-                         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 for the fiscal year ended December 31, 2006 or

[ ]Transition  report  pursuant  to  section  13 or 15(d) of the  Securities
Exchange  Act  of  1934
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
                               (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
                        Yes [ ]  No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.
                        Yes [ ]  No [X]

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]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

  Large Accelerated Filer [ ]  Accelerated Filer [ ]  Non-accelerated Filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
                          Yes [ ]  No [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,
     2006, incorporated by reference to Form 10-K, Part II.

Item 11.  Registrant's  Financial  Statements for its fiscal year ended December
     31, 2006, 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, 2006, 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, 2006 and 2005 were as follows:




Location of Property       Average Occupancy         Average Occupancy
                           for the                   Level for the
                           Year Ended                Year Ended
                           Dec. 31, 2006             Dec. 31, 2005

Chico, California               88%                       91%

Fairfield, California           83%                       84%

Ft. Collins, Colorado           80%                       83%

LaVerne, California             88%                       91%

Littleton, Colorado             79%                       81%

Riverside, California           82%                       88%

     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 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 regarding  properties owned by the Partnership.

                                                                    2006   2005
Location          Size of  Net Rentable  No. of        Completion  Avg. Rent
                  Parcel   Area          Rental Units  Date        Per. Sq. Ft.

Chico, CA         1.97 acres  39,580       366         9/05/84      7.85   7.51

Fairfield, CA     2.29 acres  40,668       442         8/31/84     12.54  12.00

Ft.Collins, CO    2.49 acres  57,284       603         3/27/85      8.10   7.42

LaVerne, CA       2.78 acres  50,652       523         8/21/84     11.88  11.40

Riverside, CA     2.92 acres  60,011       567        12/12/84      9.13   8.91

Littleton, CO     3.071 acres 43,380       404        11/01/85      9.21   8.58



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 874 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 $11.99 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2006, and $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.




Item 6.  SELECTED FINANCIAL DATA
         FOR THE YEARS ENDED DECEMBER 31,
         --------------------------------------------------------------------
                     2006         2005         2004         2003        2002
                     ----         ----         ----         ----        ----

TOTAL REVENUES
AND OTHER
INCOME            $2,814,586   $2,690,456   $2,515,273   $2,577,993   $2,614,292

TOTAL
EXPENSES           1,503,374    1,486,893    1,266,869    1,286,265    1,320,183
                  ----------   ----------   ----------   ----------   ----------

NET
INCOME            $1,311,212   $1,203,563   $1,248,404   $1,291,728   $1,294,109
                  ==========   ==========   ==========   ==========   ==========

TOTAL
ASSETS            $3,079,807   $2,965,501   $2,952,694   $2,833,436   $2,650,108
                  ==========   ==========   ==========   ==========   ==========

CASH FLOWS FROM (USED IN):
OPERATING         $1,273,499   $1,276,611   $1,260,613   $1,277,591   $1,310,542
INVESTING            (12,074)     (10,308)     (23,858)        -            -
FINANCING         (1,207,352)  (1,227,053)  (1,295,628)  (1,100,643) (1,343,293)

NET INCOME
PER LIMITED
PARTNERSHIP
UNIT              $    54.09   $    49.65   $    51.50   $    53.28   $    53.38
                  ==========   ==========   ==========   ==========   ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT              $    47.97   $    49.07   $    52.98   $    45.40   $    55.41
                  ==========   ==========   ==========   ==========   ==========




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

2006 COMPARED TO 2005

Total revenues increased from $2,689,810 in 2005 to $2,813,938 in 2006, while
total expenses increased from $1,486,893 to $1,503,374, other income increased
from $646 to $648 resulting in an increase in net income from $1,203,563 to
$1,311,212.  Rental revenues increased primarily as a result of higher unit
rental rates.  Occupancy levels for the Partnership's six mini-storage facil-
ities averaged 83.8% and 86.3% for the years ended December 31, 2006 and 2005
respectively.  The Partnership continued its advertising campaign to attract
keep new tenants in its various mini-storage facilities.  The approximate
$8,900 (1.0%) increase in operating expenses was due primarily to increases
in maintenance and repair, real estate tax and salaries and wages expenses,
partially offset by decreases in advertising and purchase of locks and packing
materials expenses.  General and administrative expenses decreased approxi-
mately $10,300 (3.9%) primarily as a result of decreases in legal and profes-
sional and office supplies and printing expenses, partially offset by an
increase in bank and credit card fees and postage expenses.  The General
Partners' incentive management fee which is based on cash available for dis-
tribution, increased as a result of the increase in net income.  Property
management fees, which are based on rental revenue, increased as a result of
the increase in rental revenue.


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 and packing materials, real
estate tax and salaries and wages, truck insurance and maintenance expenses.
General and administrative expenses increased approximately $62,300 (31.2%)
primarily as a result of increases in legal and professional, and equipment
and computer lease and office supplies and printing expenses.  The General
Partners' incentive management fee which is based on cash available for dis-
tribution, remained relatively constant.  Property management fees, which are
based on rental revenue, increased as a result of the increase in rental
revenue.

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 $3,100 (2.4%) in 2006
as compared to 2005 due to an increase in other assets and a reduction in in-
centive managment fee payable to general partners was offset by the increase
in net income and an increase in customer deposits and other liabilities. 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.

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 2006, 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 2006,
2005, and 2004 and payments on capital lease obligations in 2006, 2005, and
2004.  Special distributions of 1.5%, 1.75%, and 2.5% of capital contributed
by Limited Partners, were declared and paid on December 15, 2006, 2005, and
2004, respectively.

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.


LONG-TERM LIABILITIES, CONTRACTUAL OBLIGATIONS, AND OFF-BALANCE SHEET
ARRANGEMENTS


Long-Term Liabilities and Contractual Obligations. The following table summar-
izes our long-term liabilities, material obligations and commitments to make
future payments under certain contracts, including long-term debt obligations,
purchase commitments and operating leases.

					Payments due by period

					Less			More
					than 1	1-3	3-5	than 5
Contractual Obligations		Total	year	years	years	years

Long-Term Debt 			-	-	-	-	-
Capital (Finance) Lease 	93,750	48,750	45,000	-	-
Purchase Obligations		-	-	-	-	-
Other Long-Term Liablities	-	-	-	-	-
Reflected on the Registrant's
Balance Sheet under the GAAP
of the primary financial
Statements



                     QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



Summarized quarterly financial data for the years ended December 31, 2006 and
2005 was as follows:

                                            2006 QUARTER ENDED
                                            ------------------
                           March 31   June 30   September 30    December 31

Total revenues             $695,134   $719,919   $693,176        $705,709

Net income                  318,982    342,968    314,884         334,378

Net income per
limited partnership unit   $  13.16   $  14.15   $  12.99        $  13.79

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



                                            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






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, 2006,  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 73 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 78 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 84 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, 2006,  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

     The following table sets forth certain information regarding the beneficial
ownership of the Fund's limited partnership units as of December 31, 2006 of
(i) each person known to beneficially own more than 5% of the Fund's limited
partnership units(2), (ii) each director or director nominee of the Fund,
(iii) each executive officer of the Fund for whom information is given in the
Summary Compensation Table in this proxy statement, and (iv) all directors and
executive officers of the Fund.

TITLE OF        NAME OF                 NUMBER OF LP UNITS         PERCENT
CLASS          BENEFICIAL OWNER        BENEFICIALLY HELD(1)        OF CLASS
--------      -----------------        --------------------        --------
Limited
Partnership
Interest      Robert J. Conway              358 - Direct            1.49

Limited
Partnership
Interest      Joseph W. Conway              187 - Direct             *


*  Less than one percent of the Fund's limited partnership's units.

(1) Unless otherwise indicated, the address for each listed director or officer
    is c/o 6700 E. Pacific Coast Hwy. #150. As used in this table, "beneficial
    ownership" means the sole or shared power to vote or direct the voting
    or to dispose or direct the disposition of any security. For purposes of
    this table, a person is deemed to be the beneficial owner of units acquired
    before the date of this filing.

(2) As of  December  31,  2006,  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 beneficiary,  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  State-
    ment 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 State-
    ment 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, 2006,  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 2006 were $31,240 and for 2005 were $29,640.

     Tax Fees

     The aggregate fees for professional services rendered by Deloitte Tax
LLP for tax compliance, tax advice and tax planning for 2006 were $26,639
and 2005 were $22,750.  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, 2006,  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, 2006.

     (b)  No reports on Form 8K were filed during the fiscal year ended December
          31, 2006.

                                   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


    /s/ ROBERT J. CONWAY
By_____________________________     Dated:  March 30, 2007
  ROBERT J. CONWAY, President
  (Chief Executive Officer, Chief
  Financial Officer, and Director)

    /s/ JOSEPH W. CONWAY
By____________________________      Dated:  March 30, 2007
  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


      /s/ ROBERT J. CONWAY
By:__________________________       Dated:  March 30, 2007
  ROBERT J. CONWAY, President,
  Chief Executive Officer, Chief
  Financial Officer, and Director


     /s/ JOSEPH W. CONWAY
By___________________________       Dated:  March 30, 2007
  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, 2006, 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,

-----------------------------------------------------------------------------
                     2006         2005         2004         2003        2002
                     ----         ----         ----         ----        ----

TOTAL REVENUES
AND OTHER
INCOME            $2,814,586   $2,690,456   $2,515,273   $2,577,993   $2,614,292

TOTAL
EXPENSES           1,503,374    1,486,893    1,266,869    1,286,265    1,320,183
                  ----------   ----------   ----------   ----------   ----------

NET
INCOME            $1,311,212   $1,203,563   $1,248,404   $1,291,728   $1,294,109
                  ==========   ==========   ==========   ==========   ==========

TOTAL
ASSETS            $3,079,807   $2,965,501   $2,952,694   $2,833,436   $2,650,108
                  ==========   ==========   ==========   ==========   ==========

CASH FLOWS FROM (USED IN):
OPERATING         $1,273,499   $1,276,611   $1,260,613   $1,277,591   $1,310,542
INVESTING            (12,074)     (10,308)     (23,858)        -            -
FINANCING         (1,207,352)  (1,227,053)  (1,295,628)  (1,100,643) (1,343,293)

NET INCOME
PER LIMITED
PARTNERSHIP
UNIT              $    54.09   $    49.65   $    51.50   $    53.28   $    53.38
                  ==========   ==========   ==========   ==========   ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT              $    47.97   $    49.07   $    52.98   $    45.40   $    55.41
                  ==========   ==========   ==========   ==========   ==========



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, 2006:

                                                         Net          Partners'
                                                        Income         Equity

Per financial statements                             $ 1,311,212    $ 2,354,798
Excess tax depreciation                                   38,515       (112,995)
Accrued incentive management fees                                       221,117
Deferred rental revenues                                 (13,384)        72,339
Accrued expenses                                          33,755         80,317
Accrued property taxes                                    (9,055)      (110,387)
Fixed asset adjustment                                   (38,460)       130,884
Excess book distribution                                                242,424
Tax expense adjustment                                   (11,378)
Bad debt allowance                                        19,562
                                                     -----------    -----------
Per Partnership income tax return                    $ 1,330,767    $ 2,878,497
                                                     ===========    ===========
Net taxable income per
limited partnership unit                             $     54.89
                                                     ===========



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, 2006 and 2005                         F-2

    Statements of Income for Each of the Three
        Years Ended December 31, 2006                                       F-3

    Statements of Changes in Partners' Equity (Deficit)for Each
        of the Three Years Ended December 31, 2006                          F-4

    Statements of Cash Flows for Each of the Three Years
        Ended December 31, 2006                                             F-5

    Notes to Financial Statements as of December 31, 2006
       and 2005, and for Each of the Three Years Ended
       December 31, 2006                                                    F-6

SUPPLEMENTAL SCHEDULE:

    Schedule III - Real Estate and Accumulated Depreciation
                   as of December 31, 2006                                  F-9


    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, 2006
and 2005,  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, 2006. Our audits also included the supplemental schedule listed
in the Index at Item 15.  These financial  statements  and the supplemental
schedule are the responsibility of the Partnership's management. Our respons-
ibility  is to express an opinion on the financial statements and supplemental
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,
2006 and 2005,  and the results of its operations and its cash flows for each of
the three years in the period  ended  December  31,  2006,  in  conformity  with
accounting principles generally accepted  in the United States of America. Also,
in our opinion, such supplemental 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.


/s/ Deloitte & Touche LLP
_______________________________________
Deloitte & Touche LLP
Los Angeles, California

March 30, 2007




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

BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
--------------------------------------------------------------------------------


ASSETS                                                  2006             2005

CASH AND CASH EQUIVALENTS                           $   715,368      $  655,295

PROPERTY, net (Note 3)                                2,211,491       2,246,183

OTHER ASSETS                                            152,948          64,023
                                                    -----------      -----------
TOTAL                                               $ 3,079,807     $ 2,965,501
                                                    ===========      ===========

LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:
Distribution due partners (Note 4)                  $   242,424      $   242,424
Incentive management fee payable to
general partners (Note 4)                               234,821          250,672
Property management fees payable (Note 6)                14,812           14,821
Customer deposits and other liabilities                 145,026          124,720
Capital lease obligations (Notes 3 and 6)                87,926          126,386
                                                    -----------      -----------
Total liabilities                                       725,009          759,023
                                                    -----------      -----------
PARTNERS' EQUITY (DEFICIT)(Note 4):
General partners                                        (84,221)        (85,704)
Limited partners (24,000 limited
partnership units outstanding
at December 31, 2006 and 2005)                        2,439,019       2,292,182
                                                   ------------      -----------
Total partners' equity                                2,354,798       2,206,478
                                                   ------------      -----------
TOTAL                                               $ 3,079,807     $ 2,965,501
                                                   ============      ===========

See notes to financial statements.



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

STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 2006
--------------------------------------------------------------------------------


                                               2006         2005         2004

REVENUES:
Rental                                      $2,813,938   $2,689,810   $2,514,629
                                            ----------   ----------   ----------
EXPENSES:
 Depreciation                                   46,766       50,513        2,386
 Operating                                     916,774      907,840      814,977
 General and administrative                    251,491      261,758      199,484
 Interest expense                                6,540        8,770
 General partners' incentive
  management fee (Note 4)                      143,270      123,265      120,973
 Property management fee (Note 6)              138,533      134,747      129,049
                                            ----------   ----------   ----------
Total expenses                               1,503,374    1,486,893    1,266,869
                                            ----------   ----------   ----------
OPERATING INCOME                             1,310,564    1,202,917    1,247,760

OTHER INCOME-
 Interest income                                   648          646          644

                                            ----------   ----------   ----------
NET INCOME                                  $1,311,212   $1,203,563   $1,248,404
                                            ==========   ==========   ==========

AGGREGATE NET INCOME
 ALLOCATED TO (Note 4):
Limited partners                            $1,298,100   $1,191,527   $1,235,920
General partners                                13,112       12,036       12,484
                                            ----------   ----------   ----------
TOTAL                                       $1,311,212   $1,203,563   $1,248,404
                                            ==========   ==========   ==========
NET INCOME PER
LIMITED PARTNERSHIP
UNIT (Notes 2 and 4)                        $    54.09   $    49.65   $    51.50
                                            ==========   ==========   ==========

See 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, 2006
--------------------------------------------------------------------------------


                                         General       Limited
                                        Partners       Partners         Total

BALANCE, JANUARY 1, 2004               $(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

 Net income                              13,112       1,298,100       1,311,212

 Distributions                          (11,629)     (1,151,263)     (1,162,892)
                                       --------     -----------     -----------
BALANCE, DECEMBER 31, 2006             $(84,221)    $ 2,439,019     $ 2,354,798
                                       =========    ===========     ===========


See notes to financial statements.



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

STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2006
--------------------------------------------------------------------------------


                                            2006          2005          2004

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                             $ 1,311,212   $ 1,203,563   $ 1,248,404
 Adjustments to reconcile net income
  to net cash provided by
  operating activities:
  Depreciation                               46,766        50,513         2,386
 Changes in assets and liabilities:
  Other assets                              (88,925)        3,750           945
  Incentive management fee
    payable to general partners             (15,851)          269        (4,173)
  Property management fees payable               (9)        1,755         2,813
  Customer deposits and
   other liabilities                         20,306        16,761        10,238
                                         -----------   -----------   -----------
  Net cash provided by operating
  activities                              1,273,499     1,276,611     1,260,613
                                         -----------   -----------   -----------

CASH FLOWS FROM INVESTING
 ACTIVITIES- Additions to property          (12,074)      (10,308)      (23,858)
                                         ----------    ----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners                (1,162,892)   (1,189,573)   (1,284,378)
Payments on capital lease obligations       (38,460)      (37,480)      (11,250)
                                        -----------   -----------   ------------
Net cash used in financing activities    (1,201,352)   (1,227,053)   (1,295,628)
                                        -----------   -----------   ------------
NET INCREASE(DECREASE) IN CASH AND
CASH EQUIVALENTS                             60,073        39,250       (58,873)

CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR                        655,295       616,045       674,918
                                        -----------   -----------   ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR                          $   715,368   $   655,295   $   616,045
                                        ===========   ===========   ============

SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION - Cash paid
 during the year for interest           $     6,540   $     8,770         -
                                        ===========   ===========   ============

NON CASH INVESTING AND
    FINANCING ACTIVITIES:

 Acquisition of trucks utilizing
 capital leases                         $      -      $    17,512   $   157,604
                                        ===========   ===========   ============
 Distribution due partners included
 in partners' equity                    $   242,242   $   242,424   $   242,424
                                        ===========   ===========   ============



See notes to financial statements.



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

NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2006 AND 2005, AND FOR
EACH OF THE THREE YEARS ENDED DECEMBER 31, 2006


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 (see Note 6).


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, 2006 is $19,555.

        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 2006, 2005 and 2004.

        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 September 2006, the Financial
        Accounting Standards ("SFAS") No. 157, "Fair Value Measurements."
        SFAS No. 157 defines fair value, establishes a framework for measuring
        fair value and expands desclosures about fair value measurements.
        The Partnership is required to adopt SFAS No. 157 for fiscal year 2008
        and does not expect its adoption to have a material effect on the
        Partnership's results of operations or financial condition.


3.      PROPERTY
        The total cost  of  property  and  accumulated  depreciation as  of
        December 31, 2006 and 2005, is as follows:

                                                  2006            2005

       Land                                   $ 2,089,800     $ 2,089,800
       Buildings and improvements               7,792,522       7,780,448
       Rental trucks under
         capital leases                           175,116         175,116
                                              -----------     -----------

       Total                                   10,057,438      10,045,364
       Less accumulated depreciation           (7,845,947)     (7,799,181)
                                              -----------     -----------
       Property-net                           $ 2,211,491     $ 2,246,183
                                              ===========     ===========


      Depreciation expense of $44,710 and $44,710 was recorded on the rental
      trucks under capital leases in 2006 and 2005, respectively.

      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,
      2006, are summarized  as follows:

      2007                                              $48,750
      2008                                               45,000
                                                        -------
      Total future minimum payment obligations           93,750
      Less interest portion                               5,824
                                                        -------
      Present value of net minimum lease payments       $87,926
                                                        =======



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.

6.      RELATED-PARTY TRANSACTIONS

        The partnership has entered into management agreements with Dahn to
        operate their mini-storage facilities.  The management agreement pro-
        vides for a management fee equal to 5% of gross revenue from operations,
        which is defined as the entire amount of all receipts from the renting
        or leasing of storage compartments and sale of locks.  The management
        agreement is renewable annually.  Dahn earned management fees equal to
        $138,533, $134,747, and $129,049 for the years ended December 31, 2006,
        2005, and 2004, respectively.  Amounts payable to Dahn at December 31,
        2006 and 2005, were $14,812, and $14,821, respectively.

        In 2004, the Partnership entered into truck lease agreements with KMD
        Trucks, LLC ("KMD").  The president of Dahn, Brian Dahn, is also a
        member of KMD.  The truck lease is a 48-month lease with monthly pay-
        ments in the amount of $750 (see Note 3).




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   $12,570         $209,700  $  944,943  $1,154,643    940,431  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  1,407,614  12/84 05/84 15 Yrs
Riverside, CA         None     356,000   1,391,210    26,750          356,000   1,417,960   1,773,960  1,407,710  12/84 06/84 15 Yrs
La Verne, CA          None     453,250   1,243,974    22,550          453,250   1,266,524   1,719,774  1,257,641  03/85 08/84 15 Yrs
Littleton, CO         None     431,250   1,423,811    42,319          431,250   1,466,130   1,897,380  1,461,401  10/85 05/85 15 Yrs
                              --------  ----------   -------         --------  ----------  ---------- ----------
                            $2,089,800  $7,656,224  $136,298       $2,089,800  $7,792,522 $ 9,882,322 $7,756,527
                            ==========  ==========  ========       ==========  ========== =========== ==========
</TABLE>

                                                     Real Estate     Accumulated
                                                        at Cost     Depreciation

               Balance, January 1, 2004               $ 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
                 Additions                                 12,074          2,056
                                                      -----------     ----------
               Balance, December 31, 2006             $ 9,882,322     $7,756,527
                                                      ===========     ==========



<PAGE>


                                    EXHIBIT 2

                                 March 30,2007

                      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,
2006 and 2005, and the related statements of income, changes in partners' equity
(deficit) and cash flows for each of the three years ended December 31, 2006
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, 2006 and 2005 were as follows:


Location of Property       Average Occupancy         Average Occupancy
                           for the                   Level for the
                           Year Ended                Year Ended
                           Dec. 31, 2006             Dec. 31, 2005

Chico, California               88%                       91%

Fairfield, California           83%                       84%

Ft. Collins, Colorado           80%                       83%

LaVerne, California             88%                       91%

Littleton, Colorado             79%                       81%

Riverside, California           82%                       88%





     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, 2006 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.


                                                      /s/ ROBERT J. CONWAY
                                                   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 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 report.

    3.  Based on my knowledge, the financial statements, and other financial
    information included in this 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 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
         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 an 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 the audit committee of the registrant's
    board of directors (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 control over financial reporting.

    Date:  March 30, 2007

     /s/ ROBERT J. CONWAY
    _________________________________
    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 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 report.

    3.  Based on my knowledge, the financial statements, and other financial
    information included in this 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 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
         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 an 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 the audit committee of the registrant's
    board of directors (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 control over financial reporting.


    Date:  March 30, 2007

     /s/ RICHARD P. CONWAY
    ________________________________
    Richard P. Conway
    Vice President



EXHIBIT 3
                       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 VI (the
"Partnership") on Form 10-K for the period ending December 31, 2006 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


                                    /s/ ROBERT J. CONWAY
                                    ____________________________
                                    Robert J. Conway
                                    Chief Executive Officer
                                    March 30, 2007





EXHIBIT 4
                       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 VI (the
"Partnership") on Form 10-K for the period ending December 31, 2006 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard P. Conway, Vice President of the Corporate General Partner, 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.

                                     /s/ RICHARD P. CONWAY
                                    ___________________________
                                    Richard P. Conway
                                    Vice President
                                    March 30, 2007