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, 2005.
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,
     2005, incorporated by reference to Form 10-K, Part II.

Item 11.  Registrant's  Financial  Statements for its fiscal year ended December
     31, 2005, 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, 2005, 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, 2005 and December 31, 2004 were as follows:




Location of Property       Average Occupancy         Average Occupancy
                           for the                   Level for the
                           Year Ended                Year Ended
                           Dec. 31, 2005             Dec. 31, 2004

Chico, California               91%                       84%

Fairfield, California           84%                       85%

Ft. Collins, Colorado           83%                       83%

LaVerne, California             91%                       86%

Littleton, Colorado             81%                       77%

Riverside, California           88%                       87%

     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 1a. RISK FACTORS

Our operations are concentrated in California, and our operational and
financial performance depends on the economies in that market, changes in such
market may adversely affect our financial condition.
Our Properties are located in four cities in California.  We thus do not have
a broad geographic distribution of our properties.  Like other real estate
markets, these markets have experienced economic down turns in the past, as
well as broader economic slow downs in the United States.  Such a down turn
can lead to lower occupancy rates and, consequently, downward pressure on
rental rates.  Furthermore, such a climate might affect our ability to attract
and keep new tenants in our mini-storage facilities.  A prolonged decline in
the economies of these real estate markets could adversely affect our finan-
cial position, results of operation, cash flow, and ability to make
distributions.

Some Potential Losses Are Not Covered By Insurance.
We carry comprehensive liability, fire, extended coverage and rental loss
insurance on all of our Properties.  We believe the policy specifications and
insured limits of these policies are adequate and appropriate.  There are,
however, types of losses, such as lease and other contract claims and acts of
war that generally are not insured.  We cannot be assured that we will be able
to renew insurance coverage upon expiration of our policies in an adequate
amount or at reasonable prices. In addition, insurance companies may no longer
offer coverage against certain types of losses, such as losses due to terrorist
acts and mold or, if offered, these types of insurance may be prohibitively
expensive.  Should uninsured loss or a loss in excess from insured limits
occur, we could lose all or a portion of the capital we have invested in a
Property, as well as the anticipated future revenue from the Property.  In
such an event, we might nevertheless remain obligated for any mortgage debt
or other financial obligations related to the Property.  We cannot be assured
that material losses in excess of insurance proceeds will not occur in the
future.  If any of our Properties were to experience catastrophic loss, it
could seriously disrupt our operations, delay revenue and result in large
expenses to repair or rebuild the Property.  Such events could adversely
affect our cash flow and ability to make distributions to shareholders.

Because real estate is illiquid, we may not be able to sell Properties when
appropriate.
Real estate investments generally, mini-storage facilities like those that we
own, in particular, often cannot be sold quickly.  Consequently, we may not be
able to sell Properties when appropriate.  This could adversely affect our cash
flow and ability to make distributions.

Our operating costs might rise, which might reduce our profitability and have
an adverse affect on our cash flow and our ability to make distributions to
shareholders.
We might face higher operating expenses as a result of rising costs generally,
and in particular as a result of increased costs following a terrorist attack
or other catastrophic event.  For example, it might cost more in the future
for security, property/casualty and liability insurance, and property mainten-
ance.  As noted above, when our insurance policies expire, the cost of premiums
for comparable coverage might be significantly higher after such an event when
it is time to renew our coverage, which could then increase our operating
expenses and reduce or profitability and our cash flow.  Because of rising
costs in general, we might experience increases in our property maintenance
costs, such as for cleaning and electricity.  If operating expenses increase
dramatically, the availability of other comparable mini-storage facilities in
our specific geographic markets might limit our ability to increase rents,
which could reduce our profitability (if operating expenses increase without a
corresponding increase in revenues) and limit our ability to make distributions.

We face significant competition.
We compete with numerous other owners of mini-storage facilities for tenants.
Some of these competitors have significantly greater financial resources than
we do.  Such competition may reduce our ability to attract and keep and retain
tenants, and may increase vacancies, which increases may lower rental rates.
In addition, some of our competitors may be willing, because their properties
may have vacancy rates higher than those for our properties, to make space
available at lower prices than the space in our properties.  We cannot be
assured that this competition will not adversely affect our cash flow and
ability to make distributions.

Our ability to make distributions is subject to various risks.
We have been paying quarterly distributions since inception.  Our ability to
make distributions in the future will depend upon:

   -       Financial performance of our Property;
   -       The absence of significant expenditures relating to environmental
                and regulator matters; and
   -       Our ability to attract and maintain tenants.

Certain of these matters are beyond our control and any significant difference
between our expectations and actual results could have a material adverse
affect on our cash flow and our ability to make distributions.

Changes in the law may adversely affect our cash flow.
The Properties are subject to various regulatory requirements, such as those
relating to the environment, fire and safety.  Our failure to comply with
these requirements could result in the imposition of fines and damage awards.
Additionally, the cost to comply with any new or different regulation could
adversely affect our cash flow and our ability to make distributions.  While
we believe that the Properties are currently in material compliance with all
such requirements, we cannot be assured that these requirements will not change
our that newly imposed requirements will not require significant unanticipated
expenditures.

Should we incur long-term indebtedness, it will subject us to additional risks.
Like other real estate companies, should we incur indebtedness on our proper-
ties, we will be subject to risks normally associated with debt financing,
such as the insufficiency of cash flow to meet required debt service payment
obligations and the inability to refinance existing indebtedness.  If such
debt cannot be paid, refinanced or extended at maturity, in addition to our
failure to repay our debt, we may not be able to make distributions at expected
levels or at all.  Furthermore, an increase in interest expense could adversely
affect our cash flow and ability to make distributions to Limited Partners.
If we should not meet our debt service obligations, any Properties securing
such indebtedness could be foreclosed on, which would have a material adverse
affect on our cash flow and ability to make distributions and, depending on
the number of Properties foreclosed on, could threaten our continued viability.
Our organizational documents do not contain any limitation on our ability to
incur debt secured by our Properties.  Accordingly, we could place financing
on our Properties almost without restriction.  If we were to take such action,
the debt service could adversely affect our cash flow and ability to make dis-
tributions and would include the risk of default on such indebtedness. There
are no plans to incur any long-term indebtedness on any of the Partnership's
Properties.

Environmental problems at the Properties are possible and may be costly.
Federal, state and local laws, ordinances and regulations may require a current
or previous owner or operator of real estate to investigate and clean up hazard-
ous or toxic substances or releases at such property.  The owner or operator
may be forced to pay for property damage and for investigation and clean up
costs incurred by others in connection with environmental contamination.  Such
laws typically impose clean-up responsibility and liability without regard to
whether the owner or operator knew of or caused the presence of  contaminates.
Even if more than one person may have been responsible for the contamination,
each person covered by the environmental laws may be held responsible for all
the clean-up costs incurred.  In addition, third parties may sue the owner or
operator of a site for damages and costs resulting from environmental contamin-
ation emanating from that site.  These costs may be substantial and the presence
of such substances may adversely affect the owner's ability to sell or rent
such property or to borrow using such property as collateral.

Environmental laws that govern the presence, maintenance and removal of asbestos
require that owners or operators of buildings containing asbestos properly
manage and maintain the asbestos, notifying and train those who may come into
contact with asbestos and undertake special precautions, including removal or
other abatement, if asbestos would be disturbed during renovation or demolition
of a building.  Such laws may impose fines and penalties on building owners or
operators who fail to comply with these requirements and may allow third parties
to seek recovery from owners or operators for personal injury associated with
exposure to asbestos fibers.

To the best of our knowledge, asbestos was not used in the construction of any
of the Properties.  Tenants of the Partnership's mini-storage facilities are
prohibited from storing hazardous or toxic substances or from even bringing
hazardous or toxic substances onto the property.  To the best knowledge of the
General Partners, there are no instances of storage or release of hazardous or
toxic substances at any of the Partnership's Properties.  However, there can
be no guaranty that one or more tenants did not actually store such materials
or cause releases at any of the Partnership's Properties.  If these conditions
should occur, we may need to undertake a target remediation program which could
become costly and could necessitate the temporary location of some or all of
the Properties' tenants or require rehabilitation of the affected property.

Americans With Disabilities Act compliance can be costly.
Under the Americans With Disabilities Act of 1990 ("ADA"), all public accom-
modations and commercial facilities, must meet certain Federal requirements
related to access and use by disabled persons.  Compliance with the ADA re-
quirements could involve removal of structural barriers from certain disabled
persons' entrances, which could adversely affect our financial condition, and
results of operations.  Other Federal, state or local laws may require modifi-
cations to or restrict further renovations of our Properties with respect to
such accesses.  Although we believe that our Properties are currently in
material compliance with present requirements, non-compliance with the ADA or
similar or related laws or regulations could result in the United States govern-
ment imposing fines or private litigants being awarded damages against us.  In
addition, we do not know whether existing requirements will change or whether
compliance with future requirements will require significant unanticipated
expenditures.  Such costs may adversely affect our cash flow and ability to
make distributions.

Partnership's status as a limited partnership is dependent on compliance with
Federal income tax requirements.
Failure of the Partnership to be treated as a limited partnership would have
serious adverse consequences to holders of our Units.  If the IRS were to
successfully challenge the tax status of the Partnership for Federal income
tax purposes, the Partnership would be treatable as a corporation.  In such
event, the imposition of a corporate tax on the Partnership would reduce the
amount of cash available for distribution from such Partnership to the Limited
Partners.  We do not anticipate such a challenge.

We are dependent upon our key personnel.
We are dependent upon our key personnel whose continued service is not guar-
anteed.  We are dependent upon our independent property manager for experience
in managing mini-storage facilities.  While we believe we could find replace-
ments for these key personnel, loss of their services could adversely affect
our operations.



Item 1b. UNRESOLVED STAFF COMMENTS

         None.



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, 2005 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 880 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 $12.27 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2005 and  $13.25
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 2004 and  $11.35 per Limited Partnership Unit were declared
and paid each quarter for the year ended December 31, 2003.




Item 6.  SELECTED FINANCIAL DATA
         FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, 2003, 2002, and 2001
         --------------------------------------------------------------------
                     2005         2004         2003         2002        2001
                     ----         ----         ----         ----        ----

TOTAL REVENUES
AND OTHER
INCOME            $2,690,456   $2,515,273   $2,577,993   $2,614,292   $2,597,851

TOTAL
EXPENSES           1,486,893    1,266,869    1,286,265    1,320,183    1,210,651
                  ----------   ----------   ----------   ----------   ----------

NET
INCOME            $1,203,563   $1,248,404   $1,291,728   $1,294,109   $1,387,200
                  ==========   ==========   ==========   ==========   ==========

TOTAL
ASSETS            $2,965,501   $2,952,694   $2,833,436   $2,650,108   $2,696,934
                  ==========   ==========   ==========   ==========   ==========

CASH FLOWS FROM (USED IN):
OPERATING         $1,276,611   $1,260,613   $1,277,591   $1,310,542   $1,344,360
INVESTING            (10,308)     (23,858)        -            -            -
FINANCING         (1,227,053)  (1,295,628)  (1,100,643)  (1,343,293) (1,282,481)

NET INCOME
PER LIMITED
PARTNERSHIP
UNIT              $    49.65   $    51.50   $    53.28   $    53.38   $    57.22
                  ==========   ==========   ==========   ==========   ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT              $    49.07   $    52.98   $    45.40   $    55.41   $    52.90
                  ==========   ==========   ==========   ==========   ==========


====================================


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

Critical Accounting Policies

Revenue recognition - 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 is usually less than one year.



                              RESULTS OF OPERATIONS

2005 COMPARED TO 2004

     Total revenues increased from $2,514,629 in 2004 to $2,689,810 in 2005,
while total expenses increased from $1,266,869 to $1,486,893, other income
increased from $644 to $646 resulting in a decrease in net income from
$1,248,404 to $1,203,563.  Rental revenues increased primarily as a result of
higher occupancy and unit rental rates.  Occupancy levels for the Partnership's
six mini-storage facilities averaged 86.3% and 83.5% for the years ended
December 31, 2005 and 2004 respectively.  The Partnership continued its adver-
tising campaign to attract and keep new tenants in its various mini-storage
facilities. The approximate $92,900 (11.4%) increase in operating expenses was
due primarily to increases in purchase of locks, real estate tax and salaries
and wages expenses, partially offset by a decrease in advertising expense.
General and administrative expenses increased approximately $62,300 (31.2%)
primarily as a result of increases in legal and professional fees, office
supplies and equipment and computer lease expenses.  The General Partners'
incentive management fee which is based on cash available for distribution,
remained relatively constant.  Property management fees, which are based on
rental revenue, increased as a result of the increase in rental revenue.


2004 COMPARED TO 2003

     Total revenues decreased from $2,577,321 in 2003 to $2,514,629 in 2004,
while total expenses decreased from $1,286,265 to $1,266,869 and other income
decreased from $672 to $644 resulting in a decrease in net income from
$1,291,728 to $1,248,404.  Rental revenues decreased primarily as a result of
lower occupancy rates.  Occupancy levels for the Partnership's six mini-storage
facilities averaged 83.5% for the year ended December 31, 2004 and 86.3% for
the year ended December 31, 2003.  The Partnership continued its advertising
campaign to attract and keep new tenants in its various mini-storage facilities.
The approximate $33,100 (4.2%) increase in operating expenses was due primarily
to increases in purchase of locks, real estate tax and salaries and wages
expenses, partially offset by a decrease in advertising expense.  General and
administrative expenses decreased approximately $48,500 (19.6%) primarily as
a result of decreases in legal and professional fees and equipment and computer
lease expenses, partially offset by an increase in office supplies and printing
expense.  The decrease in legal expense and professional expense is related to
unsuccessful legal challenges by two dissident Limited Partners to a proposed
amendment to the Partnership Agreement (see paragraph below).  The General
Partners' incentive management fee which is based on cash available for dis-
tribution, decreased as a result of the decrease in net cash provided by
operating activities reduced by additions to property.  Property management
fees 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  increased  approximately
$16,000 (1.3%) in 2005 compared to 2004 primarily due to the increase in
customer deposits and other liabilities, partially offset by a decrease in
net income.  Net cash provided by operating activities decreased approximately
$17,000 (1.3%) in 2004 compared to 2003 primarily due to the decrease in net
income, partially offset by an increase in customer deposits and other lia-
bilities.

    Cash used in investing activities, as set forth in the statement of cash
flows, has consisted solely of acquisitions of equipment for the Partnership's
mini storage properties in 2005 and 2004.  The Partnership has no material
commitments for capital expenditures.

    Cash used in financing  activities, as set forth in the statements of cash
flows,  has  consisted  solely of cash  distributions  to partners in 2005,
2004 and 2003 and payments on capital lease obligations in 2005 and 2004.
Special distributions of 1.75%, 2.5%, and 1.0% of capital contributed by
Limited Partners, were declared and paid on December 15, 2005, 2004, and 2003,
respectively.

    In 2003, the Limited Partners 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 rejected all preliminary attempts to halt the
implementation of the amendment.  Subsequently, the two dissident Limited
Partners who initiated the legal proceedings decided not 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, 2005 and
2004 was as follows:

                                            2005 QUARTER ENDED
                                            ------------------
                           March 31   June 30   September 30    December 31

Total revenues             $644,047   $664,740   $694,711        $686,312

Net income                  297,500    294,947    329,935         281,181

Net income per
  limited partnership unit $  12.27   $  12.17   $  13.61        $  11.60

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



                                            2004 QUARTER ENDED
                                            ------------------
                           March 31   June 30   September 30    December 31

Total revenues             $642,833   $633,029   $635,270        $603,497

Net income                  327,568    287,364    312,327         321,145

Net income per
  limited partnership unit $  13.51   $  11.85   $  12.88        $  13.26

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




Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     None.


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.

     See the financial statements.

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

     None.

Item 9a. CONTROLS AND PROCEDURES

     The Partnership evaluated the effectiveness of its disclosure controls
     and procedures.  This evaluation 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 information required to be disclosed by the
     Parnership in 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.

Item 9b. OTHER INFORMATION
         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, 2005,  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 72 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 77 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 83 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, 2005,  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,  2005,  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, 2005,  attached hereto as Exhibit l and incorporated herein by this
reference.

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Audit Fees

     The aggregate fees for professional services rendered by Deloitte & Touche
LLP for the audit of the Partnership's annual financial statements and for re-
view of the financial statements included in the Partnership's Quarterly Reports
on Form 10-Q for 2005 were $29,640 and for 2004 were $26,920.

     Tax Fees

     The aggregate fees for professional services rendered by Deloitte Tax
LLP for tax compliance, tax advice and tax planning for 2005 were $22,600 and
for 2004 were $20,900.  Most of the fees related to preparation of the Partner-
ship's tax returns.


                                     PART IV

Item 15. 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, 2005,  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, 2005.

     (b)  No reports on Form 8K were filed during the fiscal year ended December
          31, 2005.

                                   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, 2006
  ROBERT J. CONWAY, President
  (Chief Executive Officer, Chief
  Financial Officer, and Director)



By____________________________      Dated:  March 31, 2006
  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, 2006
  ROBERT J. CONWAY, President,
  Chief Executive Officer, Chief
  Financial Officer, and Director



By___________________________       Dated:  March 31, 2006
  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, 2005, 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, 2005

-----------------------------------------------------------------------------
                     2005         2004         2003         2002        2001
                     ----         ----         ----         ----        ----


TOTAL REVENUES
AND OTHER
INCOME          $2,690,456   $2,515,273   $2,577,993   $2,614,292   $2,597,851

TOTAL
EXPENSES         1,486,893    1,266,869    1,286,265    1,320,183    1,210,651
                ----------   ----------   ----------   ----------   ----------

NET
INCOME          $1,203,563   $1,248,404   $1,291,728   $1,294,109   $1,387,200
                ==========   ==========   ==========   ==========   ==========

TOTAL
ASSETS          $2,965,501   $2,952,694   $2,833,436   $2,650,108   $2,696,934
                ==========   ==========   ==========   ==========   ==========

CASH FLOWS FROM (USED IN):
OPERATING       $1,276,611   $1,260,613   $1,277,591   $1,310,542   $1,344,360
INVESTING          (10,308)     (23,858)        -            -            -
FINANCING       (1,227,053)  (1,295,628)  (1,100,643)  (1,343,293) (1,282,481)

NET INCOME
PER LIMITED
PARTNERSHIP
UNIT            $    49.65   $    51.50   $    53.28   $    53.38   $    57.22
                ==========   ==========   ==========   ==========   ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT            $    49.07   $    52.98   $    45.40   $    55.41   $    52.90
                ==========   ==========   ==========   ==========   ==========




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, 2005.

                                                         Net          Partners'
                                                        Income         Equity

Per financial statements                             $ 1,203,563    $ 2,206,478
Excess tax depreciation                                    1,755       (151,510)
Accrued incentive management fees                                       221,117
Deferred rental revenues                                                 85,723
Accrued expenses                                          17,200         27,000
Accrued property taxes                                       (73)      (101,332)
Fixed asset adjustment                                   (37,480)       169,344
Excess book distribution                                                242,415
Tax expense adjustment                                    (7,755)
                                                     -----------    -----------
Per Partnership income tax return                    $ 1,177,210    $ 2,699,235
                                                     ===========    ===========
Net taxable income per
limited partnership unit                             $     48.56
                                                     ===========



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


INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE


                                                                            Page

FINANCIAL STATEMENTS:

    Report of Independent Registered Public
        Accounting Firm                                                      F-1


    Balance Sheets as of December 31, 2005 and 2004                          F-2

    Statements of Income for each of the Three
        Years Ended December 31, 2005                                        F-3

    Statements of Changes in Partners' Equity (Deficit)for each
        of the Three Years Ended December 31, 2005                           F-4

    Statements of Cash Flows for each of the Three Years
        Ended December 31, 2005                                              F-5

    Notes to Financial Statements                                            F-6

SUPPLEMENTAL SCHEDULE:                                                      F-10

    Schedule III - Real Estate and Accumulated Depreciation
                   as of December 31, 2005                                  F-11


    NOTE:

     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.



REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the 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, 2005
and 2004,  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, 2005. Our audits also included the financial statement schedule
listed in the Index at Item 15.  These financial  statements  and the financial
statement schedule are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on the financial statements and
financial statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  The Partnership is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.  Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Partnership's internal control over
financial reporting.  Accordingly, we express no such opinion.  An audit also
includes examining, on a test basis, evidence supporting the amounts and dis-
closures in the financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evlauating the overall
financial statement presentation.  We believe that our audits provide a reason-
able 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,
2005 and 2004,  and the results of its operations and its cash flows for each of
the three years in the period  ended  December  31,  2005,  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
Los Angeles, California

March 27, 2006




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

BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
--------------------------------------------------------------------------------


ASSETS                                                  2005             2004

CASH AND CASH EQUIVALENTS                           $   655,295      $  616,045

PROPERTY, net (Note 3)                                2,246,183       2,268,876

OTHER ASSETS                                             64,023          67,773
                                                    -----------      -----------
TOTAL                                               $ 2,965,501      $2,952,694
                                                    ===========      ===========

LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:
Distribution due partners (Note 4)                  $   242,424      $   242,424
Incentive management fee payable to
general partners (Note 4)                               250,672          250,403
Property management fees payable                         14,821           13,066
Customer deposits and other liabilities                 124,720          107,959
Capital lease obligations (Note 3)                      126,386          146,354
                                                    -----------      -----------
Total liabilities                                       759,023          760,206
                                                    -----------      -----------
PARTNERS' EQUITY (DEFICIT)(Note 4):
General partners                                        (85,704)        (85,844)
Limited partners (24,000 limited
partnership units outstanding
at December 31, 2005 and 2004)                        2,292,182       2,278,332
                                                   ------------      -----------
Total partners' equity                                2,206,478       2,192,488
                                                   ------------      -----------
TOTAL                                               $ 2,965,501     $ 2,952,694
                                                   ============      ===========

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, 2005
--------------------------------------------------------------------------------


                                               2005         2004         2003

REVENUES:
Rental                                      $2,689,810   $2,514,629   $2,577,321
                                            ----------   ----------   ----------
EXPENSES:
 Depreciation                                   50,513        2,386         -
 Operating                                     907,840      814,977      781,921
 General and administrative                    261,758      199,484      248,000
 Interest expense                                8,770
 General partners' incentive
  management fee (Note 4)                      123,265      120,973      127,790
 Property management fee                       134,747      129,049      128,554
                                            ----------   ----------   ----------
Total expenses                               1,486,893    1,266,869    1,286,265
                                            ----------   ----------   ----------
OPERATING INCOME                             1,202,917    1,247,760    1,291,056

OTHER INCOME-
 Interest income                                   646          644          672

                                            ----------   ----------   ----------
NET INCOME                                  $1,203,563   $1,248,404   $1,291,728
                                            ==========   ==========   ==========

NET INCOME ALLOCATED TO (Note 4):
Limited partners                            $1,191,527   $1,235,920   $1,278,811
General partners                                12,036       12,484       12,917
                                            ----------   ----------   ----------
TOTAL                                       $1,203,563   $1,248,404   $1,291,728
                                            ==========   ==========   ==========
NET INCOME ALLOCATED TO LIMITED
PARTNERS PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4)                        $    49.65   $    51.50   $    53.28
                                            ==========   ==========   ==========

See accompanying notes to financial statements.


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

STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
THREE YEARS ENDED DECEMBER 31, 2005
--------------------------------------------------------------------------------


                                         General       Limited
                                        Partners       Partners         Total

BALANCE, JANUARY 1, 2003               $(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

 Net income                              12,484       1,235,920       1,248,404

 Distributions                          (12,844)     (1,271,534)     (1,284,378)
                                       --------     -----------     -----------
BALANCE, DECEMBER 31, 2004              (85,844)      2,278,332       2,192,488

 Net income                              12,036       1,191,527       1,203,563

 Distributions                          (11,896)     (1,177,677)     (1,189,573)
                                       --------     -----------     -----------
BALANCE, DECEMBER 31, 2005             $(85,704)    $ 2,292,182     $ 2,206,478
                                       =========    ===========     ===========


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, 2005
--------------------------------------------------------------------------------


                                            2005          2004          2003

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                             $ 1,203,563   $ 1,248,404   $ 1,291,728
 Adjustments to reconcile net income
  to net cash provided by
  operating activities:
  Depreciation                               50,513         2,386
 Changes in assets and liabilities:
  Other assets                                3,750           945        (6,380)
  Incentive management fee
    payable to general partners                 269        (4,173)       (7,932)
  Property management fees payable            1,755         2,813           175
  Customer deposits and
   other liabilities                         16,761        10,238
                                         -----------   -----------   -----------
  Net cash provided by operating
  activities                              1,276,611     1,260,613     1,277,591


CASH FLOWS USED IN INVESTING
 ACTIVITIES- Additions to property          (10,308)      (23,858)

CASH FLOWS USED IN FINANCING ACTIVITIES -
Distributions to partners                (1,189,573)   (1,284,378)   (1,100,643)
Payments on capital lease obligations       (37,480)      (11,250)
                                        -----------   -----------   ------------
 Net cash used in financing activities   (1,227,053)   (1,295,628)   (1,100,643)

NET INCREASE(DECREASE) IN CASH AND
CASH EQUIVALENTS                             39,250       (58,873)      176,948

CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR                        616,045       674,918       497,970
                                        -----------   -----------   ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR                          $   655,295   $   616,045   $   674,918
                                        ===========   ===========   ============

SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION - Cash paid
 during the year for interest           $     8,770         -              -
                                        ===========   ===========   ============

NON CASH INVESTING AND
    FINANCING ACTIVITIES -

 Acquisition of trucks utilizing
 capital leases                         $    17,512   $   157,604   $     -
                                        ===========   ===========   ============



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, 2005


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 which were  purchased  for $500 a unit.  The  general
        partners have made no capital  contributions to the  Partnership and are
        not  required  to make  any  capital  contributions 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 and cash equivalents.

        Property  and  Depreciation  -  Property was  recorded  at  cost  and is
        composed primarily of mini-storage facilities. The facilities' buildings
        are fully depreciated.  Building improvements are depreciated over a
        five year period.  Property under capital leases is amortized over the
        lives of the the respective leases or the estimated useful lives of the
        assets.

        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 for the year ended December 31, 2005 is  $26,353.

        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 2005, 2004 and 2003.

        Fair Value of Financial Instruments - For all financial instruments,
        including cash and cash equivalents, other assets, distributions due
        partners, incentive management fee payable to general partners, pro-
        perty management fee payable, and customer deposits and other liabil-
        ities, carrying values approximate fair values because of short matur-
        ity of those instruments.  The carrying values of the capital lease
        obligations approximates fair value because the terms of the instru-
        ments are similar to terms available to the Partnership for similar
        types of leasing agreements.

        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 and cash equivalents with high credit
        quality institutions.

        Recent Accounting Pronouncement - In March 2005, the Financial Account-
        ing Standards Board issued Statement of Financial Accounting Standards
        Board Interpretation No. 47, Accounting for Conditional Asset Retire-
        ment Obligations ("FIN 47"). FIN 47 clarifies guidance provided in
        Statement of Financial Accounting Standards No. 143, Accounting for
        Asset Retirement Obligations ("SFAS 143").  The term asset retirement
        obligation refers to a legal oblifation to perform an asset retirement
        activity in which the timing and/or method of settlement are conditional
        on a future event that may or may not be within the control of the
        entity.  Entities are required to recognize a liability for the fair
        value of a conditional asset retirement obligation when incurred if
        the liability's fair value can be reasonably estimated.  FIN 47 was
        effective for fiscal years ending after December 15, 2005.  The adop-
        tion of the interpretation did not have a material effect on the Part-
        nership's financial statements.

          In May 2005, the Financial Accounting Standards Board issued Statement
        of Financial Accounting Standards No. 154, Accounting Changes and Error
        Corrections ("SFAS 154"), to replace APB Opinion No. 20, Reporting
        Accounting Changes in Interim Financial Statements ("APB 20"). SFAS 154
        changes the requirements for the accounting for and reporting of change
        in accounting principle and requires retrospective application to prior
        periods' financial statements, unless it is impracticable to determine
        period specific effects or the cumulative effect of the change. SFAS 154
        will be effective for accounting changes and corrections of errors made
        in fiscal years beginning after December 15, 2005.  The adoption of this
        statement is not expected to have a material effect on the Company's
        results of operations or financial condition.

        Reclassification - The Partnership reclassified the change in payments
        on capital lease obligations in the statements of cash flows from an
        operating activity to a financing activity.  This reclassification does
        not affect the total net change in cash and cash equivalents and has no
        impact on the Partnership's balance sheet, statements of income, and
        statements of changes in partners' equity (deficit).


3.      PROPERTY
        The total cost  of  property  and  accumulated  depreciation as  of
        December 31, 2005 and 2004, is as follows:

                                                  2005            2004

       Land                                   $ 2,089,800     $ 2,089,800
       Buildings and improvements               7,780,448       7,770,140
       Rental trucks under
         capital leases                           175,116         157,604
                                              -----------     -----------

       Total                                   10,045,364      10,017,544
       Less accumulated depreciation           (7,799,181)     (7,748,668)
                                              -----------     -----------
       Property-net                           $ 2,246,183     $ 2,268,876
                                              ===========     ===========

      The rental trucks under capital leases were not placed into service
      until January 2005 and therefore no depreciation expense was recorded
      during 2004. Depreciation expense of $44,710 was recorded in 2005.

      The Partnership leases certain vehicles under agreements that meet the
      criteria for classification as capital leases which expire in 2008.
      Future minimum lease payments under these capital leases at December 31,
      2005 are summarized  as follows:

      2006                                             $ 45,000
      2007                                               45,000
      2008                                               45,000
                                                        -------
      Total future minimum payment obligations          135,000
      Less interest portion                               8,614
                                                        -------
      Present value of net minimum lease payments      $126,386
                                                        =======



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)
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                    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
<S>                   <C>     <C>       <C>         <C>            <C>         <C>        <C>         <C>         <C>   <C>   <C>

Chico, CA             None    $209,700  $  932,373   $11,148         $209,700  $  943,521  $1,153,221    940,098  09/84 12/83 15 Yrs
Fairfield, CO         None     264,500   1,267,896    15,666          264,500   1,283,562   1,548,062  1,281,730  08/84 01/84 15 Yrs
Fort Collins, CO      None     375,100   1,396,960    16,443          375,100   1,413,403   1,788,503  1,407,283  12/84 05/84 15 Yrs
Riverside, CA         None     356,000   1,391,210    21,145          356,000   1,412,355   1,768,355  1,407,132  12/84 06/84 15 Yrs
La Verne, CA          None     453,250   1,243,974    19,305          453,250   1,263,279   1,716,529  1,256,890  03/85 08/84 15 Yrs
Littleton, CO         None     431,250   1,423,811    40,517          431,250   1,464,328   1,895,578  1,461,338  10/85 05/85 15 Yrs
                              --------  ----------   -------         --------  ----------  ---------- ----------
                            $2,089,800  $7,656,224  $124,224       $2,089,800  $7,780,448 $ 9,870,248 $7,754,471
                            ==========  ==========  ========       ==========  ========== =========== ==========
</TABLE>

                                                     Real Estate     Accumulated
                                                        at Cost     Depreciation

               Balance, January 1, 2003               $ 9,836,082     $7,746,282
                 Additions                                  -               -
                                                      -----------     ----------
               Balance, December 31, 2003             $ 9,836,082     $7,746,282
                 Additions                                 23,858          2,386
                                                      -----------     ----------
               Balance, December 31, 2004             $ 9,859,940     $7,748,668
                 Additions                                 10,308          5,803
                                                      -----------     ----------
               Balance, December 31, 2005             $ 9,870,248     $7,754,471
                                                      ===========     ==========



<PAGE>


                                    EXHIBIT 2

                                 March 27, 2006

                      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,
2005 and 2004, and the related statements of income, changes in partners' equity
(deficit) and cash flows for each of the three years ended December 31, 2005
accompanied by a report of independent registered public accounting firm.  The
Partnership owns  six  mini-storage  facilities.  The Partnership's  properties
were each purchased for all cash and funded solely from subscriptions for limit-
ed 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, 2005 and December 31, 2004 were as follows:

Location of Property               Average Occupancy          Average Occupancy
                                   Levels for the             Levels for the
                                   Year Ended                 Year Ended
                                   Dec. 31, 2005              Dec. 31, 2004


Chico, California                      91%                       84%

Fairfield, California                  84%                       85%

Ft. Collins, Colorado                  83%                       83%

LaVerne, California                    91%                       86%

Littleton, Colorado                    81%                       77%

Riverside, California                  88%                       87%



     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, 2005 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 officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have:

         a)  designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our super-
         vision, to ensure that material information relating to the registrant,
         including its consolidated 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 and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures as of the end
         of the period covered by this report based on such evaluation; and

         c)  disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of our annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

    5.  The registrant's other certifying officer and I have disclosed based
    on our most recent evaluation of internal control over financial reporting,
    to the registrant's auditors and general partners (or persons performing
    the equivalent functions):

         a)  all significant deficiencies and material weaknesses in the design
         or operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to re-
         cord, process, summarize and report financial information; 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 over financial reporting.


    Date:  March 27, 2006



    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 officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have:

         a)  designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our super-
         vision, to ensure that material information relating to the registrant,
         including its consolidated 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 and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures as of the end
         of the period covered by this report based on such evaluation; and

         c)  disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of our annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

    5.  The registrant's other certifying officer and I have disclosed based
    on our most recent evaluation of internal control over financial reporting,
    to the registrant's auditors and general partners (or persons performing the
    equivalent functions):

         a)  all significant deficiencies and material weaknesses in the design
         or operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to re-
         cord, process, summarize and report financial information; 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 over financial reporting.


    Date:  March 27, 2006



    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



Pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley
Act of 2002, the undersigned of DSI Realty Income Fund VII (the "Partnership),
hereby certifies, to his knowledge, that:

  (i) the accompanying Annual Report on Form 10-K of the Partnership for the
fiscal year ended December 31, 2005 (the "Report") fully complies with the
requirements of Section 13(a) or Section 15(d), as applicable of the Securities
Exchange Act of 1934, as amended; and

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


                                    Robert J. Conway
                                    Chief Executive Officer
                                    March 27, 2006






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


Pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley
Act of 2002, the undersigned of DSI Realty Income Fund VII (the "Partnership),
hereby certifies, to his knowledge, that:

  (i) the accompanying Annual Report on Form 10-K of the Partnership for the
fiscal year ended December 31, 2005 (the "Report") fully complies with the
requirements of Section 13(a) or Section 15(d), as applicable of the Securities
Exchange Act of 1934, as amended; and

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


                                    Richard P. Conway
                                    Vice President
                                    March 27, 2006