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DSI REALTY INCOME FUND VII



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM 1O-K

(Mark One)
/ x /Annual Report Pursuant to Section 13 or 15 (d) of the Securities and
Exchange Act of 1934 [Fee required] for the fiscal year ended December 31, 2003.
or / /Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No fee required] for the transition period from
_____________ to _____________.

Commission File No. 2-83291.

DSI REALTY INCOME FUND VII, a California Limited Partnership (Exact name of
registrant as specified in governing instruments)

_________California___________________________95-3871044_____
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization identification number

6700 E. Pacific Coast Hwy., Long Beach, California 9O8O3
(Address of principal executive offices) (Zip Code)

Registrants telephone number, including area code-(562)493-8881

Securities registered pursuant to Section 12(b) of the Act: none.

Securities registered pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interests
(Class of Securities Registered)

Indicate by check mark, whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 9O days. Yes_X____. No______.

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /x/

The Registrant is a limited partnership and there is no voting stock. All
units of limited partnership sold to date are owned by non-affiliates of the
registrant. All such units were sold at $5OO.OO per unit.



DOCUMENTS INCORPORATED BY REFERENCE

Item 8. Registrant's Financial Statements for its fiscal year ended December 31,
2003, incorporated by reference to Form 10-K, Part II.

Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 2003, incorporated by reference to Form 10-K, Part III.

Item 12. Registration Statement on Form S-11, previously filed with the
Securities and Exchange Commission pursuant to Securities Act of 1933, as
amended, incorporated by reference to Form 10-K Part III.

Item 13. Registrant's Financial Statements for its fiscal year ended December
31, 2003, incorporated by reference to Form 10-K, Part III.

PART I

Item l. BUSINESS

Registrant, DSI Realty Income Fund VII (the "Partnership") is a
publicly-held limited partnership organized under the California Uniform Limited
Partnership Act pursuant to a Certificate and Agreement of Limited Partnership
(hereinafter referred to as "Agreement") dated August 1, 1983. The General
Partners are DSI Properties, Inc., a California corporation, Diversified
Investors Agency, a general partnership, whose current partners are Robert J.
Conway and Joseph W. Conway, brothers. The General Partners are affiliates of
Diversified Securities, Inc., a wholly-owned subsidiary of DSI Financial, Inc.
The General Partners provide similar services to other partnerships. Through its
public offering of Limited Partnership Units, Registrant sold twenty-four
thousand (24,000) units of limited partnership interests aggregating Twelve
Million Dollars ($12,000,000). The General Partners have retained a one percent
(l%) interest in all profits, losses and distributions (subject to certain
conditions) without making any capital contribution to the Partnership. The
General Partners are not required to make any capital contributions to the
Partnership in the future. Registrant is engaged in the business of investing in
and operating mini-storage facilities with the primary objectives of generating,
for its partners, cash flow, capital appreciation of its properties, and
obtaining federal income tax deductions so that during the early years of
operations, all or a portion of such distributable cash may not represent
taxable income to its partners. Funds obtained by Registrant during the public
offering period of its units were used to acquire six mini-storage facilities.
Registrant does not intend to sell additional limited partnership units. The
term of the Partnership is fifty years but it is anticipated that Registrant
will sell and/or refinance its properties prior to the termination of the
Partnership. The Partnership is intended to be self-liquidating and it is not
intended that proceeds from the sale or refinancing of its operating properties
will be reinvested. Registrant has no full time employees but shares one or more
employees with other publicly-held limited partnerships sponsored by the General
Partners. The General Partners are vested with authority as to the general
management and supervision of the business and affairs of Registrant. Limited
Partners have no right to participate in the management or conduct of such
business and affairs. An independent management company has been retained to
provide day-to-day management services with respect to all of the Partnership's
investment properties.

The average occupancy level for each of the Partnership's six properties
for the years ended December 31, 2003 and December 31, 2002 were as follows:


Location of Property Average Occupancy Average Occupancy Level
for the Level for the
Year Ended Year Ended
Dec. 31, 2003 Dec. 31, 2002

Chico, California 86% 89%

Fairfield, California 89% 91%

Ft. Collins, Colorado 81% 81%

LaVerne, California 90% 90%

Littleton, Colorado 81% 80%

Riverside, California 91% 89%

The business in which the Partnership is engaged is highly competitive.
Each of its mini-storage facilities is located in or near a major urban area,
and accordingly, competes with a significant number of individuals and
organizations with respect to both the purchase and sale of its properties and
for rentals. Generally, Registrant's business is not affected by the change in
seasons.



Item 2. PROPERTIES

Registrant owns a fee interest in six mini-storage facilities, none of
which are subject to long-term indebtedness. Additional information is set forth
in Registrant's letter to its Limited Partners regarding the Annual Report,
attached hereto as Exhibit 2, and incorporated by this reference. The following
table sets forth information as of December 31, 2003 regarding properties owned
by the Partnership.

Location Size of Net Rentable No. of Completion
Parcel Area Rental Units Date

Chico, CA 1.97 acres 39,580 366 9/05/84

Fairfield, CA 2.29 acres 40,668 442 8/31/84

Ft.Collins, CO 2.49 acres 57,284 603 3/27/85

LaVerne, CA 2.78 acres 50,652 523 8/21/84

Riverside, CA 2.92 acres 60,011 567 12/12/84

Littleton, CO 3.071 acres 43,380 404 11/01/85

Item 3. LEGAL PROCEEDINGS

Registrant is not a party to any material pending legal proceedings.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

Registrant, a publicly-held limited partnership, sold 24,000 limited
partnership units during its offering and currently has 883 limited partners of
record. There is no intention to sell additional limited partnership units nor
is there a market for these units.

Average cash distributions of $11.35 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2003 and $13.85
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 2002 and $13.23 per Limited Partnership Unit were declared
and paid each quarter for the year ended December 31, 2001.




Item 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, 2001, 2000, and 1999
--------------------------------------------------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----

TOTAL REVENUES
AND OTHER
INCOME $2,577,993 $2,614,292 $2,597,851 $2,351,050 $2,179,398

TOTAL
EXPENSES 1,286,265 1,320,183 1,210,651 1,237,093 1,556,719
---------- ---------- ---------- ---------- ----------

NET
INCOME $1,291,728 $1,294,109 $1,387,200 $1,113,957 $ 622,679
========== ========== ========== ========== ==========

TOTAL
ASSETS $2,833,436 $2,650,108 $2,696,934 $2,603,230 $2,751,925
========== ========== ========== ========== ==========

CASH FLOWS FROM:
(USED IN):
OPERATING $1,277,393 $1,310,542 $1,344,360 $1,231,203 $1,191,273
INVESTING - - - (5,388) (23,425)
FINANCING (1,100,643) (1,343,293) (1,282,481) (1,281,976) (1,101,945)

NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 53.28 $ 53.38 $ 57.22 $ 45.95 $ 25.69
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 45.40 $ 55.41 $ 52.90 $ 52.88 $ 45.46
========== ========== ========== ========== ==========



Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

2003 COMPARED TO 2002

Total revenues decreased from $2,613,254 in 2002 to $2,577,321 in 2003,
while total expenses decreased from $1,320,183 to $1,286,265 and other income
decreased from $1,038 to $672 resulting in a decrease in net income from
$1,294,109 to $1,291,728. Rental revenue remained relatively constant.
Occupancy levels for the Partnership's six mini-storage facilities averaged
86.3% for the year ended December 31, 2003 and 86.2% for the year ended
December 31, 2002. The Partnership continued its advertising campaign
to attract and keep new tenants in its various mini-storage facilities. The
approximate $57,200 (6.8%) decrease in operating expenses was due primarily
to decreases in yellow pages advertising costs, maintenance and repair and
workers compensation insurance expenses, partially offset by an increase in
salaries and wages expense. General and administrative expenses increased
approximately $37,600 (17.9%) primarily as a result of increases in legal
and professional fees, partially offset by decreases in equipment and computer
lease and office supplies expenses. Legal expense increased as a result of
legal challenges by dissident Limited Partners to a proposed amendment to
the Partnership Agreement. General Partners' incentive management fee, which
is based on cash available for distribution, decreased approximately $12,800
(9.1%). Property management fees, which are based on revenue, remained
relatively constant.


2002 COMPARED TO 2001

Total revenues increased from $2,593,700 in 2001 to $2,613,254 in 2002,
while total expenses increased from $1,210,651 to $1,320,183 and other income
decreased from $4,151 to $1,038 resulting in a decrease in net income from
$1,387,200 to $1,294,109. Rental revenue remained constant, as a decrease in
occupancy rates was offset bv higher unit rental rates. Occupancy levels for
the Partnership's six mini-storage facilities averaged 86.2% for the year
ended December 31, 2002 and 90.0% for the year ended December 31, 2001. The
Partnership continued its advertising campaign to attract and keep new
tenants in its various mini-storage facilities. The approximate $42,300 (5.3%)
increase in operating expenses was due primarily to increases in yellow pages
advertising costs, real estate tax and workers compensation insurance expenses,
partially offset by decreases in repairs and maintenance and security alarm
services expenses. General and administrative expenses increased approximately
$61,600 (41.4%) primarily as a result of increases in legal and professional
equipment and computer lease and office supplies expenses. General Partners'
incentive management fees remained relatively constant. Property management
fees, which are based on revenue, also remained relatively constant.

Operating expenses consists mainly of expenses such as yellow pages and
other advertising, utilities, repairs and maintenance, real estate taxes,
salaries and wages and their related expenses. General and administrative
expenses consist mainly of expenses such as legal and professional, office
supplies accounting services and computer expenses.



LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities decreased approximately
$33,000 (2.5%) in 2003 compared to 2002 primarily due to the decrease in net
income and incentive management fee payable to general partners and an increase
in other assets. Net cash provided by operating activities decreased approxi-
mately $33,800 (2.5%) in 2002 compared to 2001 primarily due to the decrease
in net income, partially offset by an increase in incentive management fee
payable to general partners and a decrease in other assets.

Cash used in financing activities, as set forth in the statements of cash
flows, has consisted solely of cash distributions to partners. Special
distributions of 1.0%, 3.0%, and 2.5% of capital contributed by Limited Part-
ners, were declared and paid on December 15, 2003, 2002, and 2001, respectively.

The Partnership has no material commitments for capital expenditures.

On April 22, 2002, the General Partners received a copy of a hostile tender
offer from MacKenzie Patterson, Inc. and associated corporations and limited
partnerships to purchase all of the Units in the Partnership. This offer was
also filed with the Securities and Exchange Commission on the same date. The
General Partners determined that the hostile tender offer was not in the best
interests of the Limited Partners, that the offer was grossly inadequate given
the performance history of the Limited Partnership and the inherent value of
the Units, and recommended that the Limited Partners reject the hostile tender
offer and not tender their Units pursuant thereto. The offer was subsequently
increased and extended to June 30, 2002 and again to July 22, 2002. The
General Partners' initial determination regarding the offer has not changed.
Prior to the expiration date of the offer, Limited Partners tendered 74 Units
representing 0.308% of the outstanding Units of the Partnership.

The Limited Partners have approved an amendment to the Partnership
Agreement granting the General Partners ten days to review certain types of
transfers during which the General Partners may match, exceed or approve the
proposed transfers. The court has rejected all preliminary attempts to halt
the implementation of the amendment. Subsequently, the dissident Limited
Partners who initiated the legal proceedings decided no to pursue the matter
any further.

The General Partners plan to continue their policy of funding the
continuing improvement and maintenance of Partnership properties with cash
generated from operations. The Partnership anticipates that cash flows
generated from operations of the Partnership's rental real estate operations
will be sufficient to cover operating expenses and distributions for the next
twelve months and beyond.

The General Partners are not aware of any environmental problems which
could have an adverse material effect upon the financial position of the Part-
nership.

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



Summarized quarterly financial data for the years ended December 31, 2003 and
2002 was as follows:

2003 QUARTER ENDED
------------------
March 31 June 30 September 30 December 31

Total revenues $650,704 $648,778 $652,525 $625,314

Net income 338,859 323,617 290,895 338,357

Net income per
limited partnership unit $ 13.98 $ 13.35 $ 12.00 $ 13.95

Weighted average number
of limited partnership
units outstanding 24,000 24,000 24,000 24,000



2002 QUARTER ENDED
------------------

March 31 June 30 September 30 December 31

Total revenues $671,743 $637,269 $658,822 $645,420

Net income 354,504 306,910 338,964 293,731

Net income per
limited partnership unit $ 14.62 $ 12.66 $ 13.98 $ 12.12

Weighted average number
of limited partnership
units outstanding 24,000 24,000 24,000 24,000






Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Attached hereto as Exhibit l is the information required to be set forth as
Item 8, Part II hereof.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT'S GENERAL PARTNER

The General Partners of Registrant are the same as when the Partnership was
formed, i.e., DSI Properties, Inc., a California corporation, and Diversified
Investors Agency. As of December 31, 2003, Messrs. Robert J. Conway and Joseph
W. Conway, each of whom own approximately 48.4% of the issued and outstanding
capital stock of DSI Financial, Inc., a California corporation, together with
Mr. Joseph W. Stok, currently comprise the entire Board of Directors of DSI
Properties, Inc.

Mr. Robert J. Conway is 70 years of age and is a licensed California real
estate broker, and since 1965 has been President and a member of the Board of
Directors of Diversified Securities, Inc., and since 1973 President, Chief
Financial Officer and a member of the Board of Directors of DSI Properties, Inc.
Mr. Conway received a Bachelor of Science Degree from Marquette University with
majors in Corporate Finance and Real Estate.

Mr. Joseph W. Conway is age 75 and has been Executive Vice President,
Treasurer and a member of the Board of Directors of Diversified Securities, Inc.
since 1965 and since 1973 the Vice President, Treasurer and member of the Board
of Directors of DSI Properties, Inc. Mr. Conway received a Bachelor of Arts
Degree from Loras College with a major in Accounting.

Mr. Joseph W. Stok is age 81 and has been a member of the Board of
Directors of DSI Properties, Inc. since 1994, a Vice President of Diversified
Securities, Inc. since 1973, and an Account Executive with Diversified
Securities, Inc. since 1967.

Item 11. EXECUTIVE COMPENSATION (MANAGEMENT REMUNERATION AND TRANSACTIONS)

The information required to be furnished in Item 11 of Part III is
contained in Registrant's Financial Statements for its fiscal year ended
December 31, 2003, which together with the report of its independent auditors,
Deloitte & Touche LLP, is attached hereto as Exhibit 1 and incorporated herein
by this reference. In addition to such information: (a) No annuity, pension or
retirement benefits are proposed to be paid by Registrant to any of the General
Partners or to any officer or director of the corporate General Partner;

(b) No standard or other arrangement exists by which directors of the
Registrant are compensated;

(c) The Registrant has not granted any option to purchase any of its
securities; and

(d) The Registrant has no plan, nor does the Registrant presently propose
a plan, which will result in any remuneration being paid to any
officer or director upon termination of employment.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of December 31, 2003, no person of record owned more than 5% of the
limited partnership units of Registrant, nor was any person known by Registrant
to own of record and beneficially, or beneficially only, more than 5% thereof.
The balance of the information required to be furnished in Item 12 of Part III
is contained in Registrant's Registration Statement on Form S-11, previously
filed pursuant to the Securities Act of 1933, as amended, and which is
incorporated herein by this reference. The only change to the information
contained in said Registration Statement on Form S-11 is the fact that Messrs.
Benes and Blakley have retired and Messrs. Robert J. Conway and Joseph W. Conway
equity interest in DSI Financial, Inc., parent of DSI Properties, Inc., has
increased. Please see information contained in Item 10 hereinabove.



Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required to be furnished in Item 13 of Part III is
contained in Registrant's Financial Statements for its fiscal year ended
December 31, 2003, attached hereto as Exhibit l and incorporated herein by this
reference.

PART IV

Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(l) Attached hereto and incorporated herein by this reference as Exhibit
l are Registrant's Financial Statements and Supplemental Schedule for
its fiscal year ended December 31, 2003, together with the reports of
its independent auditors, Deloitte & Touche LLP. See Index to
Financial Statements and Supplemental Schedule.

(a)(2) Attached hereto and incorporated herein by this reference as Exhibit
2 is Registrant's letter to its Limited Partners regarding its Annual
Report for its fiscal year ended December 31, 2003.

(b) No reports on Form 8K were filed during the fiscal year ended December
31, 2003.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

DSI REALTY INCOME FUND VII
by: DSI Properties, Inc., a
California corporation, as
General Partner



By_____________________________ Dated: March 31, 2004
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)



By____________________________ Dated: March 31, 2004
JOSEPH W. CONWAY (Executive
Vice President and Director)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the date indicated.

DSI REALTY INCOME FUND VII
by: DSI Properties, Inc., a
California corporation, as
General Partner



By:__________________________ Dated: March 31, 2004
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director



By___________________________ Dated: March 31, 2004
JOSEPH W. CONWAY
(Executive Vice President
and Director)



DSI REALTY INCOME FUND VII

CROSS REFERENCE SHEET

FORM 1O-K ITEMS TO ANNUAL REPORT


PART I, Item 3. There are no legal proceedings pending or threatened.

PART I, Item 4. Not applicable.

PART II, Item 5. Not applicable.

PART II, Item 6. The information required is contained in Registrant's Financial
Statements for its fiscal year ended December 31, 2003, attached as Exhibit l to
Form 10-K.

PART II, Item 8. See Exhibit l to Form 10-K filed herewith.

PART II, Item 9. Not applicable.



EXHIBIT l

DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)

SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2003

- -----------------------------------------------------------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----

TOTAL REVENUES
AND OTHER
INCOME $2,577,993 $2,614,292 $2,597,851 $2,351,050 $2,179,398

TOTAL
EXPENSES 1,286,265 1,320,183 1,210,651 1,237,093 1,556,719
---------- ---------- ---------- ---------- ----------

NET
INCOME $1,291,728 $1,294,109 $1,387,200 $1,113,957 $ 622,679
========== ========== ========== ========== ==========

TOTAL
ASSETS $2,833,436 $2,650,108 $2,696,934 $2,603,230 $2,751,925
========== ========== ========== ========== ==========

CASH FLOWS FROM:
(USED IN):
OPERATING $1,277,393 $1,310,542 $1,344,360 $1,231,203 $1,191,273
INVESTING - - - (5,388) (23,425)
FINANCING (1,100,643) (1,343,293) (1,282,481) (1,281,976) (1,101,945)

NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 53.28 $ 53.38 $ 57.22 $ 45.95 $ 25.69
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 45.40 $ 55.41 $ 52.90 $ 52.88 $ 45.46
========== ========== ========== ========== ==========




The following are reconciliations between the operating results and partners'
equity per the financial statements and the Partnership's income tax return for
the year ended December 31, 2003.

Net Partners'
Income Equity

Per financial statements $ 1,291,728 $ 2,228,462
Excess book depreciation (63,942) (78,446)
Accrued property taxes (86) (97,368)
Deferred rental revenues 85,723
Accrued distributions to partners 242,415
Accrued incentive management fees 221,117
Acquisition costs capitalized
for tax purposes 218,274
State taxes (9,734)
----------- -----------
Per Partnership income tax return $ 1,217,966 $ 2,820,177
=========== ===========
Net taxable income per
limited partnership unit $ 50.24
===========



DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)


INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE


Page


Independent Auditors' Report F-1

FINANCIAL STATEMENTS:

Balance Sheets at December 31, 2003 and 2002 F-2

Statements of Income for the Three Years Ended December 31, 2003 F-3

Statements of Changes in Partners' Equity (Deficit)for the Three Years
Ended December 31, 2003 F-4

Statements of Cash Flows for the Three Years Ended December 31, 2003 F-5

Notes to Financial Statements F-6

SUPPLEMENTAL SCHEDULE:

Schedule IIII - Real Estate and Accumulated Depreciation F-9

SCHEDULES OMITTED:

Financial statements and schedules not listed above are omitted because of the
absence of conditions under which they are required or because the
information is included in the financial statements named above, or in the
notes thereto.


CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, the Partnership evaluated
the effectiveness of its disclosure controls and procedures. This evalu-
ation was performed by the Partnership's Controller with the assistance
of the Partnership's President and the Chief Executive Officer. These
disclosure controls and procedures are designed to ensure that the inform-
ation required to be disclosed by the Parnership it its periodic reports
filed with the Securities and Exchange Commission (the "Commission") is
recorded, processed summarized and reported, within the time periods
specified by the Commission's rules and forms, and that the information
is communicated to the certifying officers on a timely basis. Based on
this evaluation, the Partnership concluded that its disclosure controls
and procedures were effective. There have been no significant changes
in the Partnership's internal controls or in other factors that could
significantly affect the internal controls subsequent to the date of
their evaluation.



INDEPENDENT AUDITORS' REPORT
Partners of
DSI Realty Income Fund VII:

We have audited the accompanying balance sheets of DSI Realty Income Fund VII, a
California limited partnership (the "Partnership") as of December 31, 2003
and 2002, and the related statements of income, changes in partners' equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 2003. Our audits also included the financial statement schedule
listed in the Index at Item 14. These financial statements and the financial
statement schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted in the
United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
financial statement schedule are free of material misstatement. An audit in-
cludes examining, on a test basis, evidence supporting the amounts and dis-
closures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of DSI Realty Income Fund VII at December 31,
2003 and 2002, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.


Deloitte & Touche LLP
March 20, 2004




DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)

BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
- --------------------------------------------------------------------------------


ASSETS 2003 2002

CASH AND CASH EQUIVALENTS $ 674,918 $ 497,970

PROPERTY, net (Note 3) 2,089,800 2,089,800

OTHER ASSETS 68,718 62,338
----------- -----------
TOTAL $ 2,833,436 $2,650,108
=========== ===========

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

LIABILITIES:
Distribution due partners (Note 4) $ 242,424 $ 242,424
Incentive management fee payable to
general partners (Note 4) 254,576 262,508
Property management fees payable 10,253 10,078
Customer deposits and other liabilities 97,721 97,721
----------- -----------
Total liabilities 604,974 612,731
----------- -----------
PARTNERS' EQUITY (DEFICIT)(Notes 4):
General partners (85,484) (87,395)
Limited partners (24,000 limited
partnership units outstanding
at December 31, 2003 and 2002) 2,313,946 2,124,772
------------ -----------
Total partners' equity 2,228,462 2,037,377
------------ -----------
TOTAL $ 2,833,436 $ 2,650,108
============ ===========

See accompanying notes to financial statements.



DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)

STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------


2003 2002 2001

REVENUES:
Rental $2,577,321 $2,613,254 $2,593,700
---------- ---------- ----------
EXPENSES:
Depreciation
Operating 781,921 839,143 796,881
General and administrative 248,000 210,413 148,844
General partners' incentive
management fee (Note 4) 127,790 140,588 136,432
Property management fee 128,554 130,039 128,494
---------- ---------- ----------
Total expenses 1,286,265 1,320,183 1,210,651
---------- ---------- ----------
OPERATING INCOME 1,291,056 1,293,071 1,383,049

OTHER INCOME-
Interest income 672 1,038 4,151
---------- ---------- ----------
NET INCOME $1,291,728 $1,294,109 $1,387,200
========== ========== ==========

AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $1,278,811 $1,281,168 $1,373,328
General partners 12,917 12,941 13,872
---------- ---------- ----------
TOTAL $1,291,728 $1,294,109 $1,387,200
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 53.28 $ 53.38 $ 57.22
========== ========== ==========

See accompanying notes to financial statements.


DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)

STATEMENTS OF CHANGES IN PARTNERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------


General Limited
Partners Partners Total

BALANCE, JANUARY 1, 2001 $(87,950) $ 2,069,792 $ 1,981,842

Net income 13,872 1,373,328 1,387,200

Distributions (12,825) (1,269,656) (1,282,481)
------- ----------- -----------
BALANCE, DECEMBER 31, 2001 $(86,903) $ 2,173,464 $ 2,086,561

Net income 12,941 1,281,168 1,294,109

Distributions (13,433) (1,329,860) (1,343,293)
-------- ----------- -----------
BALANCE, DECEMBER 31, 2002 $(87,395) $ 2,124,772 $ 2,037,377

Net income 12,917 1,278,811 1,291,728

Distributions (11,006) (1,089,637) (1,100,643)
-------- ----------- -----------
BALANCE, DECEMBER 31, 2003 $(85,484) $ 2,313,946 $ 2,228,462
========= =========== ===========


See accompanying notes to financial statements.


DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)

STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------


2003 2002 2001

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,291,728 $ 1,294,109 $ 1,387,200
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation
Changes in assets and liabilities:
Other assets (6,380) 14,075 (31,825)
Incentive management fee
payable to general partners (7,932) 27,093 (96)
Property management fees payable 175 (850) 281
Customer deposits and
other liabilities (23,885) (11,200)
----------- ----------- -----------
Net cash provided by operating
activities 1,277,591 1,310,542 1,344,360


CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,100,643) (1,343,293) (1,282,481)

----------- ----------- ------------
NET(DECREASE)INCREASE IN CASH AND
CASH EQUIVALENTS 176,948 (32,751) 61,879

CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 497,970 530,721 468,842
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 674,918 $ 497,970 $ 530,721
=========== =========== ============

See accompanying notes to financial statements.


DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)

NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 2003


1. GENERAL


DSI Realty Income Fund VII, a California Real Estate Limited Partnership
(the "Partnership"), has two general partners (DSI Properties, Inc. and
Diversified Investors Agency) and limited partners owning 24,000 limited
partnership units that were purchased for $500 a unit. The general
partners have made no capital contribution to the Partnership and are
not required to make any capital contribution in the future. The
Partnership has a maximum life of 50 years and was formed on August 1,
1983 under the California Uniform Limited Partnership Act for the
primary purpose of acquiring and operating real estate.

The Partnership has acquired six mini-storage facilities located in
Chico, Fairfield, La Verne, and Riverside, California and Ft. Collins
and Littleton, Colorado. All facilities were purchased from Dahn
Corporation ("Dahn"). Dahn is not affiliated with the Partnership. Dahn
is affiliated with other partnerships in which DSI Properties, Inc. is a
general partner. The mini-storage facilities are operated for the
Partnership by Dahn under various agreements that are subject to renewal
annually. Under the terms of the agreements, the Partnership is required
to pay Dahn a property management fee equal to 5% of gross revenue from
operations, defined as the entire amount of all receipts from the rent-
ing or leasing of storage compartments and sale of locks.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Cash and Cash Equivalents - The Partnership classifies its short-term
investments purchased with an original maturity of three months or less
as cash equivalents.

Property and Depreciation - Property was recorded at cost and is
composed primarily of mini-storage facilities. The facilities' buildings
and improvements were fully depreciated.

Income Taxes - No provision has been made for income taxes in
the accompanying financial statements. The taxable income or loss
of the Partnership is allocated to each partner in accordance with the
terms of the Agreement of Limited Partnership. Each partner's tax
status, in turn, determines the appropriate income tax for its
allocated share of the Partnership's taxable income or loss. The net
difference between the basis of the Partnership's assets and liabilities
for federal income tax purposes and as reported for financial statement
purpose is $73,762.

Revenues - Rental revenue is recognized using the accrual method
based on contractual amounts provided for in the lease agreements,
which approximates recognition on a straight line basis. The term
of the lease agreements are usually less than one year.

Net Income per Limited Partnership Unit - Net income per limited
partnership unit is computed by dividing net income allocated to the
limited partners by the weighted average number of limited partnership
units outstanding during each year.

Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Partnership's management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.

Impairment of Long-Lived Assets - The Partnership regularly reviews
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not
be recoverable. If the sum of the expected undiscounted future cash
flow is less than the carrying amount of the asset, the Partnership
would recognize an impairment loss to the extent the carrying value
exceeded the fair market value of the property. No impairment losses
were required in 2003, 2002 and 2001.

Fair Value of Financial Instruments - The Partnership's financial
instruments consist primarily of cash, receivables, accounts payable
and accrued liabilities. The carrying values of all financial
instruments are representative of their fair values due to their short-
term maturities.

Concentrations of Credit Risk - Financial instruments that potentially
subject the Partnership to concentrations of credit risk consist
primarily of cash and cash equivalents and rent receivables. The
Partnership places its cash equivalents with high credit quality
institutions.

Impact of Recent Accounting Pronouncements - In 2002, the Partnership
adopted the following pronouncements: Statements of Financial Account-
ing Standards ("SFAS") No. 144, Accounting for Impairment or Disposal
of Long-Lived Assets; SFAS No 145, Rescission of FASB Statements No. 4,
44, 64 and Amendment of FASB Statement No. 13, and Technical Correc-
tions. The adoption of these pronouncements did not have a material
impact on the Partnership's financial position or results of operations.
The Partnership believes the adoption of Financial Accounting Standards
Board Interpretation No. 46, Consolidation of Variable Interest Entities
will not have a material impact on the financial statements.

3. PROPERTY

The total cost of property and accumulated depreciation is as follows
as of December 31:

2003 2002

Land $ 2,089,800 $ 2,089,800
Buildings and improvements 7,746,282 7,746,282
----------- -----------

Total 9,836,082 9,836,082
Less accumulated depreciation (7,746,282) (7,746,282)
----------- -----------

Property, net $ 2,089,800 $ 2,089,800
=========== ===========


4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNER MANAGEMENT FEES


Under the Agreement of Limited Partnership, the general partners are
to be allocated 1% of the net profits or losses from operations
and the limited partners are to be allocated the balance of the net
profits or losses from operations in proportion to their limited
partnership interests. The general partners are also entitled to
receive a percentage, based on a predetermined formula, of any cash
distribution from the sale, other disposition, or refinancing of
a real estate project.

In addition, the general partners are entitled to receive an incentive
management fee for supervising the operations of the Partnership. The
fee is to be paid in an amount equal to 9% per annum of the cash
available for distribution on a cumulative basis, calculated as cash
generated from operations less capital expenditures.

5. BUSINESS SEGMENT INFORMATION

The following disclosure about segment reporting of the Partnership is
made in accordance with the requirements of SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information. The Partner-
ship operates in a single segment; storage facility operations, under
which the Partnership rents its storage facilities to its customers
on a need basis and charges rent on a predetermined rate.



DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)

REAL ESTATE AND ACCUMULATED DEPRECIATION
- --------------------------------------------------------------------------------





Costs Capitalized
Initial Cost to Subsequent to Gross Amount at Which Carried
Partnership Acquisition at Close of Period
------------------- ----------------- -----------------------------
Buildings Buildings Date
and Improve- Carrying and Accum. of Date
Description Encumbrances Land Improvements ments Costs Land Improvements Total Deprec. Const. Acq. Life

MINI-U-STORAGE


Chico, CA None $209,700 $ 932,373 $ 6,670 $209,700 $ 939,043 $1,148,743 939,043 09/84 12/83 15 Yrs
Fairfield, CO None 264,500 1,267,896 13,047 264,500 1,280,943 1,545,443 1,280,943 08/84 01/84 15 Yrs
Fort Collins, CO None 375,100 1,396,960 8,643 375,100 1,405,603 1,780,703 1,405,603 12/84 05/84 15 Yrs
Riverside, CA None 356,000 1,391,210 14,289 356,000 1,405,499 1,761,499 1,405,499 12/84 06/84 15 Yrs
La Verne, CA None 453,250 1,243,972 11,162 453,250 1,255,136 1,708,386 1,255,136 03/85 08/84 15 Yrs
Littleton, CO None 431,250 1,423,811 36,247 431,250 1,460,058 1,891,308 1,460,058 10/85 05/85 15 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,089,800 $7,656,224 $ 90,058 $2,089,800 $7,746,282 $9,836,082 $7,746,282
========== ========== ======== ========== ========== =========== ==========


Real Estate Accumulated
at Cost Depreciation

Balance, January 1, 2001 $ 9,836,082 $7,746,282
Additions - -
----------- ----------
Balance, December 31, 2001 $ 9,836,082 $7,746,282
Additions - -
----------- ----------
Balance, December 31, 2002 $ 9,836,082 $7,746,282
Additions - -
----------- ----------
Balance, December 31, 2003 $ 9,836,082 $7,746,282
=========== ==========





EXHIBIT 2

March 20, 2004

ANNUAL REPORT TO LIMITED PARTNERS OF

DSI REALTY INCOME FUND VII

Dear Limited Partner:

This report contains the Partnership's balance sheets as of December 31,
2003 and 2002, and the related statements of income, changes in partners' equity
and cash flows for each of the three years in the period ended December 31, 2003
accompanied by an independent auditors' report. The Partnership owns six
mini-storage facilities. The Partnership's properties were each purchased for
all cash and funded solely from subscriptions for limited partnership interests
without the use of mortgage financing.

Your attention is directed to the section entitled Management's Discussion
and Analysis of Financial Condition and Results of Operations for the General
Partners' discussion and analysis of the financial statements and operations of
the Partnership.

Average occupancy levels for each of the Partnership's six properties for
the years ended December 31, 2003 and December 31, 2002 were as follows:

Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 2003 Dec. 31, 2002


Chico, California 86% 89%

Fairfield, California 89% 91%

Ft. Collins, Colorado 81% 81%

LaVerne, California 90% 90%

Littleton, Colorado 81% 80%

Riverside, California 91% 89%


We will keep you informed of the activities of DSI Realty Income Fund VII
as they develop. If you have any questions, please contact us at your
convenience at (562) 493-3022.

If you would like a copy of the Partnership's Annual Report on Form 10-K
for the year ended December 31, 2003 which was filed with the Securities and
Exchange Commission (which report includes the enclosed Financial Statements),
we will forward a copy of the report to you upon written request.

Very truly yours,

DSI REALTY INCOME FUND VII
By: DSI Properties, Inc.



By___________________________
ROBERT J. CONWAY, President


CERTIFICATIONS

I, Robert J. Conway, certify that:

1. I have reviewed this annual report on Form 10-K of DSI Realty Income
Fund VII;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period cover-
ed by this annual report.

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its con-
solidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effec-
tiveness of the disclosure controls and procedures based on our evalu-
ation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors:

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to re-
cord, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's in-
ternal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls sub-
sequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 20, 2004



Robert J. Conway
Chief Executive Officer



CERTIFICATIONS

I, Richard P. Conway, certify that:

1. I have reviewed this annual report on Form 10-K of DSI Realty Income
Fund VII;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period cover-
ed by this annual report.

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its con-
solidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effec-
tiveness of the disclosure controls and procedures based on our evalu-
ation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors:

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to re-
cord, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's in-
ternal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls sub-
sequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 20, 2004



Richard P. Conway
Vice President



CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of DSI Realty Income Fund VII (the
"Partnership") on Form 10-K for the period ending December 31, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert J. Conway, Chief Executive Officer of the Partnership, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.



Robert J. Conway
Chief Executive Officer
March 20, 2004






CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of DSI Realty Income Fund VII (the
"Partnership") on Form 10-K for the period ending December 31, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard P. Conway, Chief Executive Officer of the Partnership, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.



Richard P. Conway
Vice President
March 20, 2004