IAI Investment Funds II, Inc.
File No. 33-61834
IAI Investment Funds VII, Inc.
File No. 2-39560
SUPPLEMENT DATED JANUARY 25, 2000
TO THE JOINT PROSPECTUS DATED AUGUST 1, 1999
OF
IAI GROWTH FUND (A PORTFOLIO OF IAI INVESTMENT FUNDS
II, INC.) IAI GROWTH AND INCOME FUND (A PORTFOLIO OF IAI
INVESTMENT FUNDS VII, INC.)
The following replaces the disclosure on page 9 concerning Growth
Fund's principal investment strategies:
GROWTH FUND. Growth Fund invests primarily in common stocks of large,
established companies with earnings that the Fund's adviser expects will
increase at an above average rate. The Fund generally invests in the largest
organizations that comprise the S&P 500, with market capitalizations ranging
from $10 billion to over $100 billion at the time of investment. The market
capitalization of each company in the Fund generally places it in the top 20% of
the S&P 500 universe.
Growth Fund evaluates firms according to momentum, risk and valuation
by considering historical and projected growth rates, the financial risk of the
company (including its level of debt and liquidity), and the current and
expected market valuation of the firm. The Fund also uses qualitative factors
including market share, quality of management, profitability trends, product
strategies and volatility of earnings. As a result of this evaluation, Growth
Fund's portfolio is generally comprised of approximately 25 to 35 securities.
Growth Fund may deviate from the sector or industry categories represented
within the S&P 500 and may overweight or underweight a given sector depending on
the adviser's outlook. Generally, Growth Fund will not be overweight by more
than two times the S&P 500 sector weighting.
The following replaces the disclosure on page 12 concerning Growth and
Income Fund's principal investment strategies:
GROWTH & INCOME FUND. Growth and Income Fund invests primarily in
common stocks of U.S. companies. The Fund generally invests in companies with
market capitalizations of $3 billion or more at the time of investment.
The Fund follows the approach of purchasing stocks in Growing companies
At a Reasonable Price, also known in the investment world as GARP. Growth Fund
generally selects from the universe of companies included in the S&P 500. The
Fund evaluates each firm to determine a company's historical and projected
growth rates, the financial risk of the company (including its level of debt and
liquidity), and the current and expected market valuation of the firm. The Fund
uses qualitative factors such as market share, quality of management,
profitability trends, product strategies and volatility of earnings. As a result
of this process, Growth and Income Fund's portfolio is generally comprised of
approximately 70 to 90 securities. The Fund will not deviate significantly from
the sectors or categories of businesses included in the S&P 500.
