<PAGE>
June 22, 1999
Dear Shareholder:
It is a pleasure to provide you with the Semi-Annual Report for Spirit of
America Investment Fund, Inc. ("Spirit") dated April 30, 1999.
Spirit continues to diversify its portfolio and is now fully invested in 76
separate REIT's. In terms of its diversification, Spirit is approximately 20%
invested in Apartment REIT's, 14% invested in shopping center REIT's, and 10%
invested in each of the categories of Industrial, Diversified, Office,
Healthcare and Regional Mall REIT's.
During the first half of 1999, REIT's in our portfolio registered a signifi-
cant net asset value increase of approximately 10% to 15%. In our opinion this
suggests that investors are beginning to recognize that REIT's have previously
been undervalued, and are investing more funds in this stock market sector.
Spirit is still attempting to achieve increases in net asset value, while con-
tinuing to maintain a high dividend distribution.
Some of the factors Spirit management regards as important in evaluating its
portfolio investments are: a predictable high dividend return, coverage of the
dividend, price-earnings multiple, and projected future growth of the individ-
ual REIT and its market sector.
We believe that REIT prices will continue to appreciate, and that specific
REIT categories are still significantly undervalued. It is our aim to attempt
to take advantage of our research and market evaluations to provide our in-
vestors with excellent total returns.
Sincerely,
/s/ David Lerner
David Lerner
President
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- 96.44% ------ ------------
<S> <C> <C>
Apartments (REITS) -- 19.21%
Amli Residential Properties Trust........................... 8,300 $ 181,044
Avalonbay Communities, Inc. ................................ 5,304 185,640
Camden Property Trust....................................... 8,500 229,500
Cornerstone Realty Income Trust, Inc. ...................... 15,000 149,062
Equity Residential Properties Trust......................... 4,300 198,875
Gables Residential Trust.................................... 8,000 190,500
Home Properties of New York, Inc. .......................... 3,300 85,387
Mid-America Apartment Communities, Inc. .................... 10,500 250,031
Post Properties, Inc. ...................................... 3,000 118,875
Smith (Charles E.) Residential Realty, Inc. ................ 3,000 97,500
Summit Properties, Inc. .................................... 10,000 182,500
United Dominion Realty Trust, Inc. ......................... 19,000 206,625
Walden Residential Properties, Inc. ........................ 9,000 172,125
-----------
2,247,664
-----------
Diversified (REITS) -- 10.02%
BRE Properties, Inc., Cl A.................................. 6,300 156,712
Colonial Properties Trust................................... 8,000 219,000
Crescent Real Estate Equities Co. .......................... 12,300 275,212
Duke Realty Investments, Inc. .............................. 4,000 94,000
Essex Property Trust, Inc. ................................. 4,000 126,250
Glenborough Realty Trust, Inc. ............................. 9,000 154,688
Liberty Property Trust...................................... 6,000 144,750
Vornado Operating Co., Inc.*................................ 250 1,750
-----------
1,172,362
-----------
Healthcare (REITS) -- 7.11%
Health Care Property Investors, Inc. ....................... 5,000 153,750
Healthcare Realty Trust, Inc. .............................. 3,000 65,438
HRPT Properties Trust....................................... 21,000 307,125
LTC Healthcare, Inc.*....................................... 400 750
LTC Properties, Inc. ....................................... 6,000 80,625
Meditrust Companies -- Paired Stock......................... 3,000 37,313
National Health Investors, Inc. ............................ 5,000 125,625
Nationwide Health Properties, Inc. ......................... 3,000 60,938
-----------
831,564
-----------
Industrial (REITS) -- 10.84%
Bedford Property Investors, Inc. ........................... 13,000 223,437
Brandywine Realty Trust..................................... 16,000 302,000
First Industrial Realty Trust, Inc. ........................ 11,000 295,625
ProLogis Trust.............................................. 4,600 96,600
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- continued ------ ------------
<S> <C> <C>
Industrial (REITS) -- continued
Reckson Associates Realty Corp. ............................ 6,000 $ 135,000
Reckson Services Industries, Inc.*.......................... 640 7,840
Spieker Properties, Inc. ................................... 5,300 208,025
-----------
1,268,527
-----------
Net Lease (REITS) -- 7.94%
Catellus Development Corp.*................................. 2,000 30,750
Commercial Net Lease Realty................................. 18,000 226,125
Franchise Finance Corp. of America.......................... 4,000 92,750
Lexington Corporate Properties Trust........................ 17,000 194,438
TriNet Corporate Realty Trust, Inc. ........................ 14,000 384,125
-----------
928,188
-----------
Office Space (REITS) -- 10.62%
Boston Properties, Inc. .................................... 4,300 156,144
CarrAmerica Realty Corp. ................................... 6,000 148,500
Corporate Office Properties Trust, Inc. .................... 13,000 95,063
Equity Office Properties Trust.............................. 6,300 173,644
Highwoods Properties, Inc. ................................. 7,300 187,975
Kilroy Realty Corp. ........................................ 5,000 117,813
Mack-Cali Realty Corp. ..................................... 8,600 266,062
Prentiss Properties Trust................................... 4,500 97,313
-----------
1,242,514
-----------
Regional Malls (REITS) -- 11.98%
Bradley Real Estate, Inc. .................................. 6,000 119,625
CBL & Associates Properties, Inc. .......................... 4,000 98,250
Crown American Realty Trust ................................ 6,000 43,500
General Growth Properties................................... 3,000 110,437
Glimcher Realty Trust....................................... 24,000 406,500
Macerich Co. (The).......................................... 4,000 102,250
Mills Corp. ................................................ 10,000 195,625
Simon Property Group, Inc. ................................. 6,000 172,125
Taubman Centers, Inc. ...................................... 2,000 27,125
Westfield America, Inc. .................................... 8,000 126,500
-----------
1,401,937
-----------
Shopping Centers (REITS) -- 14.29%
Burnham Pacific Properties, Inc. ........................... 11,000 126,500
Developers Diversified Realty Corp. ........................ 10,000 158,125
Excel Legacy Corp.*......................................... 3,300 15,056
Federal Realty Investment Trust............................. 4,300 102,662
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- continued ------ ------------
<S> <C> <C>
Shopping Centers (REITS) -- continued
First Washington Realty Trust, Inc. ........................ 8,000 $ 171,500
IRT Property Co. ........................................... 12,000 113,250
Kimco Realty Corp. ......................................... 2,000 78,500
New Plan Excel Realty Trust................................. 7,160 132,908
Pan Pacific Retail Properties, Inc. ........................ 7,000 126,000
Realty Income Corp. ........................................ 6,000 140,250
Saul Centers, Inc. ......................................... 15,000 244,687
Urban Shopping Centers, Inc. ............................... 3,000 96,000
Weingarten Realty Investors................................. 4,000 165,750
-----------
1,671,188
-----------
Storage (REITS) -- 4.43%
JDN Realty Corp. ........................................... 6,000 132,750
Shurgard Storage Centers, Inc., Cl A........................ 4,000 107,750
Sovran Self Storage, Inc. .................................. 4,000 97,750
Storage USA, Inc. .......................................... 5,600 179,900
-----------
518,150
-----------
Total Common Stocks
(Cost $12,061,111).......................................... 11,282,094
-----------
Total Investments -- 96.44%
(Cost $12,061,111**)........................................ 11,282,094
Other Assets in Excess of Liabilities -- 3.56%.............. 416,662
-----------
NET ASSETS -- 100.00%....................................... $11,698,756
===========
</TABLE>
* Non-income producing security
** Cost for Federal income tax purposes is $12,061,111, and net unrealized de-
preciation consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation................. $ 114,920
Gross unrealized depreciation................. (893,937)
---------
Net unrealized depreciation.................. $(779,017)
=========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Spirit of America Investment Fund, Inc.
Statement of Assets and Liabilities (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$12,061,111) (Note 1)........................................... $11,282,094
Cash............................................................. 448,834
Receivables:
Dividends and interest.......................................... 64,095
Capital stock sold.............................................. 773,530
Deferred organization costs (Note 1)............................. 91,722
Other assets..................................................... 19,843
-----------
TOTAL ASSETS.................................................. 12,680,118
-----------
LIABILITIES
Payables:
Securities purchased............................................ 332,175
Capital stock redeemed.......................................... 500,973
Accrued expenses................................................. 22,164
Accrued distribution expense (Note 3)............................ 3,357
Loan Payable, K.G.K. Agency, Inc................................. 6,411
Due to Advisor................................................... 116,282
-----------
TOTAL LIABILITIES............................................. 981,362
-----------
NET ASSETS........................................................ $11,698,756
===========
Class A Shares
Net assets applicable to 1,179,055 outstanding $0.001 par value
shares (500,000,000 authorized shares).......................... $10,065,655
===========
Net asset value and redemption price per Class A Share
($10,065,655 / 1,179,055 shares)................................ $ 8.54
===========
Offering price per share ($8.54 / 0.9475)........................ $ 9.01
===========
Class B Shares
Net assets applicable to 191,558 outstanding $0.001 par value
shares (500,000,000 authorized shares).......................... $ 1,633,101
===========
Net asset value and offering price per Class B Share
($1,633,101 / 191,558 shares)................................... $ 8.53
===========
Redemption price per share ($8.53 X 0.9425)...................... $ 8.04
===========
SOURCE OF NET ASSETS
At April 30, 1999, net assets consisted of:
Paid-in capital................................................. $12,587,437
Distributions in excess of net investment income................ (30,598)
Accumulated net realized loss on investments.................... (79,066)
Net unrealized depreciation on investments...................... (779,017)
-----------
NET ASSETS.................................................... $11,698,756
===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
Spirit of America Investment Fund, Inc.
Statement of Operations (unaudited) For the Six Months Ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends............................................................. $388,614
Interest.............................................................. 3,086
--------
TOTAL INCOME......................................................... 391,700
--------
EXPENSES
Investment advisory fees (Note 3)..................................... 48,820
Transfer agent fees................................................... 26,150
Administration fees................................................... 33,574
Distribution fees -- Class A (Note 3)................................. 13,423
Distribution fees -- Class B (Note 3)................................. 5,623
Accounting fees....................................................... 17,112
Registration fees..................................................... 6,945
Legal fees............................................................ 1,212
Custodian fees........................................................ 4,309
Printing expenses..................................................... 3,252
Amortization of organization costs (Note 1)........................... 12,294
Auditing fees......................................................... 5,140
Directors' fees....................................................... 3,681
Insurance expenses.................................................... 5,522
Miscellaneous expenses................................................ 1,199
--------
TOTAL EXPENSES....................................................... 188,256
Expenses waived and reimbursed by Advisor (Note 3).................. (85,137)
--------
NET EXPENSES......................................................... 103,119
--------
NET INVESTMENT INCOME................................................ 288,581
--------
UNREALIZED LOSS ON INVESTMENTS
Net realized loss from security transactions.......................... (79,066)
Net change in unrealized depreciation of investments.................. (11,623)
--------
Net realized and unrealized loss on investments..................... (90,689)
--------
Net increase in net assets resulting from operations................ $197,892
========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
Spirit of America Investment Fund, Inc.
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended For the Period
April 30, 1999 Ended
(unaudited) October 31, 1998*
------------------ -----------------
<S> <C> <C>
OPERATIONS
Net investment income.................... $ 288,581 $ 142,811
Net realized loss from security
transactions............................ (79,066) --
Net change in unrealized depreciation of
investments............................. (11,623) (767,394)
----------- ----------
Net increase (decrease) in net assets
resulting from operations.............. 197,892 (624,583)
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income:
Class A................................ (318,484) (99,452)
Class B................................ (36,684) (7,370)
----------- ----------
Total distributions to shareholders...... (355,168) (106,822)
----------- ----------
CAPITAL SHARE TRANSACTIONS (Dollar
Activity)
Shares sold:
Class A................................ 4,704,864 8,038,878
Class B................................ 1,088,543 726,562
Shares issued as reinvestment of
dividends:
Class A................................ 282,927 90,487
Class B................................ 34,344 7,281
Shares redeemed:
Class A................................ (2,064,792) (262,776)
Class B................................ (149,494) (9,387)
----------- ----------
Increase in net assets derived from
capital share transactions (a).......... 3,896,392 8,591,045
----------- ----------
Total increase in net assets........... 3,739,116 7,859,640
----------- ----------
NET ASSETS
Beginning of period...................... 7,959,640 100,000
----------- ----------
End of period............................ $11,698,756 $7,959,640
=========== ==========
(a) Transactions in capital stock were:
Shares sold:
Class A................................ 412,389 850,717
Class B................................ 126,748 77,658
Shares issued as reinvestment of
dividends:
Class A................................ 7,477 10,944
Class B................................ 1,623 882
Shares redeemed:
Class A................................ (82,874) (29,598)
Class B................................ (14,278) (1,075)
----------- ----------
Increase in shares outstanding......... 451,085 909,528
=========== ==========
</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.
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 Six Months For the Six Months
Ended For the Period Ended For the Period
April 30, 1999 Ended April 30, 1999 Ended
(unaudited) October 31, 1998* (unaudited) October 31, 1998**
------------------ ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 8.66 $10.00 $ 8.64 $9.62
------- ------ ------ -----
Income From Investment
Operations:
Net investment
income............... 0.22 0.20 0.17 0.15
Net unrealized losses
on securities........ (0.04) (1.38) (0.02) (1.00)
------- ------ ------ -----
Total from
investment
operations......... 0.18 (1.18) 0.15 (0.85)
------- ------ ------ -----
Less Distributions:
Distributions from net
investment income.... (0.30) (0.16) (0.26) (0.13)
Distributions from net
capital gains........ -- -- -- --
------- ------ ------ -----
Total
distributions...... (0.30) (0.16) (0.26) (0.13)
------- ------ ------ -----
Net Asset Value, End of
Period................. $ 8.54 $ 8.66 $ 8.53 $8.64
======= ====== ====== =====
Total Return............ 2.27%/1/ (11.78%)/1/ 1.97%/3/ (8.84%)/3/
Ratios/Supplemental Data
Net assets, end of
period (in 000s)...... $10,066 $7,290 $1,633 $ 669
Ratio of expenses to
average net assets:
Before expense
reimbursement........ 3.66%/2/ 6.33%/2/ 4.36%/2/ 7.03%/2/
After expense
reimbursement........ 1.97%/2/ 1.97%/2/ 2.67%/2/ 2.67%/2/
Ratio of net investment
income (loss) to
average net assets:
Before expense
reimbursement........ 4.12%/2/ (0.62%)/2/ 3.42%/2/ (1.32%)/2/
After expense
reimbursement........ 5.81%/2/ 3.75%/2/ 5.11%/2/ 3.05%/2/
Portfolio turnover
rate.................. 7.76% 0.00% 7.76% 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 (unaudited) April 30, 1999
- -------------------------------------------------------------------------------
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 (unaudited) -- continued April 30, 1999
- -------------------------------------------------------------------------------
Note 2 -- Purchases and Sales of Securities
Purchases and sales of securities, other than short-term investments, aggre-
gated $4,321,731 and $773,139, respectively, for the six months ended April
30, 1999.
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 will not exceed 1.97% and 2.67%,
respectively, of the average daily net assets of each Class. For the six
months ending April 30, 1999, advisory fees of $48,820 were waived by Spirit
Management, and Spirit Management reimbursed the Fund $36,317.
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>
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
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 the 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.
[LOGO OF SPIRIT OF AMERICA INVESTMENT FUND APPEARS HERE]
Semi-Annual Report
April 30, 1999
