<PAGE>
December, 1999
Dear Shareholder:
We are pleased to submit to you our report for the year ended October 31,
1999.
The past twelve months were a period when real estate investment trust
stocks declined in value, even though the underlying real estate businesses
continued to prosper and expand. Because of year-end profit and loss taking,
we were able to identify some significantly undervalued REITS and to take ad-
vantage of these investment opportunities.
We believe that both institutional and retail investors are waiting for the
opportunity to jump back into the REIT marketplace with substantial invest-
ments in the first quarter of 2000. We see the current state of the REIT sec-
tor as an opportunity to invest in specific REITs, particularly since we can
purchase these stocks more cheaply than the underlying real estate. Future
profits and dividend yields cannot be implied from prior performance. REIT
values may be adversely affected by environmental, economic and interest rate
changes.
We remain convinced that in the long term Spirit of America has the poten-
tial to provide its investors with a high income return in a sector of the
economy that we believe will eventually reflect its fundamental values, and
that we will be able to profit from our market research and evaluations.
Sincerely,
/s/ David Lerner
David Lerner
President
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- 98.01% ------ ------------
<S> <C> <C>
Apartments (REITS) -- 18.04%
Amli Residential Properties Trust........................... 8,300 $ 172,225
Associated Estates Realty Corp. ............................ 20,000 172,500
Avalonbay Communities, Inc. ................................ 5,304 171,385
Camden Property Trust....................................... 8,500 230,031
Cornerstone Realty Income Trust, Inc. ...................... 35,000 363,125
Equity Residential Properties Trust......................... 4,300 179,794
Gables Residential Trust.................................... 12,000 290,250
Home Properties of New York, Inc. .......................... 3,300 88,069
Mid-America Apartment Communities, Inc. .................... 10,500 232,313
Post Properties, Inc. ...................................... 3,000 115,875
Smith (Charles E.) Residential Realty, Inc. ................ 3,000 102,000
Summit Properties Inc. ..................................... 10,000 191,250
Walden Residential Properties, Inc. ........................ 9,000 192,938
-----------
2,501,755
-----------
Diversified (REITS) -- 9.60%
BRE Properties, Inc., Cl A.................................. 6,300 142,931
Colonial Properties Trust................................... 8,000 204,000
Crescent Real Estate Equities Co. .......................... 17,300 288,694
Duke-Weeks Realty Corp. .................................... 4,000 78,500
Essex Property Trust, Inc. ................................. 4,000 130,250
Glenborough Realty Trust, Inc. ............................. 20,000 261,250
Hospitality Properties Trust................................ 4,000 84,500
Liberty Property Trust...................................... 6,000 140,250
Vornado Operating Inc.*..................................... 250 1,500
-----------
1,331,875
-----------
Healthcare (REITS) -- 13.04%
American Health Properties, Inc. ........................... 10,000 201,875
Health Care Property Investors, Inc. ....................... 10,000 262,500
Healthcare Realty Trust, Inc. .............................. 12,500 240,625
HRPT Properties Trust....................................... 27,000 248,062
LTC Healthcare Inc.*........................................ 400 600
LTC Properties, Inc. ....................................... 11,000 116,875
Meditrust Companies -- Paired Stock......................... 31,000 249,937
National Health Investors, Inc. ............................ 15,000 226,875
Nationwide Health Properties, Inc. ......................... 3,000 49,688
OMEGA Healthcare Investors, Inc. ........................... 9,000 178,313
Senior Housing Properties Trust............................. 2,700 33,075
-----------
1,808,425
-----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- continued ------ ------------
<S> <C> <C>
Industrial (REITS) -- 8.41%
Bedford Property Investors, Inc............................. 13,000 $ 227,500
Brandywine Realty Trust..................................... 16,000 269,000
First Industrial Realty Trust, Inc. ........................ 11,000 271,562
ProLogis Trust.............................................. 4,600 88,838
Reckson Associates Realty Corp.............................. 6,000 111,000
Reckson Services Industries, Inc.*.......................... 640 13,040
Spieker Properties, Inc. ................................... 5,300 185,169
-----------
1,166,109
-----------
Net Lease (REITS) -- 9.22%
Catellus Development Corp.*................................. 2,000 23,500
Commercial Net Lease Realty................................. 38,000 437,000
Franchise Finance Corp. of America.......................... 4,000 87,000
Lexington Corporate Properties Trust........................ 29,100 316,462
TriNet Corporate Realty Trust, Inc. ........................ 18,000 415,125
-----------
1,279,087
-----------
Office Space (REITS) -- 6.90%
CarrAmerica Realty Corp..................................... 6,000 133,500
Corporate Office Properties Trust........................... 13,000 94,250
Equity Office Properties Trust.............................. 6,300 139,387
Highwoods Properties, Inc. ................................. 7,300 176,569
Kilroy Realty Corp.......................................... 5,000 95,937
Mack-Cali Realty Corp....................................... 8,600 221,450
Prentiss Properties Trust................................... 4,500 96,469
-----------
957,562
-----------
Regional Malls (REITS) -- 12.29%
Bradley Real Estate, Inc.................................... 6,000 100,500
CBL & Associates Properties, Inc............................ 4,000 89,000
Crown American Realty Trust................................. 6,000 36,750
General Growth Properties, Inc.............................. 3,000 86,812
Glimcher Realty Trust....................................... 24,000 355,500
Macerich Co. (The).......................................... 4,000 80,000
Mills Corp.................................................. 14,000 252,000
Simon Property Group, Inc................................... 6,000 138,375
Taubman Centers, Inc........................................ 2,000 22,625
United Dominion Realty Trust, Inc. ......................... 32,000 350,000
Westfield America, Inc...................................... 14,000 192,500
-----------
1,704,062
-----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- continued ------ ------------
<S> <C> <C>
Shopping Centers (REITS) -- 17.27%
Burnham Pacific Properties, Inc. ........................... 11,000 $ 110,000
Center Trust, Inc. ......................................... 14,000 143,500
Developers Diversified Realty Corp. ........................ 20,000 285,000
Excel Legacy Corp.*......................................... 3,300 13,819
Federal Realty Investment Trust............................. 4,300 78,206
First Washington Realty Trust, Inc. ........................ 8,000 163,500
IRT Property Co. ........................................... 12,000 101,250
JDN Realty Corp. ........................................... 6,000 114,375
JP Realty, Inc. ............................................ 9,500 162,687
Kimco Realty Corp. ......................................... 2,000 68,250
Malan Realty Investors, Inc. ............................... 5,000 65,000
New Plan Excel Realty Trust................................. 7,160 123,958
Pan Pacific Retail Properties, Inc. ........................ 7,000 127,750
Realty Income Corp. ........................................ 10,000 225,000
Saul Centers, Inc. ......................................... 27,000 383,063
Urban Shopping Centers, Inc. ............................... 3,000 77,438
Weingarten Realty Investors................................. 4,000 153,000
-----------
2,395,796
-----------
Storage (REITS) -- 3.24%
Shurgard Storage Centers, Inc., Cl A........................ 4,000 94,500
Sovran Self Storage, Inc.................................... 9,000 191,250
Storage USA, Inc............................................ 5,600 163,100
-----------
448,850
-----------
Total Investments -- 98.01%
(Cost $16,154,926**)........................................ 13,593,521
Cash and Other Assets Net of Liabilities -- 1.99%........... 276,109
-----------
NET ASSETS -- 100.00%....................................... $13,869,630
===========
</TABLE>
* Non-income producing security
** Cost for Federal income tax purposes is $16,154,926, and net unrealized de-
preciation consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation............... $ 74,307
Gross unrealized depreciation............... (2,635,712)
-----------
Net unrealized depreciation................. $(2,561,405)
===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Spirit of America Investment Fund, Inc.
Statement of Assets and Liabilities October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$16,154,926) (Note 1)........................................... $13,593,521
Cash............................................................. 271,314
Receivables:
Dividends and interest.......................................... 118,160
Capital stock sold.............................................. 108,383
Deferred organization costs (Note 1)............................. 79,225
Other assets..................................................... 14,072
-----------
TOTAL ASSETS.................................................. 14,184,675
-----------
LIABILITIES
Payables:
Capital stock redeemed.......................................... 97,032
Distributions to shareholders................................... 57,793
Accrued expenses................................................. 29,371
Accrued distribution expense (Note 3)............................ 5,084
Due to Advisor................................................... 125,765
-----------
TOTAL LIABILITIES............................................. 315,045
-----------
NET ASSETS........................................................ $13,869,630
===========
Class A Shares
Net assets applicable to 1,501,445 outstanding $0.001 par value
shares
(500,000,000 authorized shares)................................. $11,224,961
===========
Net asset value and redemption price per Class A Share
($11,224,961 / 1,501,445 shares)................................ $ 7.48
===========
Offering price per share ($7.48 / 0.9475)........................ $ 7.89
===========
Class B Shares
Net assets applicable to 351,987 outstanding $0.001 par value
shares
(500,000,000 authorized shares)................................. $ 2,644,669
===========
Net asset value and offering price per Class B Share
($2,644,669 / 351,987 shares)................................... $ 7.51
===========
Redemption price per share ($7.51 X 0.9425)...................... $ 7.08
===========
SOURCE OF NET ASSETS
At October 31, 1999, net assets consisted of:
Paid-in capital................................................. $16,490,236
Accumulated net realized loss on investments.................... (59,201)
Net unrealized depreciation on investments...................... (2,561,405)
-----------
NET ASSETS.................................................... $13,869,630
===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
Spirit of America Investment Fund, Inc.
Statement of Operations For the Year Ended October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends......................................................... $ 909,185
Interest.......................................................... 6,078
-----------
TOTAL INCOME..................................................... 915,263
-----------
EXPENSES
Investment advisory fees (Note 3)................................. 117,814
Transfer agent fees............................................... 60,076
Administration fees............................................... 67,542
Distribution fees -- Class A (Note 3)............................. 30,880
Distribution fees -- Class B (Note 3)............................. 18,562
Accounting fees................................................... 38,990
Registration fees................................................. 10,293
Legal fees........................................................ 7,500
Custodian fees.................................................... 10,572
Printing expense.................................................. 8,045
Amortization of organization costs (Note 1)....................... 24,791
Auditing fees..................................................... 8,305
Directors' fees................................................... 6,500
Insurance expense................................................. 11,195
Miscellaneous expense............................................. 332
-----------
TOTAL EXPENSES................................................... 421,397
Expenses waived and reimbursed by Advisor (Note 3).............. (169,098)
-----------
NET EXPENSES..................................................... 252,299
-----------
NET INVESTMENT INCOME............................................ 662,964
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from security transactions...................... (59,201)
Net change in unrealized depreciation of investments.............. (1,794,011)
-----------
Net realized and unrealized loss on investments................. (1,853,212)
-----------
Net decrease in net assets resulting from operations............ $(1,190,248)
===========
</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 Year For the Period
Ended Ended
October 31, October 31,
1999 1998*
------------ --------------
<S> <C> <C>
OPERATIONS
Net investment income............................. $ 662,964 $ 142,811
Net realized loss from security transactions...... (59,201) --
Net change in unrealized depreciation of
investments...................................... (1,794,011) (767,394)
----------- ----------
Net decrease in net assets resulting from
operations..................................... (1,190,248) (624,583)
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income:
Class A ($0.53 and $0.16, respectively) ........ (656,695) (99,452)
Class B ($0.42 and $0.13, respectively) ........ (87,806) (7,370)
----------- ----------
Total distributions from net investment income
to shareholders................................ (744,501) (106,822)
----------- ----------
Return of capital:
Class A ($0.12 and $0.00, respectively) ........ (180,173) --
Class B ($0.12 and $0.00, respectively) ........ (42,239) --
----------- ----------
Total distributions from return of capital to
shareholders................................... (222,412) --
----------- ----------
Total distributions to shareholders............... (966,913) (106,822)
----------- ----------
CAPITAL SHARE TRANSACTIONS (Dollar Activity)
Shares sold:
Class A......................................... 9,272,657 8,038,878
Class B......................................... 2,718,024 726,562
Shares issued as reinvestment of dividends:
Class A......................................... 711,072 90,487
Class B......................................... 111,087 7,281
Shares redeemed:
Class A......................................... (4,271,790) (262,776)
Class B......................................... (473,899) (9,387)
----------- ----------
Increase in net assets derived from capital share
transactions (a)................................. 8,067,151 8,591,045
----------- ----------
Total increase in net assets.................... 5,909,990 7,859,640
NET ASSETS
Beginning of period............................... 7,959,640 100,000
----------- ----------
End of period (includes undistributed net
investment income of
$0 and $35,989, respectively).................... $13,869,630 $7,959,640
=========== ==========
(a) Transactions in capital stock were:
Shares sold:
Class A......................................... 1,096,190 850,717
Class B......................................... 320,212 77,658
Shares issued as reinvestment of dividends:
Class A......................................... 85,884 10,944
Class B......................................... 13,712 882
Shares redeemed:
Class A......................................... (522,692) (29,598)
Class B......................................... (59,402) (1,075)
----------- ----------
Increase in shares outstanding.................. 933,904 909,528
=========== ==========
</TABLE>
* Class A, period January 9, 1998 (commencement of operations) through October
31, 1998.
Class B, period March 6, 1998 (commencement of operations) through October
31, 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 A Class B Class B
---------------- ---------------- ---------------- ------------------
For the Year For the Period For the Year For the Period
Ended Ended Ended Ended
October 31, 1999 October 31,1998* October 31, 1999 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............... 0.49 0.20 0.40 0.15
Net unrealized losses
on securities........ (1.02) (1.38) (0.99) (1.00)
------- ------- ------ ------
Total from
investment
operations......... (0.53) (1.18) (0.59) (0.85)
------- ------- ------ ------
Less Distributions:
Distributions from net
investment income.... (0.53) (0.16) (0.42) (0.13)
Distributions from
return of capital.... (0.12) 0.00 (0.12) 0.00
------- ------- ------ ------
Total
distributions...... (0.65) (0.16) (0.54) (0.13)
------- ------- ------ ------
Net Asset Value, End of
Period................. $ 7.48 $ 8.66 $ 7.51 $ 8.64
======= ======= ====== ======
Total Return............ (6.38%)/2/ (11.78%)/1/ (7.09%)/2/ (8.84%)/3/
Ratios/Supplemental Data
Net assets, end of
period (in 000s)...... $11,225 $ 7,290 $2,645 $ 669
Ratio of expenses to
average net assets:
Before expense
reimbursement........ 3.35%/2/ 6.33%/2/ 4.05%/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........ 4.17%/2/ (0.62%)/2/ 3.47%/2/ (1.32%)/2/
After expense
reimbursement........ 5.55%/2/ 3.75%/2/ 4.85%/2/ 3.05%/2/
Portfolio turnover
rate.................. 8.15% 0.00% 8.15% 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/Total return calculation does not reflect sales load on Class A or CDSC
charge on Class B.
/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, 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 -- continued October 31, 1999
- -------------------------------------------------------------------------------
Note 2 -- Purchases and Sales of Securities
Purchases and sales of securities, other than short-term investments, aggre-
gated $8,748,811 and $970,236, respectively, for the year ended October 31,
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 year end-
ing October 31, 1999, advisory fees of $117,814 were waived by Spirit Manage-
ment, and Spirit Management also reimbursed the Fund $51,284.
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. For the year ended October 31, 1999, sales charges
received by SSH Securities, Inc. were $24,284.
Certain officers and directors of the Fund are "affiliated persons" of the ad-
viser 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. In addition, David Lerner Associ-
ates, Inc. received brokerage commissions of $27,755 for the year ended Octo-
ber 31, 1999.
10
<PAGE>
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, 1999, and the related statements of operations, the statement of
changes in net assets, and the financial highlights for each of the periods
presented herein. 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
audits.
We conducted our audits 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, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presenta-
tion. 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, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for
each of the periods presented herein, in conformity with generally accepted
accounting principles.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 19, 1999
11
<PAGE>
Spirit of America Investment Fund -- Class A
Illustrations 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.
[CHART OF SPIRIT OF AMERICA INVESTMENT FUND-CLASS A]
- --------------------------------------------
Total Return for the period ending 10/31/99:
Since Inception.............(12.68%)*
1 Year......................(11.30%)
- --------------------------------------------
Label A B
- ---------------------------------------------------------
Label Spirit of America Morgan Stanley
- ---------------------------------------------------------
1 1/9/98 9475 10000
- ---------------------------------------------------------
2 1/31/98 9428 9857
- ---------------------------------------------------------
3 4/30/98 9105 9646
- ---------------------------------------------------------
4 7/31/98 8587 9299
- ---------------------------------------------------------
5 10/31/98 8359 9811
- ---------------------------------------------------------
6 1/31/99 8115 9731
- ---------------------------------------------------------
7 4/30/99 8549 10967
- ---------------------------------------------------------
8 7/31/99 8484 9685
- ---------------------------------------------------------
9 10/31/99 7825 9772
- ---------------------------------------------------------
Past performance is not indicative of future results.
* Fund commenced operations January 9, 1998.
12
<PAGE>
Spirit of America Investment Fund -- Class B
Illustrations 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 Morgan
Stanley REIT Index. The values and returns for Spirit of America Investment
Fund -- Class B include reinvested dividends, and the impact of the contingent
deferred sales charge at redemption.
[CHART]
Total Return for the period ending 10/31/99:
Since Inception...............(23.21%)*
1 Year........................(12.43%)
Label A B
- ---------------------------------------------------------
Label Spirit of America Morgan Stanley
- ---------------------------------------------------------
1 1/9/98 10000 10000
- ---------------------------------------------------------
2 1/31/98 9950 9857
- ---------------------------------------------------------
3 3/6/98 9620 10051
- ---------------------------------------------------------
4 3/31/98 10020 10237
- ---------------------------------------------------------
5 4/30/98 9600 9646
- ---------------------------------------------------------
6 7/31/98 9042 9299
- ---------------------------------------------------------
7 10/31/98 8769 9811
- ---------------------------------------------------------
8 1/31/99 8500 9731
- ---------------------------------------------------------
9 4/30/99 8942 10967
- ---------------------------------------------------------
10 7/31/99 8852 9685
- ---------------------------------------------------------
11 10/31/99 8757 9772
- ---------------------------------------------------------
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 (20.17%).
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
PFPC, 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
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]
Annual Report
October 31, 1999
