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SIGNATURE JILL STEVENSON
TITLE MANAGER MUTUAL FUNDS
Independent Auditors' Report on Internal
Accounting Control
The Board of Directors and Shareholders
IAI Investment Funds II, Inc.:
In planning and performing our audit of
the financial statements of IAI Growth
Fund (a separate portfolio of IAI
Investment Funds II, Inc.) for the year
ended March 31, 1999, we considered its
internal control, including control
activities for safeguarding securities, in
order to determine our auditing procedures
for the purpose of expressing our opinion
on the financial statements and to comply
with the requirements of Form N-SAR, not
to provide assurance on internal control.
The management of the IAI Investment Funds
II, Inc. is responsible for establishing
and maintaining internal control. In
fulfilling this responsibility, estimates
and judgments by management are required
to assess the expected benefits and
related costs of controls. Generally,
controls that are relevant to an audit
pertain to the entity's objective of
preparing financial statements for
external purposes that are fairly
presented in conformity with generally
accepted accounting principles. Those
controls include the safeguarding of
assets against unauthorized acquisition,
use, or disposition.
Because of inherent limitations in
internal control, error or fraud may occur
and not be detected. Also, projection of
any evaluation of internal control to
future periods is subject to the risk that
it may become inadequate because of
changes in conditions or that the
effectiveness of the design and operation
may deteriorate.
Our consideration of internal control
would not necessarily disclose all matters
in internal control that might be material
weaknesses under standards established by
the American Institute of Certified Public
Accountants. A material weakness is a
condition in which the design or operation
of one or more of the internal control
components does not reduce to a relatively
low level the risk that misstatements
caused by error or fraud in amounts that
would be material in relation to the
financial statements being audited may
occur and not be detected within a timely
period by employees in the normal course
of performing their assigned functions.
However, we noted no matters involving
internal control and its operation,
including controls for safeguarding
securities, that we consider to be
material weaknesses as defined above as of
March 31, 1999.
This report is intended solely for the
information and use of management, the
Board of Directors, and the Securities and
Exchange Commission and is not intended to
be and should not be used by anyone other
than these specified parties.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 14, 1999
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