
022 A000004 CHASE MANHATTAN
022 B000004 13-3112953
022 C000004 980
022 D000004 3936
022 A000005 BARING SECURITIES
022 B000005 13-2455153
022 C000005 2035
022 D000005 147
022 A000006 HG ASIA HK
022 B000006 FOREIGN
022 C000006 2014
022 D000006 0
022 A000007 PETERCAM BRUSSELS
022 B000007 FOREIGN
022 C000007 0
022 D000007 1140
022 A000008 LEHMAN BROTHERS
022 B000008 13-2518466
022 C000008 1100
022 D000008 0
022 A000009 ROBERT FLEMING
022 B000009 13-3298866
022 C000009 71
022 D000009 113
022 A000010 S.G. WABURG
022 B000010 13-3340045
<PAGE> PAGE 4
022 C000010 37
022 D000010 0
023 C000000 45501
023 D000000 36264
024 00AA00 N
025 D00AA01 0
025 D00AA02 0
025 D00AA03 0
025 D00AA04 0
025 D00AA05 0
025 D00AA06 0
025 D00AA07 0
025 D00AA08 0
026 A000000 N
026 B000000 Y
026 C000000 N
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027 000000 Y
029 00AA00 N
030 A00AA00 0
030 B00AA00 0.00
030 C00AA00 0.00
031 A00AA00 0
031 B00AA00 0
032 00AA00 0
033 00AA00 0
034 00AA00 N
035 00AA00 0
036 B00AA00 0
037 00AA00 N
038 00AA00 0
039 00AA00 N
040 00AA00 Y
041 00AA00 N
049 00AA00 N
050 00AA00 N
051 00AA00 N
052 00AA00 N
053 A00AA00 Y
053 B00AA00 Y
053 C00AA00 N
054 A00AA00 Y
054 B00AA00 Y
054 C00AA00 Y
054 D00AA00 N
054 E00AA00 N
<PAGE> PAGE 5
054 F00AA00 N
054 G00AA00 Y
054 H00AA00 Y
054 I00AA00 N
054 J00AA00 Y
054 K00AA00 N
054 L00AA00 Y
054 M00AA00 Y
054 N00AA00 N
054 O00AA00 N
058 A00AA00 N
059 00AA00 Y
060 A00AA00 Y
060 B00AA00 Y
061 00AA00 5000
077 A000000 Y
077 B000000 Y
078 000000 N
080 A00AA00 ICI MUTUAL INSURANCE COMPANY
080 C00AA00 5000
081 A00AA00 Y
081 B00AA00 25
082 A00AA00 Y
082 B00AA00 75
083 A00AA00 N
083 B00AA00 0
084 A00AA00 N
084 B00AA00 0
085 A00AA00 Y
085 B00AA00 N
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
028 A010100 7924
028 A020100 0
028 A030100 0
028 A040100 11393
028 B010100 11881
028 B020100 0
028 B030100 0
028 B040100 12333
028 C010100 7487
<PAGE> PAGE 6
028 C020100 0
028 C030100 0
028 C040100 9778
028 D010100 12431
028 D020100 0
028 D030100 0
028 D040100 15917
028 E010100 12141
028 E020100 8439
028 E030100 0
028 E040100 10052
028 F010100 19603
028 F020100 0
028 F030100 0
028 F040100 15574
028 G010100 71467
028 G020100 8439
028 G030100 0
028 G040100 75047
028 H000100 0
042 A000100 0
042 B000100 0
042 C000100 0
042 D000100 0
042 E000100 0
042 F000100 0
042 G000100 0
042 H000100 0
043 000100 0
044 000100 0
045 000100 Y
046 000100 N
047 000100 Y
048 000100 0.000
048 A010100 100000
048 A020100 1.000
048 B010100 100000
048 B020100 0.850
048 C010100 100000
048 C020100 0.750
048 D010100 0
048 D020100 0.000
048 E010100 0
048 E020100 0.000
048 F010100 0
048 F020100 0.000
048 G010100 0
048 G020100 0.000
048 H010100 0
048 H020100 0.000
048 I010100 0
<PAGE> PAGE 7
048 I020100 0.000
048 J010100 0
048 J020100 0.000
048 K010100 300000
048 K020100 0.700
055 A000100 N
055 B000100 Y
056 000100 Y
057 000100 N
062 A000100 N
062 B000100 0.0
062 C000100 0.0
062 D000100 0.0
062 E000100 0.0
062 F000100 0.0
062 G000100 0.0
062 H000100 0.0
062 I000100 0.0
062 J000100 0.0
062 K000100 0.0
062 L000100 0.0
062 M000100 0.0
062 N000100 0.0
062 O000100 0.0
062 P000100 0.0
062 Q000100 0.0
062 R000100 0.0
063 A000100 0
063 B000100 0.0
066 A000100 Y
066 B000100 N
066 C000100 Y
066 D000100 N
066 E000100 N
066 F000100 N
066 G000100 N
067 000100 N
068 A000100 N
068 B000100 Y
069 000100 N
070 A010100 Y
070 A020100 N
070 B010100 Y
070 B020100 N
070 C010100 Y
070 C020100 N
070 D010100 Y
070 D020100 N
070 E010100 Y
070 E020100 N
070 F010100 Y
<PAGE> PAGE 8
070 F020100 N
070 G010100 Y
070 G020100 N
070 H010100 Y
070 H020100 N
070 I010100 N
070 I020100 N
070 J010100 Y
070 J020100 N
070 K010100 Y
070 K020100 Y
070 L010100 Y
070 L020100 Y
070 M010100 Y
070 M020100 Y
070 N010100 Y
070 N020100 N
070 O010100 Y
070 O020100 N
070 P010100 Y
070 P020100 N
070 Q010100 N
070 Q020100 N
070 R010100 N
070 R020100 N
071 A000100 54257
071 B000100 63732
071 C000100 138380
071 D000100 39
072 A000100 12
072 B000100 252
072 C000100 3723
072 D000100 0
072 E000100 0
072 F000100 1368
072 G000100 430
072 H000100 0
072 I000100 56
072 J000100 104
072 K000100 0
072 L000100 0
072 M000100 6
072 N000100 9
072 O000100 0
072 P000100 0
072 Q000100 0
072 R000100 23
072 S000100 0
072 T000100 358
072 U000100 0
072 V000100 0
<PAGE> PAGE 9
072 W000100 25
072 X000100 2379
072 Y000100 4
072 Z000100 1601
072AA000100 15864
072BB000100 7589
072CC010100 16656
072CC020100 0
072DD010100 1654
072DD020100 0
072EE000100 10800
073 A010100 0.1512
073 A020100 0.0000
073 B000100 1.0271
073 C000100 0.0000
074 A000100 830
074 B000100 0
074 C000100 5943
074 D000100 0
074 E000100 844
074 F000100 145621
074 G000100 0
074 H000100 0
074 I000100 0
074 J000100 0
074 K000100 0
074 L000100 604
074 M000100 11
074 N000100 153853
074 O000100 1970
074 P000100 193
074 Q000100 0
074 R010100 0
074 R020100 0
074 R030100 0
074 R040100 27
074 S000100 0
074 T000100 151663
074 U010100 11459
074 U020100 0
074 V010100 13.24
074 V020100 0.00
074 W000100 0.0000
074 X000100 3153
074 Y000100 0
075 A000100 0
075 B000100 142633
076 000100 0.00
028 A010200 654
028 A020200 0
028 A030200 0
<PAGE> PAGE 10
028 A040200 555
028 B010200 241
028 B020200 0
028 B030200 0
028 B040200 196
028 C010200 156
028 C020200 0
028 C030200 0
028 C040200 174
028 D010200 426
028 D020200 0
028 D030200 0
028 D040200 144
028 E010200 960
028 E020200 123
028 E030200 0
028 E040200 156
028 F010200 2301
028 F020200 0
028 F030200 0
028 F040200 755
028 G010200 4738
028 G020200 123
028 G030200 0
028 G040200 1980
028 H000200 0
042 A000200 0
042 B000200 0
042 C000200 0
042 D000200 0
042 E000200 0
042 F000200 0
042 G000200 0
042 H000200 0
043 000200 0
044 000200 9
045 000200 Y
046 000200 N
047 000200 Y
048 000200 0.000
048 A010200 200000
048 A020200 1.250
048 B010200 200000
048 B020200 1.100
048 C010200 0
048 C020200 0.000
048 D010200 0
048 D020200 0.000
048 E010200 0
048 E020200 0.000
048 F010200 0
<PAGE> PAGE 11
048 F020200 0.000
048 G010200 0
048 G020200 0.000
048 H010200 0
048 H020200 0.000
048 I010200 0
048 I020200 0.000
048 J010200 0
048 J020200 0.000
048 K010200 400000
048 K020200 1.000
055 A000200 N
055 B000200 N
056 000200 Y
057 000200 N
062 A000200 N
062 B000200 0.0
062 C000200 0.0
062 D000200 0.0
062 E000200 0.0
062 F000200 0.0
062 G000200 0.0
062 H000200 0.0
062 I000200 0.0
062 J000200 0.0
062 K000200 0.0
062 L000200 0.0
062 M000200 0.0
062 N000200 0.0
062 O000200 0.0
062 P000200 0.0
062 Q000200 0.0
062 R000200 0.0
063 A000200 0
063 B000200 0.0
066 A000200 Y
066 B000200 N
066 C000200 Y
066 D000200 N
066 E000200 N
066 F000200 N
066 G000200 N
067 000200 N
068 A000200 N
068 B000200 Y
069 000200 N
070 A010200 Y
070 A020200 N
070 B010200 Y
070 B020200 N
070 C010200 Y
<PAGE> PAGE 12
070 C020200 N
070 D010200 Y
070 D020200 N
070 E010200 Y
070 E020200 N
070 F010200 Y
070 F020200 N
070 G010200 Y
070 G020200 N
070 H010200 Y
070 H020200 N
070 I010200 N
070 I020200 N
070 J010200 Y
070 J020200 Y
070 K010200 Y
070 K020200 Y
070 L010200 Y
070 L020200 Y
070 M010200 Y
070 M020200 Y
070 N010200 Y
070 N020200 N
070 O010200 Y
070 O020200 N
070 P010200 Y
070 P020200 N
070 Q010200 N
070 Q020200 N
070 R010200 N
070 R020200 N
071 A000200 7159
071 B000200 1292
071 C000200 3083
071 D000200 42
072 A000200 12
072 B000200 26
072 C000200 47
072 D000200 0
072 E000200 0
072 F000200 45
072 G000200 11
072 H000200 0
072 I000200 11
072 J000200 26
072 K000200 0
072 L000200 0
072 M000200 8
072 N000200 7
072 O000200 0
072 P000200 0
<PAGE> PAGE 13
072 Q000200 0
072 R000200 0
072 S000200 0
072 T000200 9
072 U000200 4
072 V000200 0
072 W000200 1
072 X000200 122
072 Y000200 51
072 Z000200 2
072AA000200 213
072BB000200 41
072CC010200 163
072CC020200 0
072DD010200 0
072DD020200 0
072EE000200 124
073 A010200 0.0000
073 A020200 0.0000
073 B000200 0.2691
073 C000200 0.0000
074 A000200 150
074 B000200 0
074 C000200 989
074 D000200 0
074 E000200 758
074 F000200 5446
074 G000200 0
074 H000200 0
074 I000200 0
074 J000200 0
074 K000200 0
074 L000200 5
074 M000200 22
074 N000200 7370
074 O000200 0
074 P000200 12
074 Q000200 0
074 R010200 0
074 R020200 0
074 R030200 0
074 R040200 1
074 S000200 0
074 T000200 7357
074 U010200 697
074 U020200 0
074 V010200 10.56
074 V020200 0.00
074 W000200 0.0000
074 X000200 510
074 Y000200 0
<PAGE> PAGE 14
075 A000200 0
075 B000200 3709
076 000200 0.00
SIGNATURE SUSAN J HAEDT
TITLE CONTROLLER
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> IAI DEVELOPING COUNTRIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 7029
<INVESTMENTS-AT-VALUE> 7193
<RECEIVABLES> 5
<ASSETS-OTHER> 172
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7370
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13
<TOTAL-LIABILITIES> 13
<SENIOR-EQUITY> 7
<PAID-IN-CAPITAL-COMMON> 7132
<SHARES-COMMON-STOCK> 697
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 163
<NET-ASSETS> 7357
<DIVIDEND-INCOME> 47
<INTEREST-INCOME> 26
<OTHER-INCOME> 0
<EXPENSES-NET> 71
<NET-INVESTMENT-INCOME> 2
<REALIZED-GAINS-CURRENT> 172
<APPREC-INCREASE-CURRENT> 163
<NET-CHANGE-FROM-OPS> 337
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 124
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1042
<NUMBER-OF-SHARES-REDEEMED> 358
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 7357
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 45
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 122
<AVERAGE-NET-ASSETS> 3709
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .83
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .27
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.56
<EXPENSE-RATIO> 2
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> IAI INTERNATIONAL FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 139001
<INVESTMENTS-AT-VALUE> 152408
<RECEIVABLES> 604
<ASSETS-OTHER> 841
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 153853
<PAYABLE-FOR-SECURITIES> 1970
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 220
<TOTAL-LIABILITIES> 2190
<SENIOR-EQUITY> 115
<PAID-IN-CAPITAL-COMMON> 136729
<SHARES-COMMON-STOCK> 11459
<SHARES-COMMON-PRIOR> 11315
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13711
<NET-ASSETS> 151663
<DIVIDEND-INCOME> 3723
<INTEREST-INCOME> 252
<OTHER-INCOME> 0
<EXPENSES-NET> 2374
<NET-INVESTMENT-INCOME> 1601
<REALIZED-GAINS-CURRENT> 8275
<APPREC-INCREASE-CURRENT> 16656
<NET-CHANGE-FROM-OPS> 26532
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1654
<DISTRIBUTIONS-OF-GAINS> 10800
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9474
<NUMBER-OF-SHARES-REDEEMED> 10291
<SHARES-REINVESTED> 961
<NET-CHANGE-IN-ASSETS> 15190
<ACCUMULATED-NII-PRIOR> 54
<ACCUMULATED-GAINS-PRIOR> 3634
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1368
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2379
<AVERAGE-NET-ASSETS> 142633
<PER-SHARE-NAV-BEGIN> 12.06
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> 2.17
<PER-SHARE-DIVIDEND> .16
<PER-SHARE-DISTRIBUTIONS> 1.02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.24
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
