<PAGE>
June, 2000
Dear Shareholder:
We are pleased to submit to you our semi-annual report for the period ended
April 30, 2000.
Major Wall Street REIT analysts are projecting an even better performance by
REITs for the remainder of this year, after they have already out-performed
previous estimates. After the NASDAQ stock index reached its high point on
March 10, it declined nearly 18% through the middle of April. During the same
period REIT stock prices increased in value by over 5%, in addition to paying
dividend yields averaging 8.5%. Most high tech and Internet stocks pay no div-
idends, because they have no earnings.
Institutional and high yield fund investment in real estate has remained
strong and is projected to increase by several billion dollars this year. In
our opinion, this trend will continue for the foreseeable future.
From January 3, 2000 to April 28, 2000 the net asset value of our fund has
risen from $7.00 to $7.33. We continue to look for an increase in REIT market
values and dividend cash flow throughout the remainder of this year.*
Sincerely,
/s/ David Lerner
David Lerner
President
* Past performance is not indicative of future results. Property values may
fall due to environmental, economic or other conditions. Changes in interest
rates may adversely affect the performance of real estate companies.
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments (unaudited) April 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- 97.77% ------ ------------
<S> <C> <C>
Apartments (REITS) -- 15.41%
Amli Residential Properties Trust........................... 8,300 $ 188,825
Associated Estates Realty Corp. ............................ 20,000 166,250
Camden Property Trust....................................... 8,500 241,188
Cornerstone Realty Income Trust, Inc. ...................... 5,000 50,937
Equity Residential Properties Trust......................... 4,300 195,650
Gables Residential Trust.................................... 12,000 288,000
Home Properties of New York, Inc. .......................... 3,300 92,400
Mid-America Apartment Communities, Inc. .................... 10,500 250,688
Summit Properties, Inc...................................... 8,500 169,469
-----------
1,643,407
-----------
Diversified (REITS) -- 12.28%
BRE Properties, Inc., Cl A.................................. 6,300 176,006
Colonial Properties Trust................................... 8,000 199,500
Crescent Real Estate Equities Company....................... 17,300 296,263
Duke-Weeks Realty Corp. .................................... 4,000 86,750
Essex Property Trust, Inc. ................................. 4,000 154,500
Frontline Cap Group*........................................ 640 10,960
Glenborough Realty Trust Inc. .............................. 20,000 295,000
Hospitality Properties Trust................................ 4,000 89,000
Vornado Operating, Inc.*.................................... 250 1,969
-----------
1,309,948
-----------
Healthcare (REITS) -- 12.10%
Health Care Property Investors, Inc. ....................... 17,800 496,175
Healthcare Realty Trust, Inc. .............................. 12,500 225,000
HRPT Properties Trust....................................... 27,000 205,875
LTC Healthcare, Inc.*....................................... 400 500
LTC Properties, Inc. ....................................... 11,000 65,312
National Health Investors, Inc. ............................ 15,000 180,000
Nationwide Health Properties, Inc. ......................... 3,000 39,750
OMEGA Healthcare Investors, Inc. ........................... 9,000 55,125
Senior Housing Properties Trust............................. 2,700 23,119
-----------
1,290,856
-----------
Industrial (REITS) -- 8.06%
Bedford Property Investors, Inc. ........................... 13,000 229,125
Brandywine Realty Trust..................................... 16,000 278,000
First Industrial Realty Trust, Inc. ........................ 900 27,056
ProLogis Trust.............................................. 4,600 90,562
Spieker Properties, Inc. ................................... 5,300 234,856
-----------
859,599
-----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments (unaudited) April 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- continued ------ ------------
<S> <C> <C>
Net Lease (REITS) -- 6.82%
Commercial Net Lease Realty................................. 38,000 $ 418,000
Franchise Finance Corp. of America.......................... 4,000 95,000
Lexington Corporate Properties Trust........................ 19,100 214,875
-----------
727,875
-----------
Office Space (REITS) -- 6.91%
Corporate Office Properties Trust........................... 13,000 112,125
Kilroy Realty Corp. ........................................ 5,000 120,625
Mack-Cali Realty Corp. ..................................... 8,600 221,450
Prentiss Properties Trust................................... 4,500 106,875
Starwood Financial, Inc. ................................... 10,000 175,625
-----------
736,700
-----------
Regional Malls (REITS) -- 14.98%
Bradley Real Estate, Inc. .................................. 6,000 108,375
CBL & Associates Properties, Inc. .......................... 4,000 93,750
Crown American Realty Trust................................. 6,000 33,375
Glimcher Realty Trust....................................... 24,000 330,000
Macerich Co., (The)......................................... 4,000 92,750
Mills Corp. ................................................ 14,000 252,000
Simon Property Group, Inc. ................................. 6,000 152,250
Taubman Centers, Inc. ...................................... 2,000 23,875
United Dominion Realty Trust, Inc. ......................... 32,000 320,000
Westfield America, Inc. .................................... 14,000 191,625
-----------
1,598,000
-----------
Shopping Centers (REITS) -- 16.96%
Burnham Pacific Properties, Inc. ........................... 11,000 81,125
Center Trust, Inc. ......................................... 14,000 101,500
Excel Legacy Corp.*......................................... 3,300 9,487
Federal Realty Investment Trust............................. 4,300 91,375
First Washington Realty Trust, Inc. ........................ 8,000 166,500
IRT Property Co. ........................................... 12,000 99,750
JDN Realty Corp ............................................ 6,000 58,125
JP Realty, Inc. ............................................ 9,500 170,406
Malan Realty Investors, Inc. ............................... 5,000 62,500
New Plan Excel Realty Trust................................. 7,160 102,925
Pan Pacific Retail Properties, Inc. ........................ 7,000 133,000
Realty Income Corp.......................................... 10,000 218,125
Saul Centers, Inc. ......................................... 27,000 416,813
Urban Shopping Centers, Inc. ............................... 3,000 96,750
-----------
1,808,381
-----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Spirit of America Investment Fund, Inc.
Schedule of Investments (unaudited) April 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS -- continued ------ ------------
<S> <C> <C>
Storage (REITS) -- 4.25%
Shurgard Storage Centers, Inc., Cl A........................ 4,000 $ 104,750
Sovran Self Storage, Inc. .................................. 9,000 185,063
Storage USA, Inc. .......................................... 5,600 163,800
-----------
453,613
-----------
Total Common Stocks
(Cost $12,527,034).......................................... 10,428,379
-----------
Total Investments -- 97.77%
(Cost $12,527,034**)........................................ 10,428,379
Cash and Other Assets Net of Liabilities -- 2.23%........... 237,618
-----------
NET ASSETS -- 100.00%....................................... $10,665,997
===========
</TABLE>
* Non-income producing security
** Cost for Federal income tax purposes is $12,527,034, and net unrealized de-
preciation consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation............... $ 229,751
Gross unrealized depreciation............... (2,328,406)
-----------
Net unrealized depreciation................ $(2,098,655)
===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Spirit of America Investment Fund, Inc.
Statement of Assets and Liabilities (unaudited) April 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$12,527,034) (Note 1).............................................. $10,428,379
Cash................................................................ 322,345
Receivables:
Dividends and interest............................................. 106,925
Capital stock sold................................................. 106,235
Deferred organization costs (Note 1)................................ 66,985
Other assets........................................................ 6,926
-----------
TOTAL ASSETS..................................................... 11,037,795
-----------
LIABILITIES
Payables:
Capital stock redeemed............................................. 25,241
Distributions to shareholders...................................... 231,806
Accrued distribution expense (Note 3)............................... 7,500
Due to Advisor...................................................... 107,251
-----------
TOTAL LIABILITIES................................................ 371,798
-----------
NET ASSETS........................................................... $10,665,997
===========
Class A Shares
Net assets applicable to 1,174,833 outstanding $0.001 par value
shares (500,000,000 authorized shares)............................. $ 8,612,793
===========
Net asset value and redemption price per Class A Share
($8,612,793 / 1,174,833 shares).................................... $ 7.33
===========
Offering price per share ($7.33 / 0.9475)........................... $ 7.74
===========
Class B Shares
Net assets applicable to 276,747 outstanding $0.001 par value shares
(500,000,000 authorized shares).................................... $ 2,053,204
===========
Net asset value and offering price per Class B Share
($2,053,204 / 276,747 shares)...................................... $ 7.42
===========
Redemption price per share ($7.42 X 0.9425)......................... $ 6.99
===========
SOURCE OF NET ASSETS
At April 30, 2000, net assets consisted of:
Paid-in capital.................................................... $13,645,987
Distributions in excess of net investment income................... (16,537)
Accumulated net realized loss on investments....................... (864,798)
Net unrealized depreciation on investments......................... (2,098,655)
-----------
NET ASSETS....................................................... $10,665,997
===========
</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, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends............................................................ $ 593,208
Interest............................................................. 1,333
---------
TOTAL INCOME........................................................ 594,541
---------
EXPENSES
Investment advisory fees (Note 3).................................... 56,201
Transfer agent fees.................................................. 33,090
Administration fees.................................................. 32,649
Distribution fees -- Class A (Note 3)................................ 14,056
Distribution fees -- Class B (Note 3)................................ 11,085
Accounting fees...................................................... 16,675
Registration fees.................................................... 4,537
Legal fees........................................................... 1,260
Custodian fees....................................................... 5,335
Printing expense..................................................... 5,185
Amortization of organization costs (Note 1).......................... 12,240
Auditing fees........................................................ 5,730
Directors' fees...................................................... 3,025
Insurance expense.................................................... 9,697
Miscellaneous expense................................................ 1,707
---------
TOTAL EXPENSES...................................................... 212,472
Expenses waived and reimbursed by Advisor (Note 3)................. (92,069)
---------
NET EXPENSES........................................................ 120,403
---------
NET INVESTMENT INCOME............................................... 474,138
---------
UNREALIZED GAIN/LOSS ON INVESTMENTS
Net realized loss from securities transactions....................... (805,597)
Net change in unrealized appreciation of investments................. 462,750
---------
Net realized and unrealized loss on investments.................... (342,847)
---------
Net increase in net assets resulting from operations............... $ 131,291
=========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
Spirit of America Investment Fund, Inc.
Statment of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended For the Year
April 30, 2000 Ended
(unaudited) October 31, 1999
------------------ ----------------
<S> <C> <C>
OPERATIONS
Net investment income..................... $ 474,138 $ 662,964
Net realized loss from securities
transactions............................. (805,597) (59,201)
Net change in unrealized depreciation of
investments.............................. 462,750 (1,794,011)
----------- -----------
Net increase/(decrease) in net assets
resulting from operations............... 131,291 (1,190,248)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income:
Class A................................. (413,167) (656,695)
Class B................................. (77,508) (87,806)
----------- -----------
Total distributions from net investment
income to shareholders................... (490,675) (744,501)
----------- -----------
Return of capital:
Class A................................. -- (180,173)
Class B................................. -- (42,239)
----------- -----------
Total distributions from net return of
capital to shareholders.................. -- (222,412)
----------- -----------
Total distributions to shareholders....... (490,675) (966,913)
----------- -----------
CAPITAL SHARE TRANSACTIONS (Dollar
Activity)
Shares sold:
Class A................................. 1,437,533 9,272,657
Class B................................. 384,279 2,718,024
Shares issued as reinvestment of
dividends:
Class A................................. 168,337 711,072
Class B................................. 32,045 111,087
Shares redeemed:
Class A................................. (3,927,411) (4,271,790)
Class B................................. (939,032) (473,899)
----------- -----------
Increase/(decrease) in net assets derived
from capital share transactions (a)...... (2,844,249) 8,067,151
----------- -----------
Total increase/(decrease) in net
assets................................. (3,203,633) 5,909,990
----------- -----------
NET ASSETS
Beginning of period....................... 13,869,630 7,959,640
----------- -----------
End of period............................. $10,665,997 $13,869,630
=========== ===========
(a) Transactions in capital stock were:
Shares sold:
Class A................................. 197,846 1,096,190
Class B................................. 52,193 320,212
Shares issued as reinvestment of
dividends:
Class A................................. 24,116 85,884
Class B................................. 4,060 13,712
Shares redeemed:
Class A................................. (548,574) (522,692)
Class B................................. (131,493) (59,402)
----------- -----------
Increase/(decrease) in shares
outstanding............................ (401,852) 933,904
=========== ===========
</TABLE>
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 A
------------------ ---------------- -----------------
For the Six Months
Ended For the Year For the Period
April 30, 2000 Ended Ended
(unaudited) October 31, 1999 October 31, 1998*
------------------ ---------------- -----------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 7.48 $ 8.66 $10.00
------ ------- ------
Income From Investment
Operations:
Net investment income.. 0.30+ 0.49 0.20
Net unrealized losses
on securities......... (0.12) (1.02) (1.38)
------ ------- ------
Total from investment
operations.......... 0.18 (0.53) (1.18)
------ ------- ------
Less Distributions:
Distributions from net
investment income..... (0.33) (0.53) (0.16)
Distributions from
return of capital..... -- (0.12) --
------ ------- ------
Total distributions.. (0.33) (0.65) (0.16)
------ ------- ------
Net Asset Value, End of
Period.................. $ 7.33 $ 7.48 $ 8.66
====== ======= ======
Total Return............. 2.61%/1/ (6.38%)/2/ (11.78%)/1/
Ratios/Supplemental Data
Net assets, end of
period (in 000s)....... $8,613 $11,225 $7,290
Ratio of expenses to
average net assets:
Before expense
reimbursement/2/ ..... 3.58% 3.35% 6.33%
After expense
reimbursement/2/ ..... 1.97% 1.97% 1.97%
Ratio of net investment
income (loss) to
average net assets:
Before expense
reimbursement/2/ ..... 6.83% 4.17% (0.62%)
After expense
reimbursement/2/ ..... 8.44% 5.55% 3.75%
Portfolio turnover
rate................... 0.00% 8.15% 0.00%
</TABLE>
* Class A Shares commenced investment operations on January 9, 1998.
+ Per share numbers have been calculated using the average shares method.
/1/ Calculation does not reflect sales load and is not annualized.
/2/ Calculation does not reflect sales load.
See accompanying notes to financial statements.
8
<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 B Class B Class B
------------------ ---------------- -----------------
For the Six Months
Ended For the Year For the Period
April 30, 2000 Ended Ended
(unaudited) October 31, 1999 October 31, 1998*
------------------ ---------------- -----------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 7.51 $ 8.64 $ 9.62
------ ------ ------
Income From Investment
Operations:
Net investment income.. 0.28+ 0.40 0.15
Net unrealized losses
on securities......... (0.11) (0.99) (1.00)
------ ------ ------
Total from investment
operations.......... 0.17 (0.59) (0.85)
------ ------ ------
Less Distributions:
Distributions from net
investment income..... (0.26) (0.42) (0.13)
Distributions from
return of capital..... -- (0.12) --
------ ------ ------
Total distributions.. (0.26) (0.54) (0.13)
------ ------ ------
Net Asset Value, End of
Period.................. $ 7.42 $ 7.51 $ 8.64
====== ====== ======
Total Return............. 2.39%/1/ (7.09%)/2/ (8.84%)/1/
Ratios/Supplemental Data
Net assets, end of
period (in 000s)....... $2,053 $2,645 $ 669
Ratio of expenses to
average net assets:
Before expense
reimbursement/2/ ..... 4.28% 4.05% 7.03%
After expense
reimbursement/2/ ..... 2.67% 2.67% 2.67%
Ratio of net investment
income (loss) to
average net assets:
Before expense
reimbursement/2/ ..... 6.13% 3.47% (1.32%)
After expense
reimbursement/2/ ..... 7.74% 4.85% 3.05%
Portfolio turnover
rate................... 0.00% 8.15% 0.00%
</TABLE>
* Class B Shares commenced investment operations on March 6, 1998.
+ Per share numbers have been calculated using the average shares method.
/1/ Calculation does not reflect CDSC charges and is not annualized.
/2/ Calculation does not reflect CDSC charges.
See accompanying notes to financial statements.
9
<PAGE>
Spirit of America Investment Fund, Inc.
Notes to Financial Statements (unaudited) April 30, 2000
-------------------------------------------------------------------------------
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.
10
<PAGE>
Spirit of America Investment Fund, Inc.
Notes to Financial Statements (unaudited) -- continued April 30, 2000
-------------------------------------------------------------------------------
Note 2 -- Purchases and Sales of Securities
Purchases and sales of securities, other than short-term investments, aggre-
gated $0 and $2,822,295, respectively, for the six months ended April 30,
2000.
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 ended April 30, 2000, advisory fees of $56,201 were waived by Spirit
Management, and Spirit Management also reimbursed the Fund $35,868.
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. Class A shares are subject to initial sales charges
imposed at the time of purchase, in accordance with the Funds current prospec-
tus. For the six months ended April 30, 2000, sales charges received by SSH
Securities, Inc. were $3,985. Certain redemptions of Class B shares made
within six years of purchase are subject to a contingent deferred sales charge
("CDSC"), in accordance with the Funds current prospectus. For the six months
ended April 30, 2000, CDSC's were collected in the amount of $48,518.
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 $8,360 for the six months ended
April 30, 2000.
11
<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]
Semi-Annual Report
April 30, 2000
