<PAGE>
December 18, 1998
Dear Shareholder:
It is a pleasure to provide you with the Annual Report for Spirit of America
Investment Fund, Inc. ("Spirit"), dated October 31, 1998.
Spirit Class A shares Net Asset Value is now listed daily. The Fund has di-
versified its investments in over 70 different real estate investment trusts.
It primarily concentrates its investments in apartment, office, shopping cen-
ter and industrial REITs.
REIT's are currently trading at multiples of FFO (Funds From Operations)
ranging from 8.8 to 10.8 times. For 1997 the range was 13.2 to 20.3 times. We
believe that REITs are underpriced and offer the investor exceptional value.
In most sectors, rents continue to increase, vacancy rates are declining and
there is no appreciable new construction to weaken these markets. That is why
we continue to believe that there are excellent investment opportunities
available. (Past performance should not be interpreted as an indication of fu-
ture return on investment.)
Sincerely,
/s/ David Lerner
David Lerner
President
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
COMMON STOCKS -- 98.78% ------ ------------
<S> <C> <C>
APARTMENTS (REITS) -- 15.22%
Amli Residential Properties Trust........................... 4,300 $ 96,750
Apartment Investment & Management Co., Cl A................. 5,300 185,169
Avalonbay Communities, Inc. ................................ 4,304 138,266
Camden Property Trust....................................... 5,500 147,813
Equity Residential Properties Trust......................... 4,300 180,600
Gables Residential Trust.................................... 3,000 78,937
Home Properties of New York, Inc. .......................... 3,300 88,687
Irvine Apartment Communities, Inc. ......................... 1,000 26,250
Mid-America Apartment Communities, Inc. .................... 2,500 61,250
Post Properties, Inc. ...................................... 3,000 116,062
Smith (Charles E.) Residential Realty, Inc. ................ 3,000 91,875
----------
1,211,659
----------
DIVERSIFIED (REITS) -- 13.57%
BRE Properties, Inc., Cl A.................................. 6,300 151,987
Colonial Properties Trust................................... 5,000 137,500
Crescent Real Estate Equities Co. .......................... 5,300 132,831
Duke Realty Investments, Inc. .............................. 4,000 95,500
Essex Property Trust, Inc. ................................. 4,000 125,500
Glenborough Realty Trust, Inc. ............................. 6,000 128,625
Liberty Property Trust...................................... 6,000 138,000
Vornado Operating Co., Inc.*................................ 250 1,562
Vornado Realty Trust........................................ 5,000 168,438
----------
1,079,943
----------
HEALTHCARE (REITS) -- 5.74%
Health Care Property Investors, Inc. ....................... 2,000 67,250
Healthcare Realty Trust, Inc. .............................. 3,000 70,312
HRPT Properties Trust....................................... 3,000 47,813
LTC Healthcare, Inc.*....................................... 400 950
LTC Properties, Inc. ....................................... 4,000 68,500
Meditrust Companies -- Paired Stock......................... 3,000 48,750
National Health Investors, Inc. ............................ 3,000 84,563
Nationwide Health Properties, Inc. ......................... 3,000 69,187
----------
457,325
----------
INDUSTRIAL (REITS) -- 12.09%
Bedford Property Investors, Inc. ........................... 8,000 143,000
Brandywine Realty Trust..................................... 8,000 143,000
First Industrial Realty Trust, Inc. ........................ 5,000 128,125
ProLogis Trust.............................................. 4,600 100,337
Reckson Associates Realty Corp. ............................ 6,000 136,125
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
COMMON STOCKS -- CONTINUED ------ ------------
<S> <C> <C>
INDUSTRIAL (REITS) -- CONTINUED
Reckson Services Industries, Inc.*.......................... 640 $ 1,235
Spieker Properties, Inc. ................................... 5,300 182,850
Weeks Corp. ................................................ 4,400 127,875
----------
962,547
----------
NET LEASE (REITS) -- 6.00%
Catellus Development Corp.*................................. 2,000 27,500
Commercial Net Lease Realty................................. 9,000 132,187
Franchise Finance Corp. of America.......................... 4,000 99,500
Lexington Corporate Properties Trust........................ 6,000 75,000
TriNet Corporate Realty Trust, Inc. ........................ 5,000 143,750
----------
477,937
----------
OFFICE SPACE (REITS) -- 13.45%
Boston Properties, Inc. .................................... 4,300 122,550
CarrAmerica Realty Corp. ................................... 3,000 67,500
Corporate Office Properties Trust, Inc. .................... 9,000 68,625
Cousins Properties, Inc. ................................... 5,000 143,125
Equity Office Properties Trust.............................. 6,300 151,200
Highwoods Properties, Inc. ................................. 5,300 148,069
Kilroy Realty Corp. ........................................ 5,000 110,937
Mack-Cali Realty Corp. ..................................... 5,600 165,900
Prentiss Properties Trust................................... 4,500 92,813
----------
1,070,719
----------
REGIONAL MALLS (REITS) -- 10.10%
Bradley Real Estate, Inc. .................................. 6,000 126,000
CBL & Associates Properties, Inc. .......................... 4,000 104,250
General Growth Properties................................... 3,000 106,688
Macerich Co. (The).......................................... 4,000 110,250
Mills Corp. ................................................ 4,000 86,750
Rouse Co. (The)............................................. 1,000 28,063
Simon DeBartolo Group, Inc. ................................ 6,000 179,625
Taubman Centers, Inc. ...................................... 2,000 27,375
Westfield America, Inc. .................................... 2,000 34,375
----------
803,376
----------
SHOPPING CENTERS (REITS) -- 16.82%
Burnham Pacific Properties, Inc. ........................... 3,000 39,375
Developers Diversified Realty Corp. ........................ 6,000 113,250
Excel Legacy Corp.*......................................... 3,300 9,075
Federal Realty Investment Trust............................. 4,300 97,288
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
COMMON STOCKS -- CONTINUED ------ ------------
<S> <C> <C>
SHOPPING CENTERS (REITS) -- CONTINUED
First Washington Realty Trust, Inc. ........................ 4,000 $ 90,500
IRT Property Co. ........................................... 6,000 61,500
JDN Realty Corp. ........................................... 6,000 127,875
Kimco Realty Corp. ......................................... 2,000 79,625
New Plan Excel Realty Trust................................. 7,160 162,890
Pan Pacific Retail Properties, Inc. ........................ 7,000 130,813
Realty Income Corp. ........................................ 6,000 149,625
Urban Shopping Centers, Inc. ............................... 3,000 99,000
Weingarten Realty Investors................................. 4,000 177,750
----------
1,338,566
----------
STORAGE (REITS) -- 5.79%
Public Storage, Inc. ....................................... 3,000 80,063
Shurgard Storage Centers, Inc., Cl A........................ 4,000 107,750
Sovran Self Storage, Inc. .................................. 4,000 102,500
Storage USA, Inc. .......................................... 5,600 170,450
----------
460,763
----------
TOTAL COMMON STOCKS
(Cost $8,630,229)........................................... 7,862,835
----------
TOTAL INVESTMENTS -- 98.78%
(Cost $8,630,229**)......................................... 7,862,835
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.22%.............. 96,805
----------
NET ASSETS -- 100.00%....................................... $7,959,640
==========
</TABLE>
* Non-income producing security
** Cost for Federal income tax purposes is $8,630,229, and net unrealized de-
preciation consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation................. $ 42,280
Gross unrealized depreciation................. (809,674)
---------
Net unrealized depreciation.................. $(767,394)
=========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$8,630,229) (Note 1)............................................. $7,862,835
Cash.............................................................. 225,189
Receivables:
Dividends and interest........................................... 21,837
Capital stock sold............................................... 110,246
Deferred organization costs (Note 1).............................. 104,015
Other assets...................................................... 24,317
----------
TOTAL ASSETS................................................... 8,348,439
----------
LIABILITIES
Payables:
Securities purchased............................................. 200,663
Capital stock redeemed........................................... 25,925
Accrued expenses.................................................. 28,650
Accrued distribution expense (Note 3)............................. 2,238
Due to Adviser.................................................... 115,294
Other liabilities................................................. 16,029
----------
TOTAL LIABILITIES.............................................. 388,799
----------
NET ASSETS......................................................... $7,959,640
==========
CLASS A SHARES
Net assets applicable to 842,063 outstanding $0.001 par value
shares
(500,000,000 authorized shares).................................. $7,290,343
==========
Net asset value and redemption price per Class A Share
($7,290,343 / 842,063 shares).................................... $ 8.66
==========
Offering price per share ($8.66 / 0.9475)......................... $ 9.14
==========
CLASS B SHARES
Net assets applicable to 77,465 outstanding $0.001 par value
shares
(500,000,000 authorized shares).................................. $ 669,297
==========
Net asset value and offering price per Class B Share
($669,297 / 77,465 shares)....................................... $ 8.64
==========
Redemption price per share ($8.64 X 0.9425)....................... $ 8.14
==========
SOURCE OF NET ASSETS
At October 31, 1998, net assets consisted of:
Paid-in capital.................................................. $8,691,045
Undistributed net investment income.............................. 35,989
Net unrealized depreciation on investments....................... (767,394)
----------
NET ASSETS..................................................... $7,959,640
==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS FOR THE PERIOD ENDED OCTOBER 31, 1998*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends.......................................................... $ 217,171
Interest........................................................... 3,783
---------
TOTAL INCOME...................................................... 220,954
---------
EXPENSES
Investment advisory fees (Note 3).................................. 37,487
Transfer agent fees................................................ 35,702
Administration fees................................................ 51,973
Distribution fees--Class A (Note 3)................................ 10,717
Distribution fees--Class B (Note 3)................................ 2,923
Accounting fees.................................................... 26,794
Registration fees.................................................. 14,013
Custodian fees..................................................... 8,991
Printing expense................................................... 9,365
Amortization of organization costs (Note 1)........................ 19,939
Auditing fees...................................................... 12,264
Directors' fees.................................................... 5,250
Insurance expense.................................................. 8,485
Miscellaneous expense.............................................. 2,951
---------
TOTAL EXPENSES.................................................... 246,854
Expenses waived and reimbursed by Adviser (Note 3)............... (168,711)
---------
NET EXPENSES...................................................... 78,143
---------
NET INVESTMENT INCOME............................................. 142,811
---------
UNREALIZED LOSS ON INVESTMENTS
Net change in unrealized depreciation of investments............... (767,394)
---------
Net unrealized loss on investments............................... (767,394)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $(624,583)
=========
</TABLE>
* Class A commenced operations January 9, 1998.
Class B commenced operations March 6, 1998.
See accompanying notes to financial statements.
6
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED OCTOBER 31, 1998*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS
Net investment income............................................. $ 142,811
Net change in unrealized depreciation of investments.............. (767,394)
----------
Net decrease in net assets resulting from operations............. (624,583)
----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income:
Class A......................................................... (99,452)
Class B......................................................... (7,370)
----------
Total distributions to shareholders............................... (106,822)
----------
CAPITAL SHARE TRANSACTIONS
Shares sold:
Class A......................................................... 8,038,878
Class B......................................................... 726,562
Shares issued as reinvestment of dividends:
Class A......................................................... 90,487
Class B......................................................... 7,281
Shares redeemed:
Class A......................................................... (262,776)
Class B......................................................... (9,387)
----------
Increase in net assets derived from capital share transactions
(a).............................................................. 8,591,045
----------
Total increase in net assets.................................... 7,859,640
----------
NET ASSETS
Beginning of period............................................... 100,000
----------
End of period (including undistributed net investment income of
$35,989)......................................................... $7,959,640
==========
(a) Transactions in capital stock were:
Shares sold:
Class A......................................................... 850,717
Class B......................................................... 77,658
Shares issued as reinvestment of dividends:
Class A......................................................... 10,944
Class B......................................................... 882
Shares redeemed:
Class A......................................................... (29,598)
Class B......................................................... (1,075)
----------
Increase in shares outstanding.................................. 909,528
==========
</TABLE>
* Class A commenced operations January 9, 1998.
Class B commenced operations March 6, 1998.
See accompanying notes to financial statements.
7
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock out-
standing throughout each period presented.
<TABLE>
<CAPTION>
CLASS A CLASS B
----------------- ------------------
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
OCTOBER 31, 1998* OCTOBER 31, 1998**
----------------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 10.00 $ 9.62
------- ------
Income from Investment Operations:
Net investment income................... 0.20 0.15
Net unrealized losses on securities..... (1.38) (1.00)
------- ------
Total from investment operations...... (1.18) (0.85)
------- ------
Less Distributions:
Distributions from net investment
income................................. (0.16) (0.13)
Distributions from net capital gains.... 0.00 0.00
------- ------
Total distributions................... (0.16) (0.13)
------- ------
NET ASSET VALUE, END OF PERIOD............ $ 8.66 $ 8.64
======= ======
TOTAL RETURN.............................. (11.78%)/1/ (8.84%)/3/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)...... $ 7,290 $ 669
Ratio of expenses to average net assets:
Before expense reimbursement............ 6.33%/2/ 7.03%/2/
After expense reimbursement............. 1.97%/2/ 2.67%/2/
Ratio of net investment income (loss) to
average net assets:
Before expense reimbursement............ (0.62%)/2/ (1.32%)/2/
After expense reimbursement............. 3.75%/2/ 3.05%/2/
Portfolio turnover rate.................. 0.00% 0.00%
</TABLE>
* Class A Shares commenced investment operations on January 9, 1998.
** Class B Shares commenced investment operations on March 6, 1998.
/1/Total return calculation does not reflect sales load and is not annualized.
/2/Annualized.
/3/Total return calculation does not reflect CDSC charges and is not
annualized.
See accompanying notes to financial statements.
8
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
Spirit of America Investment Fund, Inc., (the "Fund"), is an open-end diversi-
fied mutual fund registered under the Investment Company Act of 1940 (the
"1940 Act"), as amended. The Fund was incorporated under the laws of Maryland
on May 15, 1997 and commenced operations on January 9, 1998. The authorized
capital stock of the Fund is one billion (1,000,000,000) shares, par value of
$0.001 per share. The Fund seeks growth of capital and current income by in-
vesting in the equity securities of companies in the real estate industry. The
Fund currently offers two classes of shares, Class A Shares and Class B
Shares. Each class of shares is sold pursuant to different sales arrangements
and bears different expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The poli-
cies are in conformity with generally accepted accounting principles for in-
vestment companies.
A. SECURITY VALUATION: The offering price and net asset value per share of
Class A and the net asset value per share of Class B are calculated as of the
close of regular trading on the NYSE, currently 4:00 p.m., Eastern Time. The
Fund's securities are valued at the last reported sales price on the principal
exchange on which the security trades, or if no sales price is reported, the
mean of the latest bid and asked prices is used. Securities traded over-the-
counter are priced at the mean of the latest bid and asked prices. Short-term
investments having a maturity of 60 days or less are valued at amortized cost,
which the Board of Directors believes represents fair value.
B. INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Security transactions are
accounted for on the date the securities are purchased or sold (trade date).
Cost is determined and gains and losses are based on the identified cost basis
for both financial statement and federal income tax purposes. Dividend income
and distributions to shareholders are reported on the ex-dividend date. Inter-
est income and expenses are accrued daily.
C. NET ASSET VALUE PER SHARE: The methodology and procedures for determining
net asset value are identical for each Class, but due to the specific distri-
bution expenses and other costs allocable to each Class, the net asset value
of each Class will vary. Class A Shares are purchased at the offering price
per share, while Class B shares are purchased at the net asset value per
share.
D. ORGANIZATION COSTS: Organization costs are being amortized on a straight-
line basis over five years from commencement of operation.
E. FEDERAL INCOME TAXES: The Fund intends to comply with all requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders. There-
fore, no federal income tax provision is required.
F. USE OF ESTIMATES: In preparing financial statements in conformity with gen-
erally accepted accounting principles, management makes estimates and assump-
tions that affect the reported amounts of assets and liabilities at the date
of the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
G. DISTRIBUTIONS TO SHAREHOLDERS: The Fund intends to distribute substantially
all of its net investment income and capital gains to shareholders each year.
The Fund will distribute the return of capital it receives from the REITs in
which the Fund invests. The REITs pay distributions based on cash flow, with-
out regard to depreciation and amortization. As a result, a portion of the
distributions paid to the Fund and subsequently distributed to shareholders is
a return of capital.
9
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED OCTOBER 31, 1998
- -------------------------------------------------------------------------------
NOTE 2 -- PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments, aggre-
gated $8,875,350 and $33, respectively, for the period ended October 31, 1998.
NOTE 3 -- INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Spirit of America Management Corp. ("Spirit Management"), has been retained to
act as the Fund's manager and investment adviser pursuant to an Investment Ad-
visory Agreement (the "Advisory Agreement"). Spirit Management was incorpo-
rated in 1997 and is a registered investment adviser under the Investment Ad-
visers Act of 1940, as amended. Under the Advisory Agreement, the Fund pays
Spirit Management a fee at the annual rate of 0.97% of the Fund's average
daily net assets. Spirit Management has voluntarily agreed to waive all or a
portion of its fees and to reimburse expenses so that the total operating ex-
penses of Class A Shares and Class B Shares for the first year of operations
will not exceed 1.97% and 2.67%, respectively, of the average daily net assets
of each Class. For the period ending October 31, 1998, advisory fees of
$37,487 were waived by Spirit Management, and Spirit Management reimbursed the
Fund $131,224.
The Fund has adopted two plans of distribution ("Class A Plan" and "Class B
Plan") pursuant to Rule 12b-1. Each Plan permits the Fund to pay SSH Securi-
ties, Inc., the Fund's principal distributor, a monthly fee from the assets of
the respective Class. Under the Class A Plan, the Fund will pay fees of up to
0.30% of the average daily net assets, and under the Class B Plan, the Fund
will pay a combined annual distribution and service fee of up to 1.00% of the
average daily net assets. Certain officers and directors of the Fund are "af-
filiated persons" of the adviser or distributor, as that term is defined in
the 1940 Act. There are no directors' fees paid to affiliated directors of the
Fund. All officers serve without direct compensation from the Fund.
10
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Shareholders of
Spirit of America Investment Fund
and the Board of Trustees of
Spirit of America Investment Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Spirit
of America Investment Fund, including the schedule of investments, as of Octo-
ber 31, 1998, and the related statements of operations, the statement of
changes in net assets, and the financial highlights for the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Oc-
tober 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant esti-
mates made by management, as well as evaluating the overall financial state-
ment presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Spirit of America Investment Fund as of October 31, 1998, the results of its
operations, the changes in its net assets, and the financial highlights for
the period then ended, in conformity with generally accepted accounting prin-
ciples.
/s/ TAIT, WELLER & BAKER
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 20, 1998
11
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND -- CLASS A
ILLUSTRATION OF $10,000 INVESTMENT
- -------------------------------------------------------------------------------
The graph below compares the increase in value of a $10,000 investment in the
Spirit of America Investment Fund -- Class A with the performance of the Mor-
gan Stanley REIT Index. The values and returns for Spirit of America Invest-
ment Fund -- Class A include reinvested dividends, and the impact of the maxi-
mum sales charge placed on purchases.
Total Return for the period ending 10/31/98:
Since Inception.........-16.41%*
Spirit of America Morgan Stanley REIT
Investment INDEX*
----------------- -------------------
01/09/98 9,475 10,000
01/31/98 9,428 9,857
02/28/98 9,162 9,839
03/31/98 9,494 10,237
04/30/98 9,105 9,646
05/31/98 9,115 9,913
06/30/98 9,045 9,999
07/31/98 8,587 9,299
08/31/98 7,862 9,058
09/30/98 8,513 10,619
10/31/98 8,359 9,811
Past performance is not indicative of future results
*Fund commenced operations January 9, 1998.
12
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND -- CLASS B
ILLUSTRATION OF $10,000 INVESTMENT
- -------------------------------------------------------------------------------
The graph below compares the increase in value of a $10,000 investment in the
Spirit of America Investment Fund -- Class B with the performance of the Mor-
gan Stanley REIT Index. The values and returns for Spirit of America Invest-
ment Fund -- Class B include reinvested dividends, and the impact of the con-
tingent deferred sales charge at redemption.
Total Return for the period ending 10/31/98:
Since Inception.........-18.06%*
Spirit of America Morgan Stanley REIT
Investment INDEX*
----------------- -------------------
01/09/98 10,000 10,000
01/31/98 9,950 9,857
02/28/98 9,670 9,839
03/06/98 9,620 10,050
03/31/98 10,020 10,237
04/30/98 9,600 9,646
05/31/98 9,610 9,913
06/30/98 9,524 9,999
07/31/98 9,042 9,299
08/31/98 8,257 9,058
09/30/98 8,942 10,619
10/31/98 8,769 9,811
Past performance is not indicative of future results
* Effective March 6, 1998, the fund began offering Class B shares. For periods
prior to March 6, 1998, total return reflects the Class A performance, ex-
cluding the fund's Class A maximum initial sales charge, but including the
effect of Class A expenses, including Rule 12b-1 fees. For periods after
March 6, 1998, figures reflect actual Class B performance including the de-
duction of all charges and fees applicable only to that class. Since March
6, 1998 (commencement of sales), the cumulative total return of Class B
shares was -14.59%.
13
<PAGE>
INVESTMENT ADVISER
Spirit of America Management, Inc.
477 Jericho Turnpike
Syosset, NY 11791
DISTRIBUTOR
SSH Securities, Inc.
477 Jericho Turnpike
Syosset, NY 11791
SHAREHOLDER SERVICES
First Data Investor Services Group, Inc.
3200 Horizon Drive, P. O. Box 61503
King of Prussia, PA 19406
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
LEGAL COUNSEL
Ruthann G. Niosi, Esq., P.C.
91 East End Avenue
New York, NY 10028
AUDITORS
Tait Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
FOR ADDITIONAL INFORMATION ABOUT
SPIRIT OF AMERICA INVESTMENT FUND, INC.
CALL (800) 452-4892 OR (610) 239-4600
This report is submitted for general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective Prospectus which includes
details regarding the Fund's objectives, policies, expenses and other informa-
tion.
[Spirit of America Investment Fund]
ANNUAL REPORT
OCTOBER 31, 1998
