July 31, 2000

                   QUARTERLY REPORT TO THE LIMITED PARTNERS
			OF DSI REALTY INCOME FUND VII


DEAR LIMITED PARTNERS:

We are pleased to enclose the  Partnership's  unaudited financial statements
for  the  period  ended  June  30,  2000.  The  following  is  Management's
discussion  and  analysis  of  the  Partnership's  financial  condition  and
results  of  its  operations.

For the three month  period  ended  June 30, 2000, and  1999, total revenues
increased 5.1% from $557,813 to $586,402  and total expenses  increased 2.6%
from $388,033 to $398,031.  As a result, net income increased 11.0% from
$169,780 for the three-month  period ended June 30, 1999, to $188,371 for the
same period in 2000.  Rental  revenue  increased primarily as a  result of
higher occupancy and unit rental rates.  Occupancy levels for the Partnership's
six mini-storage facilities averaged 87.1% for the three-month period ended
June 30, 2000 and 85.9% for the same period in 1999.  The Partnership is
continuing its marketing efforts to attract and keep new tenants in its various
mini-storage facilities.  Operating expenses increased approximately $4,400
(1.3%) primarily  as a  result of increases in yellow pages and miscellaneous
advertising costs, maintenance and repair and office supplies expenses,
partially offset by a decrease in salaries and wages. General and administra-
tive expenses increased approximately $5,600 (11.2%) primarily as a result
of an increase in legal and professional expense.

For the six month  periods  ended  June  30, 2000, and 1999,  total  revenues
increased 1.8% from $1,109,545 to $1,129,637 and total expenses increased 0.4%
from $786,970 to $790,475.  As a result, net income increased 5.1% from
$322,575 for the six months ended June 30, 1999, to $339,162 for the same
period in 2000.  Rental revenue increased primarily as a result of higher
occupancy and unit rental rates.  Operating expenses decreases approximately
$2,400 (0.4%) primarily due to decreases in miscellaneous advertising, main-
tenance and repair and salaries and wages expenses, partially offset by
increases in yellow pages advertising costs and office supplies expenses.
General and administrative expenses increased approximately $5,900 (5.1%)
primarily as a result of increases in legal and professional and equipment
and computer lease expenses.

The General Partners will continue their  policy of  funding improvements
and  maintenance of  Partnership  properties  with cash  generated from
operations.  The Partnership's financial resources appear to be adequate
to meet its needs.  The  General  Partners  anticipate  distributions to the
Limited Partners to remain at the current level for the foreseeable future.

We are not enclosing a copy of the Partnership Form 10-Q as filed with the
Securities  and  Exchange  Commission  since all the information set forth
therein is contained  either in this  letter or in the  attached  financial
statements.  However, if you wish to  receive a copy of said report, please
send a  written  request to  DSI  Realty  Income  Fund  VII,  P.O.  Box 357,
Long  Beach,  California  90801.

                              Very truly yours,

                              DSI REALTY INCOME FUND VII
                              By: DSI Properties, Inc., as
                              General Partner



                              By  /s/ Robert J. Conway
                                  ____________________________
                                  ROBERT J. CONWAY, President