<PAGE>
June 29, 1998
Dear Shareholder:
It is a pleasure to provide you with the initial Semi-Annual Report for
Spirit of America Investment Fund, Inc. ("Spirit"), dated April 30, 1998.
Spirit commenced operations on January 9, 1998 when the Securities and Ex-
change Commission declared the registration statement relating to the Fund's
Class A shares effective. Subsequently, on March 6, 1998, Spirit began the of-
fering of Class B shares.
In keeping with its investment objective, as of April 30, 1998, the Fund
owned shares in 39 different REITs. Their investments are primarily concen-
trated in apartments, prime office buildings, shopping centers and industrial
parks.
In our opinion the REIT market is significantly undervalued. As a result, in
the Advisor's opinion, we are buying the best quality REITs at "cheap prices."
For the past three years REIT prices have been lower in the beginning of the
year and have increased during the last quarter of the year. Therefore, we an-
ticipate Spirit should be well positioned to take advantage of a possible rise
in REIT values.
We believe that Spirit of America will, over the years, provide our invest-
ors with very solid returns.
Sincerely,
/s/ David Lerner
David Lerner
President
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
COMMON STOCKS -- 96.28% ------ ------------
<S> <C> <C>
APARTMENTS (REITS) -- 22.09%
Amli Residential Properties Trust........................... 4,300 $ 98,631
Apartment Investment & Management Co., Cl A................. 5,300 198,087
Avalon Properties, Inc. .................................... 3,000 84,375
Bay Apartment Communities, Inc. ............................ 2,000 74,000
Equity Residential Properties Trust......................... 3,300 162,112
Gables Residential Trust.................................... 3,000 81,750
Home Properties of New York, Inc. .......................... 3,300 88,481
Post Properties, Inc. ...................................... 3,000 122,438
Smith (Charles E.) Residential Realty, Inc. ................ 3,000 93,000
----------
1,002,874
----------
DIVERSIFIED (REITS) -- 16.13%
BRE Properties, Inc., Cl A.................................. 3,300 86,625
Colonial Properties Trust................................... 2,000 59,375
Crescent Real Estate Equities Co. .......................... 4,300 146,737
Essex Property Trust, Inc. ................................. 4,000 132,000
Glenborough Realty Trust, Inc. ............................. 4,000 107,250
Vornado Realty Trust........................................ 5,000 200,313
----------
732,300
----------
HEALTHCARE (REITS) -- 1.86%
Healthcare Realty Trust, Inc. .............................. 3,000 84,375
----------
INDUSTRIAL (REITS) -- 13.05%
Bedford Property Investors, Inc. ........................... 3,000 58,312
Brandywine Realty Trust..................................... 5,000 113,750
Reckson Associates Realty Corp. ............................ 4,000 98,000
Security Capital Industrial Trust........................... 4,600 112,413
Spieker Properties, Inc. ................................... 5,300 210,013
----------
592,488
----------
OFFICE SPACE (REITS) -- 19.70%
Boston Properties, Inc. .................................... 4,300 142,169
Equity Office Properties Trust.............................. 6,300 179,156
Highwoods Properties, Inc. ................................. 3,300 112,200
Kilroy Realty Corp. ........................................ 3,000 79,500
Mack-Cali Realty Corp. ..................................... 5,600 210,350
Prentiss Properties Trust................................... 2,500 63,438
Trinet Corporate Realty Trust............................... 3,000 107,438
----------
894,251
----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
COMMON STOCKS -- CONTINUED ------ ------------
<S> <C> <C>
REGIONAL MALLS (REITS) -- 6.39%
CBL & Associates Properties, Inc. .......................... 4,000 $ 98,250
General Growth Properties................................... 3,000 107,625
Macerich Co. (The).......................................... 3,000 84,187
----------
290,062
----------
SHOPPING CENTERS (REITS) -- 9.36%
Excel Legacy Corp.*......................................... 3,300 17,325
Excel Realty Trust, Inc. ................................... 4,300 115,025
Federal Realty Investment Trust............................. 3,300 80,231
JDN Realty Corp. ........................................... 4,000 127,250
Pan Pacific Retail Properties, Inc. ........................ 4,000 84,750
----------
424,581
----------
STORAGE (REITS) -- 7.70%
Public Storage, Inc. ....................................... 3,000 92,250
Sovran Self Storage, Inc. .................................. 3,000 83,063
Storage USA, Inc. .......................................... 4,600 174,225
----------
349,538
----------
TOTAL COMMON STOCKS
(Cost $4,519,022)........................................... 4,370,469
----------
TOTAL INVESTMENTS -- 96.28%
(Cost $4,519,022**)......................................... 4,370,469
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.72%.............. 168,906
----------
NET ASSETS -- 100.00%....................................... $4,539,375
==========
</TABLE>
* Non-income producing security
** Cost for Federal income tax purposes is $4,519,022, and net unrealized de-
preciation consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation................. $ 20,340
Gross unrealized depreciation................. (168,893)
---------
Net unrealized depreciation.................. $(148,553)
=========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$4,519,022) (Note 1)................................................ $4,370,469
Cash................................................................. 125,600
Receivables:
Dividends and interest.............................................. 5,971
Capital stock sold.................................................. 125,080
Deferred organization costs (Note 1)................................. 116,733
Other assets......................................................... 34,478
----------
TOTAL ASSETS...................................................... 4,778,331
----------
LIABILITIES
Payable for securities purchased..................................... 95,863
Accrued expenses..................................................... 8,813
Accrued distribution expense (Note 3)................................ 1,339
Loan payable, K.G.K. Agency, Inc..................................... 25,646
Due to Adviser....................................................... 107,295
----------
TOTAL LIABILITIES................................................. 238,956
----------
NET ASSETS............................................................ $4,539,375
==========
CLASS A SHARES
Net assets applicable to 433,888 outstanding $0.001 par value shares
(500,000,000 authorized shares)..................................... $4,168,800
==========
Net asset value and redemption price per Class A Share
($4,168,800 / 433,888 shares)....................................... $ 9.61
==========
Offering price per share ($9.61 / 0.9475)............................ $ 10.14
==========
CLASS B SHARES
Net assets applicable to 38,597 outstanding $0.001 par value shares
(500,000,000 authorized shares)..................................... $ 370,575
==========
Net asset value and offering price per Class B Share
($370,575 / 38,597 shares).......................................... $ 9.60
==========
Redemption price per share ($9.60 X 0.9425).......................... $ 9.05
==========
SOURCE OF NET ASSETS
At April 30, 1998, net assets consisted of:
Paid-in capital...................................................... $4,664,518
Undistributed net investment income.................................. 23,410
Net unrealized depreciation on investments........................... (148,553)
----------
NET ASSETS........................................................ $4,539,375
==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD ENDED APRIL 30, 1998*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends.......................................................... $ 39,725
Interest........................................................... 37
---------
TOTAL INCOME...................................................... 39,762
---------
EXPENSES
Investment advisory fees (Note 3).................................. 7,940
Transfer agent fees................................................ 8,073
Administration fees................................................ 16,273
Distribution fees--Class A (Note 3)................................ 2,343
Distribution fees--Class B (Note 3)................................ 377
Accounting fees.................................................... 7,101
Registration fees.................................................. 4,947
Legal fees......................................................... 3,648
Custodian fees..................................................... 2,609
Printing expense................................................... 5,518
Amortization of organization costs (Note 1)........................ 7,221
Auditing fees...................................................... 4,378
Directors' fees.................................................... 2,023
Insurance expense.................................................. 2,146
Miscellaneous expense.............................................. 3,648
---------
TOTAL EXPENSES.................................................... 78,245
Expenses waived and reimbursed by Adviser (Note 3)............... (61,893)
---------
NET EXPENSES...................................................... 16,352
---------
NET INVESTMENT INCOME............................................. 23,410
---------
UNREALIZED LOSS ON INVESTMENTS
Net change in unrealized depreciation of investments............... (148,553)
---------
Net unrealized loss on investments............................... (148,553)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $(125,143)
=========
</TABLE>
*Class A, period January 9, 1998 (commencement of operations) through April 30,
1998.
Class B, period March 6, 1998 (commencement of operations) through April 30,
1998.
See accompanying notes to financial statements.
5
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) FOR THE PERIOD ENDED APRIL 30,
1998*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS
Net investment income............................................. $ 23,410
Net change in unrealized depreciation of investments.............. (148,553)
----------
Net decrease in net assets resulting from operations............. (125,143)
----------
CAPITAL SHARE TRANSACTIONS
Shares sold:
Class A......................................................... 4,192,403
Class B......................................................... 374,948
Shares redeemed:
Class A......................................................... (2,833)
Class B......................................................... 0
----------
Increase in net assets derived from capital share transactions
(a).............................................................. 4,564,518
----------
Total increase in net assets.................................... 4,439,375
----------
NET ASSETS
Beginning of period............................................... 100,000
----------
End of period (including undistributed net investment income of
$23,410)......................................................... $4,539,375
==========
(a) Transactions in capital stock were:
Shares sold:
Class A......................................................... 424,177
Class B......................................................... 38,597
Shares redeemed:
Class A......................................................... (289)
Class B......................................................... 0
----------
Increase in shares outstanding.................................. 462,485
==========
</TABLE>
*Class A, period January 9, 1998 (commencement of operations) through April 30,
1998.
Class B, period March 6, 1998 (commencement of operations) through April 30,
1998.
See accompanying notes to financial statements.
6
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
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
APRIL 30, 1998* APRIL 30, 1998**
--------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 10.00 $ 9.62
------- -------
Income from Investment Operations:
Net investment income...................... 0.05 0.05
Net unrealized losses on securities........ (0.44) (0.07)
------- -------
Total from investment operations......... (0.39) (0.02)
------- -------
NET ASSET VALUE, END OF PERIOD............... $ 9.61 $ 9.60
------- -------
TOTAL RETURN................................. (3.90%)/1/ (0.21%)/3/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)......... $ 4,169 $ 370
Ratio of expenses to average net assets:
Before expense reimbursement............... 9.53%/2/ 10.23%/2/
After expense reimbursement................ 1.97%/2/ 2.67%/2/
Ratio of net investment income (loss) to av-
erage net assets:
Before expense reimbursement............... (4.67%)/2/ (5.37%)/2/
After expense reimbursement................ 2.89%/2/ 2.19%/2/
Portfolio turnover rate..................... 0.00% 0.00%
Average commission rate paid................ $0.0500 $0.0500
</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.
7
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 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 operations.
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.
8
<PAGE>
SPIRIT OF AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED APRIL 30, 1998
- -------------------------------------------------------------------------------
NOTE 2 -- PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments, aggre-
gated $4,521,814 and $0, respectively, for the period ended April 30, 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 April 30, 1998, advisory fees of $7,940
were waived by Spirit Management, and Spirit Management reimbursed the Fund
$53,953.
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.
9
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<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
Two Penn Center, 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]
SEMI-ANNUAL REPORT
APRIL 30, 1998
