<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Quality Bond Fund (B-1)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Diversified Bond Fund (B-2)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone High Income Bond Fund (B-4)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Balanced Fund (K-1)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Strategic Growth Fund (K-2)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Growth and Income Fund (S-1)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Mid-Cap Growth Fund (S-3)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Small Company Growth Fund (S-4)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone International Fund Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Institutional Adjustable Rate Fund
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Institutional Trust
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Precious Metals Holdings, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Keystone Tax Free Fund
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
KEYSTONE FAMILY OF FUNDS
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116-5034
TELEPHONE NUMBER (617) 338-3200
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 9, 1996
KEYSTONE QUALITY BOND FUND (B-1) ("B-1")
KEYSTONE DIVERSIFIED BOND FUND (B-2) ("B-2")
KEYSTONE HIGH INCOME BOND FUND (B-4) ("B-4")
KEYSTONE BALANCED FUND (K-1) ("K-1")
KEYSTONE STRATEGIC GROWTH FUND (K-2) ("K2")
KEYSTONE GROWTH AND INCOME FUND (S-1) ("S-1")
KEYSTONE MID-CAP GROWTH FUND (S-3) ("S-3")
KEYSTONE SMALL COMPANY GROWTH FUND (S-4) ("S-4")
KEYSTONE INSTITUTIONAL ADJUSTABLE RATE FUND
("ADJUSTABLE RATE")
KEYSTONE INSTITUTIONAL TRUST
("INSTITUTIONAL")
KEYSTONE INTERNATIONAL FUND INC.
("INTERNATIONAL")
KEYSTONE PRECIOUS METALS HOLDINGS, INC.
("PRECIOUS METALS")
KEYSTONE TAX FREE FUND ("TAX FREE")
To the Shareholders of the Keystone Family of Funds:
A Joint Special Meeting (the "Meeting") of shareholders of each fund listed
above (each a "Fund") will be held at the offices of the Funds, 200 Berkeley
Street, Boston, Massachusetts, on Monday, December 9, 1996, at 3:00 P.M., Boston
time, for the purpose of considering and acting upon the following proposals:
1.* FOR THE SHAREHOLDERS OF ALL FUNDS, to elect Trustees** of each Fund,
subject, in the case of International, to adoption of Proposal 3 below.
2.* FOR THE SHAREHOLDERS OF ALL FUNDS, to approve an Investment Advisory
and Management Agreement between each Fund and Keystone Investment
Management Company, substantially as described in the accompanying
Proxy Statement.
3. FOR THE SHAREHOLDERS OF INTERNATIONAL ONLY, to approve an amendment to
the Fund's By-Laws to permit the Board of Directors to fix the number
of Directors from time to time.
4. FOR SHAREHOLDERS OF EACH OF INTERNATIONAL AND PRECIOUS METALS ONLY, to
ratify the selection of KPMG Peat Marwick LLP as the independent public
accountant of each Fund for its current fiscal year.
5. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
* Proposals 1 and 2, if approved, will not become effective unless the
proposed merger of Keystone Investments, Inc. with and into an affiliate
of First Union Corporation, as described in the accompanying Proxy
Statement, becomes effective.
** As used in this Notice, the term "Trustee" includes each Director of
International and Precious Metals.
Shareholders of record of each Fund at the close of business on October 18,
1996 are entitled to receive notice of and to vote at the Meeting and any
adjournments thereof on any matters relating to that Fund.
By order of the Board of Trustees of each Fund,
Rosemary D. Van Antwerp
Secretary
October 21, 1996
PLEASE FILL IN, DATE AND SIGN YOUR PROXY - NOW - AND MAIL IT - TODAY - IN THE
STAMPED ENVELOPE ENCLOSED FOR YOUR CONVENIENCE. IN ORDER TO AVOID UNNECESSARY
EXPENSE OR DELAY, YOUR PROMPT RESPONSE IS REQUESTED, NO MATTER WHAT SIZE YOUR
HOLDINGS MAY BE.
<PAGE>
KEYSTONE QUALITY BOND FUND (B-1) ("B-1")
KEYSTONE DIVERSIFIED BOND FUND (B-2) ("B-2")
KEYSTONE HIGH INCOME BOND FUND (B-4) ("B-4")
KEYSTONE BALANCED FUND (K-1) ("K-1")
KEYSTONE STRATEGIC GROWTH FUND (K-2) ("K-2")
KEYSTONE GROWTH AND INCOME FUND (S-1) ("S-1")
KEYSTONE MID-CAP GROWTH FUND (S-3) ("S-3")
KEYSTONE SMALL COMPANY GROWTH FUND (S-4) ("S-4")
KEYSTONE INSTITUTIONAL ADJUSTABLE RATE FUND
("ADJUSTABLE RATE")
KEYSTONE INSTITUTIONAL TRUST
("INSTITUTIONAL")
KEYSTONE INTERNATIONAL FUND INC.
("INTERNATIONAL")
KEYSTONE PRECIOUS METALS HOLDINGS, INC.
("PRECIOUS METALS")
KEYSTONE TAX FREE FUND ("TAX FREE")
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116-5034
TELEPHONE NUMBER (617) 338-3200
PROXY STATEMENT FOR THE
JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 9, 1996
The accompanying Proxy is solicited by the Board of Trustees(1) of each of
the above funds (each a "Fund"), as applicable, to be used at a Joint Special
Meeting and any adjournment or adjournments thereof (the "Meeting") of their
shareholders. The proxy material is expected to be mailed to shareholders on or
about October 25, 1996. The purpose of the Meeting is to consider proposals
("Proposals") relating to the proposed merger (the "Merger") of Keystone
Investments, Inc. (the corporate parent of the Funds' investment adviser and
their principal underwriter) with and into an affiliate of First Union
Corporation, a multibank holding company, as described herein, as well as
certain other Proposals.
- ----------
(1) As used in this Proxy Statement, the term "Trustee" includes each Director
of International and Precious Metals.
<PAGE>
Certain terms used throughout this Proxy Statement are defined in the text.
There is also a "Definitions" section at the end of this Proxy Statement.
All properly executed Proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon. Proxies received
prior to the Meeting on which no vote is indicated will be voted "for" each
Proposal as to which it is entitled to be voted. Abstentions do not constitute
votes "for" a Proposal, have the same effect as votes "against" a Proposal, and
are treated as shares present at the Meeting for the purpose of determining
whether a quorum is present at the Meeting. Broker non-votes (i.e., Proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other person entitled to vote each share ("Share")
on a particular matter with respect to which the brokers or nominees do not have
discretionary power) do not constitute votes "for" or "against" a Proposal and
are disregarded for purposes of determining a quorum and for every other purpose
relating to such Proposal.
Any shareholder may revoke his or her Proxy at any time before it is voted
by (i) giving written notice of revocation to the Secretary of the Fund, (ii)
properly executing and delivering a later-dated Proxy or (iii) appearing in
person at the Meeting to vote his or her Shares.
The Boards of Trustees know of no business which will be presented for
consideration at the Meeting other than that set forth in Proposals 1 through 4
of the Notice of Meeting. If any other matters are properly presented, it is the
intention of the persons designated as Proxies (Messrs. Bissell and Elfner and
Ms. Van Antwerp) to vote such Proxies in accordance with their judgment on such
matters.
Shareholders of record of each Fund at the close of business on October 18,
1996 are entitled to notice of and to vote at the Meeting. See Exhibit F hereto
for the shares of each Fund outstanding on October 1, 1996. Each Share is
entitled to one vote on all matters described herein.
FUNDS AFFECTED BY EACH PROPOSAL AND VOTES REQUIRED FOR ADOPTION OF EACH
PROPOSAL
The following sets forth the Funds for which each Proposal is being made and
the shareholder votes required to adopt each Proposal:
PROPOSAL AFFECTED FUNDS
- -------- --------------
1. Election of Trustees All Funds
2. Approval of New Investment Advisory All Funds
and Management Agreement
3. Amendment to By-Laws International
4. Ratification of Selection of Accountant International and Precious
Metals
EACH FUND, EXCEPT INTERNATIONAL:
Approval of Proposal 1 requires the affirmative vote of the holders of a
majority of the Shares xrepresented at the Meeting, if more than 50% of the
outstanding Shares are represented.
ALL FUNDS:
Approval of Proposal 2 requires the affirmative vote of the holders of (a)
67% of the Shares represented at the Meeting, if more than 50% of the Shares
outstanding are represented, or (b) more than 50% of the outstanding Shares,
whichever is less.
INTERNATIONAL:
Approval of Proposals 1, 3 and 4 requires the affirmative vote of the
holders of a majority of the Shares represented at the Meeting, if more than 25%
of the Shares outstanding are represented.
PRECIOUS METALS:
Approval of Proposal 4 requires the affirmative vote of the holders of a
majority of the Shares represented at the Meeting, if more than 50% of the
outstanding Shares are represented.
INTRODUCTION
The Proposed Merger. Keystone Investments, Inc. ("Keystone Investments") is
the corporate parent of wholly-owned operating subsidiaries (which together with
Keystone Investments are sometimes referred to herein as "Keystone") which
include the Funds' investment adviser and manager, principal underwriter and
transfer agent. Keystone has provided investment advisory and management,
underwriting, distribution, administrative, transfer agency and trustee services
to mutual funds and private accounts since Keystone Investment Management
Company ("KIMCO"), the Funds' investment adviser, was organized in 1932.
Keystone Management, Inc. ("Keystone Management") serves as investment manager
of certain of the Funds. In connection with the Merger, it is proposed that all
of the functions currently performed by Keystone Management for such Funds be
assumed by KIMCO, as more fully described below. Keystone currently manages and
advises 32 mutual funds and other clients with assets which in the aggregate
total over $11 billion. Keystone Investments has entered into an Agreement and
Plan of Acquisition and Merger, dated September 6, 1996, as the same may be
amended from time to time (the "Merger Agreement"), with First Union Corporation
("First Union"), its wholly-owned subsidiary (except for directors' qualifying
shares), First Union National Bank of North Carolina ("FUNB-NC"), and First
Union Keystone, Inc. ("FKI"), a newly organized wholly-owned subsidiary of
FUNB-NC. The principal offices of First Union, FUNB-NC and FKI are at One First
Union Center, Charlotte, North Carolina 28288. The Merger Agreement provides for
the merger (the "Merger") of Keystone Investments with and into FKI, which will
then adopt the name "Keystone Investments, Inc." ("New Keystone Investments").
First Union is a publicly owned multibank holding company registered under
the federal Bank Holding Company Act of 1956, as amended. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses through offices in 38 states and four foreign countries. The Capital
Management Group ("CMG") of FUNB-NC manages, advises or otherwise oversees the
investment of over $34 billion in assets belonging to a wide range of
institutional, trust and individual clients, including registered investment
companies, or series thereof, with assets of approximately $8.1 billion.
Evergreen Asset Management Corp. and Lieber & Company, wholly-owned subsidiaries
of FUNB-NC, serve as investment adviser, manager, and/or subadviser to
institutional, trust and individual clients, including registered investment
companies, or series thereof, with assets totalling approximately $8 billion.
The registered investment companies for which FUNB-NC, Evergreen Asset
Management Corp. and Lieber & Company serve as manager, investment adviser
and/or subadviser are referred to collectively as the "Evergreen funds."
Evergreen Asset Management Corp. also provides administrative services to
the Evergreen funds and, to the extent it is not obligated to provide such
services under the investment advisory agreements into which it has entered with
certain of the Evergreen funds, receives an administrative fee based on each
Fund's average annual net assets. Lieber & Company, in addition to being a
registered investment adviser, is a broker-dealer and member of the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Lieber & Company provides brokerage
services to the investment companies managed by Evergreen Asset Management Corp.
and to certain institutions and individuals. First Union Brokerage Services,
Inc. ("FUBS"), a wholly-owned subsidiary of FUNB-NC, is a registered
broker-dealer that is principally engaged in providing retail brokerage
services, consistent with its federal banking authorizations. FUBS currently
acts as a selected dealer for shares of the Evergreen funds and it is expected
that, following the Merger, FUBS will also become a selected dealer for shares
of the Funds. First Union Capital Markets Corp., a wholly-owned subsidiary of
First Union, is a registered broker-dealer principally engaged in providing,
consistent with its federal banking authorizations, private placement,
securities dealing and underwriting services. First Union's banking
subsidiaries, with operations in North Carolina, South Carolina, Georgia,
Florida, Tennessee, Virginia, Maryland, the District of Columbia, New Jersey,
Delaware, Connecticut, Pennsylvania and New York, engage in domestic retail
banking, worldwide commercial banking, trust banking, investment management and
other financial services and banking related activities. First Union's non-bank
financial services-related subsidiaries provide many additional services,
including mortgage banking, insurance, home equity lending, leasing, investment
banking, insurance, and securities brokerage services.
In the Merger, First Union will issue shares of its voting common stock
("First Union Common Stock") and options thereon to the beneficial owners of all
of Keystone Investments' outstanding voting common stock ("Keystone Stock") and
options thereon. Substantially all of the outstanding shares of Keystone Stock
and options thereon are beneficially owned by certain of Keystone's present and
former officers and employees and members of their families and trusts
established by them (collectively referred to herein as Management). Except for
140,042 shares held by the Keystone Investments, Inc. Savings and Investment
Plan and certain unaffiliated stockholders, all of the Keystone Stock
outstanding as of the date hereof is held pursuant to eight voting trust
agreements ("voting trusts") for which certain of Keystone's senior officers and
directors are the voting trustees. A majority of the outstanding Keystone Stock,
totalling 52%, is held by seven senior officers or directors and a spouse of one
such individual, and is subject to two of such voting trusts. These officers and
directors, who may be deemed to control Keystone, are Messrs. George S. Bissell,
Albert H. Elfner, III, Ralph J. Spuehler, Jr., Stephen J. Arpante, Philip M.
Byrne, Edward F. Godfrey and Roger T. Wickers and, together with such spouse,
are referred to herein as the "Controlling Stockholders". Their address is 200
Berkeley Street, Boston, Massachusetts 02116. Each of Messrs. Bissell, Elfner,
Spuehler, Godfrey and Byrne is also an "affiliated person" of Keystone
Investments (as defined under the 1940 Act). The Controlling Stockholders have
agreed to have their Keystone Stock voted in favor of the Merger at a Special
Meeting of Stockholders of Keystone Investments to be held on December 2, 1996
and, accordingly, it is expected that the Merger Agreement will be approved at
such Special Meeting.
The Merger Agreement provides that First Union will issue in the Merger
2,912,000 shares of First Union Common Stock which, at September 6, 1996, had an
aggregate value of $186,004,000. The number of shares that will ultimately be
issued upon the Merger is subject to certain adjustments, including an
adjustment downwards of 13.5% in the event that net redemptions of shares of the
Funds and certain other Keystone funds prior to the effective date of the Merger
equal or exceed in the aggregate 15% of the net asset value of the outstanding
shares of such funds on September 6, 1996. In addition, in the event that the
average per share market price of First Union Common Stock over a period of ten
trading days ending on the day five business days prior to the Effective Date
(as defined herein) declines by a certain amount determined with reference to
the market prices of shares of a certain peer group of bank holding companies,
Keystone Investments will have the option to terminate the Merger Agreement,
subject to the right of First Union to increase the aggregate number of shares
of First Union Common Stock to be issued in the Merger to compensate for such a
decline in accordance with the Merger Agreement. Assuming the consummation of
the Merger during the month of December, 1996 an estimated 2,523,089 shares of
First Union Common Stock, having an aggregate market value as of October 16,
1996 of $171,570,052 would be issuable in exchange for all of the shares of
Keystone Stock. The balance of the First Union Common Stock issuable in the
Merger will be paid to assignees of Keystone TA Limited Partnership ("KTLP"), a
former shareholder of Keystone Investments, which assisted current management in
a leveraged buyout of Keystone Investments in 1989, pursuant to an agreement
with Keystone Investments.
Under current federal banking law, an officer or director of a bank holding
company, or a subsidiary thereof, is prohibited from serving as an officer or
director of an open-end investment company. Accordingly, Mr. Bissell, the
current Chairman of the Funds' Boards of Trustees, who is standing for
re-election to such Boards and is currently a director of Keystone Investments,
will be prohibited from becoming a director of New Keystone Investments, which
will be a wholly-owned subsidiary of FUNB-NC following the Merger. Mr. Bissell
will receive approximately 15.97% of the shares of First Union Common Stock
issued to Management. (Receipt by Mr. Bissell may include receipt by family
members and trusts established by him.) Mr. Elfner, the President and a Trustee
of each of the Funds, is not standing for re-election and will resign as the
President of each Fund if the Merger is consummated. Mr. Elfner is a director
and chief executive officer of Keystone Investments and will continue as such of
New Keystone Investments following the Merger. He will receive approximately
9.77% of the shares of First Union Common Stock issued to Management. In
addition to the shares of First Union Common Stock to be issued in the Merger as
the consideration for the acquisition by New Keystone Investments of Keystone
Investments' assets through the Merger, New Keystone Investments will, also
through the Merger, assume all of Keystone Investments' liabilities as of the
Effective Date, estimated at that time to be approximately $182,000,000,
including senior secured notes in the amount of $145,000,000.
The Merger is expected to become effective on December 11, 1996, or a later
agreed date (the "Effective Date"), upon the satisfaction of specified terms and
conditions including, among other things, receipt of all necessary regulatory
approvals. Consummation of the Merger is conditioned on First Union and Keystone
Investments receiving, or obtaining a waiver of the requirement to receive, all
necessary approvals by governmental regulatory authorities, including approvals
of the Office of the Comptroller of the Currency and the Federal Reserve Board
and the expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Consummation of the Merger
is subject to a number of additional conditions, including the approvals
proposed hereby of new investment advisory and management agreements. To satisfy
this condition, shareholders of Keystone funds which, in the aggregate, provided
at least 90% of the management and advisory fees paid to Keystone by all of the
Keystone funds for the twelve months ended August 31, 1996 must approve such
proposed agreements.
If the Merger is consummated, First Union, indirectly, and FUNB-NC,
directly, will own all of the outstanding voting securities of New Keystone
Investments, which in turn will own directly or indirectly all of the
outstanding voting securities of the Keystone operating (and any other)
subsidiaries, including the Funds' investment adviser and manager, principal
underwriter, transfer agent and shareholder services provider. Such new
ownership will constitute a change in the identity and control ("Change in
Control") of Keystone Investments and its direct and indirect subsidiaries,
which will cause the Funds' current investment advisory and management
agreements, including subadvisory agreements, where applicable, and principal
underwriting agreements, to terminate automatically in accordance with their
terms, as required by the Investment Company Act of 1940, as amended (the "1940
Act"). Such terminations will necessitate adoption of new agreements for
provision of such services. Shareholder approvals of the new investment advisory
and management agreements, including new subadvisory agreements, where
applicable, are proposed and described herein. Shareholder approvals of new
underwriting and other agreements for distribution-related services, as
described below, are not required. Such agreements have been acted upon only by
each Fund's Board of Trustees, including a majority of the Independent Trustees
(Trustees who are independent, i.e., not "interested persons", as defined in the
1940 Act, and who have no direct or indirect financial interest in such
agreements). All new investment advisory and management agreements are proposed
to be with KIMCO, which is currently the investment manager or adviser, or both,
of the Keystone funds, and with the current subadvisers, where applicable.
Keystone Management, which is the investment manager of some of the Funds, will
not remain as such. The consolidation of all investment advisory services for
the Funds under KIMCO will not involve any material changes in the services
provided to Funds for which Keystone Management currently serves as manager. All
of the proposed investment advisory and management agreements will, except as
indicated above, be substantively identical to the existing investment advisory
and management agreements. EACH FUND'S ADVISORY FEE RATE WILL REMAIN UNCHANGED.
(SEE "ADVISORY FEE WAIVERS AND EXPENSE SUBSIDIES" BELOW.)
Following the consummation of the Merger, First Union does not have any
current intention to make any immediate significant changes in the way that New
Keystone Investments provides investment advisory and management services to the
Funds. To facilitate this continuity, Keystone Investments (the obligations of
which will be assumed by New Keystone Investments) has entered into employment
contracts, effective as of the Effective Date, with each of three directors and
executive officers of Keystone Investments (Albert H. Elfner, III, Edward F.
Godfrey and Ralph J. Spuehler, Jr.). Among other things, each such employment
contract provides for a payment to be made at the end of the one-, two- and/or
three-year periods following the Effective Date during which Messrs. Elfner,
Godfrey or Spuehler, as the case may be, remains an employee of Keystone in his
present or substantially equivalent positions. Each annual payment would equal
$440,000 for Mr. Elfner, $345,000 for Mr. Godfrey and $220,000 for Mr. Spuehler.
Such payments would also be made under certain circumstances following
termination of the employment of Messrs. Elfner, Godfrey or Spuehler,
respectively, and the expiration of a one-year non-compete period following such
termination. Messrs. Elfner and Godfrey are expected to continue to be actively
involved in providing services to the Funds to substantially the same extent to
which each has historically been involved. Mr. Spuehler is expected to be
actively involved in providing transfer agency and other shareholder services to
the Funds. Mr. Spuehler was the President of the Funds' transfer agent from 1987
to 1995. Under federal banking regulations, neither Mr. Elfner nor Mr. Godfrey
will be able to continue as an officer of the Funds.
If the Merger is consummated, Keystone Investment Distributors Company
("KID") (which is currently the principal underwriter of all of the Keystone
funds except Adjustable Rate and Institutional, whose principal underwriter at
present is Fiduciary Investment Company, Inc.) would no longer be able to act as
principal underwriter of such Funds due to regulatory restrictions imposed by
the Glass-Steagall Act upon national banks such as FUNB-NC and their affiliates,
that prohibit such entities from acting as the underwriters or distributors of
mutual fund shares. However KID will continue to receive compensation from such
Funds or such Funds' principal underwriter in respect of underwriting and
distribution services performed prior to the consummation of the Merger and,
following the consummation of the Merger, is expected to be compensated by such
Funds or their principal underwriter for providing certain marketing support
services to such Funds or their principal underwriter. In view of the foregoing,
such Funds' Boards of Trustees, as well as the Boards of Trustees of Adjustable
Rate and Institutional, approved the appointment of Evergreen Funds Distributor,
Inc. ("EFD"), an affiliate of Furman Selz LLC ("Furman Selz"), as principal
underwriter of the Funds at their meeting held on September 5, 1996, effective
upon the consummation of the Merger. At that time the Boards also approved the
amendment of the existing underwriting agreements with KID to permit KID to
continue to receive payments from the Funds with respect to distribution and
underwriting services rendered prior to the Merger, and the entry by EFD into
marketing services agreements with KID which provide for KID to furnish
post-Merger marketing support and services. The address of EFD and Furman Selz
is 230 Park Avenue, New York, New York. EFD is currently the principal
underwriter of the Evergreen funds.
Furman Selz, which currently acts as sub-administrator to the Evergreen
funds and which is expected to act as such for the Funds following the Merger,
is a registered investment adviser and broker-dealer that provides services to a
wide range of clients including investment companies, institutions and
individuals. In addition, Furman Selz, either directly or through wholly-owned
subsidiaries such as EFD, provides underwriting and distribution services to
investment companies, including investment companies managed by banks or bank
affiliates, such as FUNB-NC and Evergreen Asset Management Corp., which
themselves are prohibited from acting as principal underwriters for registered
investment companies. In connection with the foregoing, Furman Selz has entered
into an agreement with BISYS Group, Inc. ("BISYS"), pursuant to which Furman
Selz has agreed to sell to BISYS its mutual funds administration and
distribution business. Pursuant to the terms of the agreement between BISYS and
Furman Selz, EFD will become a wholly-owned subsidiary of BISYS. It is not
expected that the acquisition of the mutual funds administrative and
distribution business by BISYS will affect the services provided by EFD.
As principal underwriter of the Funds following consummation of the Merger,
EFD shall: (i) make payments to securities dealers and others engaged in the
sale of Shares; and (ii) make payments of principal and interest in connection
with the financing of commission payments made in connection with the sale of
Shares. EFD and/or KID may also do the following: (i) provide telephone
facilities and shareholder services; (ii) formulate and implement marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising;
(iii) prepare, print and distribute sales literature; (iv) prepare, print and
distribute Prospectuses of the Funds and reports for recipients other than
existing shareholders of the Funds; (v) provide to the Funds such information,
analyses and opinions with respect to marketing and promotional activities as
the Funds may, from time to time, reasonably request; and (vi) provide to the
Funds such other marketing-related and promotional services as the Funds may,
from time to time, reasonably request.
In the case of Shares sold with a front-end sales charge, EFD may retain the
difference between the current offering price of Shares, as set forth in the
current Prospectus for each Fund, and their net asset value, less any
reallowance that is payable in accordance with the sales charge schedule in
effect at any given time with respect to the Shares. In the case of Shares of
the Funds subject to a contingent deferred sales charge ("CDSC"), EFD may retain
any CDSCs payable with respect to the redemption of any Shares.
EFD will receive compensation from the Funds under the Rule 12b-1
distribution plans adopted by each of the Funds in the form of distribution
fees. EFD may pay all or part of the distribution fees to KID for the
marketing-related services described above. In addition, KID will continue to
receive all or part of the fees payable by the Funds under the distribution
plans in respect of services rendered prior to the consummation of the Merger.
The annual rate of charges payable by the Funds after the Merger under the
proposed distribution arrangements with EFD (including the marketing services
arrangement with KID) will not be greater than the annual rate of charges
currently payable by the Funds under their arrangements with KID. EFD intends to
obtain financing from FUNB-NC for advanced commission payments made in
connection with the sale of certain classes of Shares at market interest rates
for this type of financing. EFD may sell, assign, pledge or hypothecate its
rights to receive compensation as principal underwriter of the Funds in
connection with the financing of such commission payments made by EFD at the
time Shares are sold, to Mutual Fund Funding 1994-1, a bankruptcy remote
subsidiary of Furman Selz, or such other entity as may be created for this
purpose, and Mutual Fund Funding 1994-1, or such other entity, may in turn
pledge or assign such rights to FUNB-NC as lender to secure the financing of
such commission payments.
If the Merger is consummated, the Funds' transfer agent, Keystone Investor
Resources Center, Inc. ("KIRC"), an indirect subsidiary of Keystone Investments,
will become an indirect subsidiary of New Keystone Investments, FUNB-NC and
First Union. KIRC is expected to become the transfer agent and shareholder
services provider for the Evergreen funds, which will substantially increase
KIRC's operations. For additional information, see the section of this Proxy
Statement entitled "General Information."
There is proposed for election as Trustees of each Fund a Board consisting
of the current members of its Board, other than Albert H. Elfner, III, and eight
additional members who are currently Trustees of some or all of the Evergreen
funds, all as described herein. As stated previously, Mr. Elfner is the current
President and a Trustee of each Fund. Because he will be a director and chief
executive officer of New Keystone Investments, which will be a subsidiary of
FUNB-NC and First Union if the Merger is consummated, Mr. Elfner will be
prohibited by current federal banking law from holding any positions with the
Keystone funds or Evergreen funds. Adoption of the Proposal to elect Trustees as
herein provided is contingent on the Merger becoming effective.
If the Merger is not consummated, the new investment advisory and management
and subadvisory, where applicable, and principal underwriting and other
agreements would not be entered into; the Funds' current agreements would remain
in place; the election of Trustees would not be effected; and the Funds' current
Trustees would continue in office. The current Trustees would, under these
circumstances, take such actions, if any, as they deemed necessary. If the
shareholders of any Fund do not approve the proposed new investment advisory and
management agreements, but the requisite shareholder approvals of other Keystone
funds sufficient to satisfy the conditions to the Merger are obtained and the
Merger is consummated, KIMCO will be unable to continue serving as investment
adviser (and Keystone Management as manager, to the extent applicable) ot(nsKdaC
tednof each such non-approving Fund pursuant to its existing investment advisory
and/or management agreement. In that event, the Board of Trustees of each
non-approving Fund, with the assistance of Keystone, will consider alternative
advisory and management arrangements for each such Fund.
ADVISORY FEE WAIVERS AND EXPENSE SUBSIDIES
As set forth in Exhibits I and J, the investment advisory fee for certain of
the Funds has been waived in whole or part, and in certain cases Keystone may
provide additional expense subsidies, to limit such Funds' respective annual
expenses to the amounts specified in the Exhibits. Following the Merger, such
waivers or subsidies will be continued for the minimum period of time stated in
Exhibit I, or on a month-to-month basis if no minimum period is specified. While
there is no current intention to eliminate or reduce such waivers or subsidies,
there can be no assurance that New Keystone Investments will continue such
waivers or subsidies beyond any specified minimum period or, in the case of
month-to-month waivers or subsidies, beyond the month in which the Merger
becomes effective.
1. ELECTION OF BOARDS OF TRUSTEES
The first Proposal is to elect each of the individuals nominated as a
Trustee to hold office until his successor is elected and qualifies or until his
death, retirement, resignation or removal from office. The special election is
being held to add eight Trustees to the existing Boards, contingent on the
consummation of the Merger. As required by current federal banking law, Albert
H. Elfner, III, who will be a director and chief executive officer of New
Keystone Investments if the Merger is consummated, will not be standing for
re-election and, upon consummation of the Merger, will resign as a Trustee and
President of the Funds. The current Board of Trustees of each Fund, including
its Independent Trustees, has nominated the individuals described below for
election as Trustees. The nominees were selected by the Nominating Committees of
the Boards, each of which consists only of Independent Trustees. Approval of
this Proposal for International is subject to the approval of Proposal 3.
It is not expected that any of the nominees will decline or become
unavailable for election. In case this should happen, the discretionary power
given in the Proxy may be used to vote for a substitute nominee or nominees or
to fix the number of Trustees at less than nineteen. The Proxies solicited
hereby cannot be voted by shareholders for persons other than the nominees
named. Each nominee has consented to being named in this Proxy Statement and to
serve as a Trustee if elected. The nominees for election as Trustees of each
Fund and certain information about them is set forth below:
NOMINEES FOR TRUSTEES
NAME (AGE)
(TRUSTEE SINCE) PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- --------------- -------------------------------------------
Laurence B. Ashkin (68) Trustee of all the Evergreen funds other than
(new) Evergreen Investment Trust; Real estate
developer and construction consultant;
President of Centrum Equities and Centrum
Properties, Inc.
Frederick Amling (69) Trustee of the Keystone funds; Professor,
(1993) Finance Department, George Washington
University; President, Amling & Company
(investment advice); Outside Director, Torray
Fund (mutual fund); former Member, Board of
Advisers, Credito Emilano (banking).
Charles A. Austin III (61) Trustee of the Keystone funds; Investment
(1993) Counselor to Appleton Partners, Inc.
(investment advice); former Managing Director,
Seaward Management Corporation (investment
advice).
Foster Bam (69) Trustee of all the Evergreen funds other than
(new) Evergreen Investment Trust; Partner in the
law firm of Cummings & Lockwood; Director,
Symmetrix, Inc. (sulphur company) and Pet
Practice, Inc. (veterinary services); former
Director, Chartwell Group Ltd. (manufacturer
of office furnishings and accessories), Waste
Disposal Equipment Acquisition Corporation
and Rehabilitation Corporation of America
(rehabilitation hospitals).
George S. Bissell (67)* Chairman of the Boards of Trustees of the
(1979) Keystone funds; Director, Keystone Investments;
Chairman of the Board and Trustee of Anatolia
College; Trustee of University Hospital (and
Chairman of its Investment Committee); former
Chairman of the Board and Chief Executive
Officer of Keystone Investments and certain
other companies affiliated with Keystone
Investments.
Edwin D. Campbell (69) Trustee of the Keystone funds; Principal,
(1993) Padanaram Associates, Inc.; former Executive
Director, Coalition of Essential Schools, Brown
University; former Director and Executive Vice
President, National Alliance of Business; former
Vice President, Educational Testing Services;
former Dean, School of Business, Adelphi
University.
Charles F. Chapin (67) Trustee of the Keystone funds; former Group
(1993) Vice President, Textron Corp.; former
Director, Peoples Bank (Charlotte, N.C.).
K. Dun Gifford (57) Trustee of the Keystone funds; Trustee,
(1982) Treasurer and Chairman of the Finance
Committee, Cambridge College; Chairman Emeritus
and Director, American Institute of Food and
Wine; President and Chairman, Oldways
Preservation and Exchange Trust (education);
former Chairman of the Board, Director and
Executive Vice President, The London Harness Co.
(specialty retail stores); former Managing
Partner, Roscommon Capital Corp.; former Chief
Executive Officer, Gifford Gifts of Fine Foods;
former Chairman, Gifford, Drescher & Associates
(environmental consulting); former Director,
Keystone Investments and Keystone.
James S. Howell (71) Chairman of the Evergreen funds; former
(new) Chairman of the Distribution Foundation for
the Carolinas; former Vice President of Lance
Inc. (food manufacturing).
Leroy Keith, Jr. (57) Trustee of the Keystone funds; President and
(1993) Chairman of the Board of Carson Products
Company; Director of Phoenix Total Return Fund
and Equifax, Inc.; Trustee of Phoenix Series
Fund, Phoenix Multi-Portfolio Fund and the
Phoenix Big Edge Series Fund; former President,
Morehouse College.
F. Ray Keyser, Jr. (69) Trustee of the Keystone funds; Chairman and
(1973) of Counsel, Keyser, Crowley, Meub, Layden,
Kulig & Sullivan, P.C.; Member, Governor's (VT)
Council of Economic Advisers; Chairman of the
Board and Director, Central Vermont Public
Service Corporation and Lahey Hitchcock Clinic;
Director, Vermont Yankee Nuclear Power
Corporation, Grand Trunk Corporation, Grand
Trunk Western Railroad, Union Mutual Fire
Insurance Company, New England Guaranty
Insurance Company, Inc. and the Investment
Company Institute; former Director and
President, Associated Industries of Vermont;
former Governor of Vermont; former Director of
Central Vermont Railway, Inc., S.K.I. Ltd., and
Arrow Financial Corp.; former Director and
Chairman of the Board, Proctor Bank and Green
Mountain Bank.
Gerald M. McDonnell (56) Trustee of the Evergreen funds; Sales
(new) Representative with Nucor-Yamoto, Inc. (steel
producer).
Thomas L. McVerry (57) Trustee of the Evergreen funds; former Vice
(new) President and Director of Rexham Corporation;
former Director of Carolina Cooperative
Federal Credit Union.
William Walt Pettit (40) Trustee of the Evergreen funds; Partner in
(new) the law firm of Holcomb and Pettit, P.A.
David M. Richardson (55) Trustee of the Keystone funds; Vice Chair and
(1993) former Executive Vice President, DHR
International, Inc. (executive recruitment);
Director, Commerce and Industry Association
of New Jersey, 411 International, Inc. and
J&M Cumming Paper Co.; former Senior Vice
President, Boyden International Inc.
(executive recruitment).
Russell A. Trustee of the Evergreen funds; Medical
Salton, III MD (48) Director, U.S. Health Care/Aetna Health
(new) Services; former Managed Health Care
Consultant; former President, Primary
Physician Care.
Michael S. Scofield (53) Trustee of the Evergreen funds; Attorney, Law
(new) Offices of Michael S. Scofield.
Richard J. Shima (57) Trustee of the Keystone funds; Executive
(1993) Consultant, Drake Beam Morin, Inc. (executive
outplacement); Director, Connecticut Natural Gas
Corporation, Trust Company of Connecticut,
Middlesex Mutual Assurance Company, Hartford
Hospital, Old State House Association and
Enhance Financial Services, Inc.; Chairman,
Board of Trustees, Hartford Graduate Center;
Trustee, Greater Hartford YMCA; former Director,
Vice Chairman, and Chief Investment Officer, The
Travelers Corporation; former Managing Director,
Russell Miller, Inc. (insurance); and former
Director, Kingswood-Oxford School.
Andrew J. Simons (57)* Trustee of the Keystone funds; Partner in the
(1993) law firm of Farrell, Fritz, Caemmerer,
Cleary, Barnosky & Armentano, P.C.; Adjunct
Professor of Law, St. John's University; Adjunct
Professor of Law, Touro College School of Law;
former President, Nassau County Bar Association.
- ----------
*May be considered an "interested person" within the meaning of the 1940 Act.
If the Merger is consummated and Mr. Bissell is elected, he will be deemed
an "interested person" of the Funds by virtue of his ownership of First Union
Common Stock. While Mr. Simons, if elected, may be deemed an "interested person"
as a result of certain legal services rendered to a subsidiary of First Union by
his law firm, Farrell, Fritz, Caemmerer, Cleary, Barnosky & Amentano, P.C., Mr.
Simons is applying for an exemption from the Securities and Exchange Commission
("SEC") which would allow him to retain his status as an Independent Trustee.
Such exemption, if granted, may not be granted until after the Merger is
effective.
COMPENSATION OF TRUSTEES
Trustees who are not Independent Trustees will receive no compensation from
the Funds. The compensation (including all expenses incurred in connection with
any meeting attended) paid by each Fund to the Trustees as a group during the
Fund's last fiscal year, as well as the annual retainer and fee per meeting
currently paid to each Independent Trustee is set forth in Exhibit G to this
Proxy Statement. If elected, the eight newly elected Trustees will begin
receiving such amounts as of January 1, 1997 or on the Effective Date of the
Merger, whichever is later.
TRUSTEES' AND COMMITTEE MEETINGS
Prior to meetings of the shareholders at which Trustees are to be elected or
if a vacancy in the Boards of Trustees occurs between such meetings, a
Nominating Committee recommends candidates for nomination to the Boards of
Trustees. The members of the Nominating Committee are Messrs. Campbell, Chapin,
Gifford, Keith and Keyser. The Nominating Committee's recommendations for
nominees for election as Independent Trustees are voted on by the Independent
Trustees. The Funds currently have no procedure to consider persons recommended
by shareholders for nomination to the Boards.
Messrs. Amling, Austin, Richardson, Shima and Simons represent the Funds
on the Audit Committee. The Audit Committee reviews the services performed by
KPMG Peat Marwick, the independent public accountant for each of the Keystone
funds.
Each of the Trustees attended at least 75% of the total number of meetings
of the Board of Trustees and applicable Committees of each Fund during its most
recent fiscal year.
Exhibit H contains information about the number of Board of Trustees,
Nominating Committee and Audit Committee meetings held by each Fund during its
most recent fiscal year.
After the consummation of the Merger, an Advisory Committee consisting of
Messrs. Keyser and Shima will be established to assist the Boards of Trustees of
the Evergreen funds. Messrs. Keyser and Shima will be paid an annual retainer
and a fee per meeting for their services to the Advisory Committee.
OFFICERS OF THE FUNDS AND KIMCO
The executive officers of the Funds are directors, officers or employees of
KIMCO. As required by current federal banking law, following consummation of the
Merger, officers and/or employees of Keystone will no longer be permitted to
serve as officers of the Funds. Instead, such officers are expected to be
provided by Furman Selz. The current executive officers of the Funds, their
ages, and the period for which each executive officer has served, are (and are
expected to continue until consummation of the Merger to be): George S. Bissell
(age 67), Chairman of the Board since 1979 and former Chief Executive Officer;
Albert H. Elfner, III (age 52), President and Chief Executive Officer since
1994; and James R. McCall (age 51), Senior Vice President since 1993. Each of
the executive officers has been a director, officer or employee of KIMCO or its
affiliates for at least five years.
If the Merger is consummated, the executive officers of each Fund will be
John Pileggi (age 36), President and Treasurer and George O. Martinez (age 36),
Secretary. Messrs. Pileggi and Martinez have been officers or employees of
Furman Selz for at least five years.
The executive officers and directors of KIMCO, who are expected to continue
to be such, or who are expected to be elected if the Merger is consummated, are:
Albert H. Elfner, III Chairman and Chief Executive Officer
James R. McCall President
Edward F. Godfrey Senior Vice President, Chief Financial
Officer and Treasurer
Philip M. Byrne Senior Vice President
Rosemary D. Van Antwerp Senior Vice President, General Counsel
and Secretary
Donald McMullen Director
William M. Ennis II Director
Barbara J. Colvin Director
The address of each of the persons referred to above except Messrs.
McMullen and Ennis and Ms. Colvin is 200 Berkeley Street, Boston,
Massachusetts 02116-5034. The address of Messrs. McMullen and Ennis and Ms.
Colvin is 301 South College Street, Charlotte, North Carolina 23288-0630.
RECOMMENDATION OF THE TRUSTEES
The Board of Trustees of each Fund, including its Independent Trustees,
recommends that the shareholders vote FOR the election of each Trustee.
2. APPROVAL OF ADVISORY AND
MANAGEMENT AGREEMENTS
BACKGROUND OF PROPOSAL
KIMCO is the investment adviser or manager, or both, of the Funds. Keystone
Management is currently the investment manager of certain Funds for which KIMCO
is only the investment adviser. If the Merger is consummated, only KIMCO will be
the investment adviser and manager of all of the Funds, and Keystone Management
will cease to have any such function. KIMCO is a wholly-owned subsidiary of
Keystone Investments.
If the Merger is consummated, the Change in Control described in the
"Introduction" above will automatically terminate the Funds' investment advisory
and management agreements in accordance with their terms, as required by the
1940 Act. The new investment advisory and management agreement of each Fund
proposed hereby for approval by each Fund's shareholders will be substantively
identical to each Fund's existing agreement. EACH FUND'S ADVISORY FEE RATE WILL
REMAIN UNCHANGED. (See "Advisory Fee Waivers and Expense Subsidies".) Such
approvals by shareholders of Keystone funds which in the aggregate provided at
least 90% of the advisory and management fees paid to Keystone by such Keystone
funds for the twelve months ended August 31, 1996 is a condition of the
consummation of the Merger.
TERMS OF ADVISORY AND MANAGEMENT AGREEMENTS
Pursuant to each Fund's proposed advisory and management agreement, KIMCO
will act as investment adviser and manager to each Fund.
The investment advisory and management agreement of each Fund currently
requires, and each proposed agreement will require, KIMCO to manage and
administer the operation of such Fund, and to manage the investment and
reinvestment of such Fund's assets in conformity with such Fund's investment
objectives and restrictions, subject to the supervision of the Trustees of the
Fund, as well as to provide office space, all necessary office facilities,
equipment and personnel in connection with its services under the investment
advisory and management agreement, and all other expenses of KIMCO incurred in
connection with the investment advisory and management services provided. Except
as stated below, all charges and expenses, other than those specifically
referred to above as being borne by its investment adviser and manager, are
currently, and will continue to be, paid by each Fund, including, but not
limited to, custodian charges and expenses, bookkeeping and auditors' charges
and expenses, transfer agent charges and expenses, fees of Independent Trustees,
brokerage commissions, brokerage fees and expenses, issue and transfer taxes,
costs and expenses under distribution plans, interest, taxes and corporate fees
payable to governmental agencies, the cost of share certificates, fees and
expenses of the registration and qualification of the Fund and its Shares with
the SEC or under state or other securities laws, expenses of preparing, printing
and mailing of prospectuses, statements of additional information, notices,
reports and proxy materials to shareholders of the Fund, expenses of
shareholders' and Trustees' meetings, charges and expenses of legal counsel for
the Fund and for the Trustees of the Fund, charges and expenses of filing annual
and other reports with the SEC and other authorities, and all extraordinary
charges and expenses of the Fund.
The form of proposed investment advisory and management agreement for B-1,
B-2, B-4, K-1, K-2, S-1, S-3, S-4 and Institutional is attached hereto as
Exhibit A. Appendix I to Exhibit A contains each such Fund's advisory fee
schedule. The proposed investment advisory and management agreement for Tax Free
is attached hereto as Exhibit B.
As provided in its proposed investment advisory and management agreement
which is included in Exhibit C hereto, Adjustable Rate's agreement has, and will
have, a fee structure which provides for payment of a substantial number of Fund
expenses by KIMCO.
Each Fund's current and proposed investment advisory and management
agreement, except as stated below, provides that KIMCO shall have no liabilities
in connection with rendering services thereunder, other than liabilities
resulting from KIMCO's willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties, and that each Fund will indemnify KIMCO
against liabilities, losses and expenses incurred in connection with all
liabilities, except those stated above and liabilities involving breach of
KIMCO's fiduciary duties in respect of receipt of compensation for its services.
As is the case with their current agreements, the proposed agreements of
Precious Metals and International, which are included in Exhibits D and E,
respectively, hereto, do not provide for such indemnification by such Funds,
although the agreement for International contains the same limit on liabilities
of KIMCO.
If approved by the shareholders of each Fund, the proposed investment
advisory and management agreement for such Fund will continue in effect until
two years from its effective date (the Effective Date of the Merger), and,
thereafter, will continue from year to year, subject to termination as
hereinafter described, if approved annually by the shareholders or Board of
Trustees of such Fund, and, in either case, by a majority of the Independent
Trustees by vote in person at a meeting called for such purpose, all as required
by the 1940 Act. Each such agreement must also provide that it will
automatically terminate upon any "assignment" of the agreement, which term
includes, as is the case with the current agreements if the Merger is
consummated, a change in control of a Fund's investment adviser and manager. The
terms of the proposed agreements being submitted to shareholders and the
execution of such agreements upon consummation of the Merger were approved
unanimously by all of the Trustees of each Fund at a meeting called for such
purpose on September 5, 1996.
As of September 30, 1996, KIMCO served as investment adviser to the Keystone
funds listed in Exhibit I, whose investment objectives are substantially similar
to each other.
If the Merger is consummated, Furman Selz, which is not affiliated with
First Union, will provide personnel and certain administrative services to the
Funds pursuant to a sub-administration agreement under which it will receive
from KIMCO a fee at the maximum annual rate of 1/100th of 1% of the average
daily net asset value of each Fund's total assets. The terms of such
sub-administration agreement have been approved by the Funds' Boards of
Trustees. As stated above, Furman Selz has agreed to sell its mutual funds
administration and distribution business to BISYS. Upon the consummation of this
transaction, BISYS will act as sub-administrator pursuant to an identical
agreement (see page 11). EFD, currently a subsidiary of Furman Selz, will be the
Funds' new principal underwriter.
Exhibit J shows the amounts of compensation received by KIMCO and other
affiliates of KIMCO for the most recent fiscal year pursuant to its investment
advisory and/or management agreements. Exhibit K shows the amounts paid to each
Fund's principal underwriter for the most recent fiscal year for its principal
underwriting and distribution services to each Fund.
CONSIDERATIONS OF THE TRUSTEES
In considering the terms of the new investment advisory and management
agreements, together with the changes to other contracts for services described
above and approved by the Trustees, the Trustees of each Fund concluded that the
Merger should result in substantial contributions to the operations of the Funds
in four major areas consisting of: (i) investment advisory services; (ii) sales
of Fund Shares; (iii) management efficiencies and economies of scale; and (iv)
transfer agency and shareholder services and exchange options, some of which
contributions are substantially interdependent.
The Trustees, after examining relevant materials furnished to them by First
Union, Keystone and Furman Selz and attending meetings with executives and
employees of First Union and its subsidiaries, Furman Selz and EFD and the
Trustees of the Evergreen funds, determined that these expected contributions
would be largely due to First Union's financial strength, investment advisory
asset base and mutual funds under management, personnel base, transfer agency
and shareholder services requirements, marketing capability and ability to make
available additional choices of funds for exchange or purchase by Keystone fund
shareholders. A description of certain ways in which some of these attributes of
First Union are expected to contribute to Keystone's operations in the best
interests of the Funds and their shareholders follows:
Investment Advisory Services -- The Trustees expect that the increased
financial strength and stability of the investment adviser after the Merger
would be likely to: (a) enhance the investment adviser's ability to attract and
retain desirable advisory and other management personnel; (b) create
opportunities for augmenting the technological and other support infrastructure
available for portfolio management and administrative services; and (c) provide
the investment adviser with access to research and other resources of the
investment management personnel of First Union and its affiliates. The Trustees
concluded that the foregoing potential benefits, considered together with the
fact that no increase in the rate of investment management and advisory fees to
be charged to the Funds was planned or contemplated, would be in the best
interest of the Funds and their shareholders.
Sales of Shares -- The Trustees concluded that: (a) the proposed new
distribution arrangements, which include intended use of First Union's retail
brokerage affiliate to make Shares of the Funds available to purchasers; and (b)
the increased likelihood that major broker-dealers would choose to make Shares
of the Funds available, in view of the expected greater asset base and
additional exchange options to their clients that would result from the Merger,
could lead to a significant increase in sales of Shares and therefore in asset
levels.
Management Efficiencies and Economies of Scale -- The Trustees also
concluded that the Merger could result in greater economies of scale for the
Funds in the event Fund assets increase substantially as a result of increased
sales, as described above. They noted that any increases in asset levels would
result in the fixed costs of the Funds being spread over a larger number of
Shares and that a reduction in such costs on a per-share basis could be realized
depending on the magnitude of post-Merger increases in asset levels relative to
the current net assets of a particular Fund. They also considered that if sales
were increased, the resulting cash flow would permit portfolio management
personnel to increase the size of existing portfolios and to avoid some of the
costs associated with the untimely sales of securities to meet redemptions.
Transfer Agency, Shareholder Services and Exchange Options -- The Trustees
considered that the addition of the Evergreen funds to the family of funds
served by KIRC will enable it to enjoy economies of scale that could lead to
enhanced services to the Funds and that such economies of scale could possibly
result in a reduction of, and reduce the necessity for, increases in transfer
agency expenses for the Funds. The Trustees also concluded that the exchange
options that the First Union affiliation would eventually provide to Fund
shareholders would be a significant benefit.
The parties to the Merger Agreement have each agreed for a period of three
years following the Effective Date to use their reasonable best efforts to
assure compliance with the safe harbor provisions of Section 15(f) of the 1940
Act. Section 15(f) provides that an investment adviser to a registered
investment company may receive a benefit in connection with a sale of any
interest in such adviser which results in an assignment of an investment
advisory contract so long as the following two conditions are satisfied: (i) for
a period of three years after such assignment, at least 75% of the Board of
Trustees of the investment company cannot be "interested persons," as defined in
the 1940 Act, (i.e., must be Independent Trustees) of the new investment adviser
or its predecessor; and (ii) no "unfair burden" (as defined in the 1940 Act) is
imposed on the investment company as a result of the assignment or any express
or implied terms, conditions or understandings applicable thereto.
RECOMMENDATION OF TRUSTEES
The Board of Trustees of each Fund, including its Independent Trustees,
recommends that the shareholders vote FOR approval of each proposed investment
management and advisory agreement.
3. AMENDMENT TO BY-LAWS OF INTERNATIONAL
TO INCREASE THE NUMBER OF DIRECTORS
Article II, Section 1 of the By-Laws of International currently provides
that the Board of Directors shall consist of no less than three Directors and no
more than fifteen Directors of International. Consequently, the proposed
election of Directors described in Proposal 1 requires an amendment of the
ByLaws by the shareholders of International to permit additional Directors. The
Boards of Trustees of most of the Keystone funds have the authority to fix the
number of Trustees from time to time, without the need for shareholder approval
and the attendant costs of a shareholder meeting. It is therefore proposed that
the By-Laws of International be amended by substituting for the first sentence
of Section 1 of Article II, the following sentence:
"Directors and Officers. The officers of the corporation shall be a Board of
Directors, the number of which shall be fixed from time to time by the Board of
Directors, and a President, Treasurer, Clerk and such other officers as the
Board of Directors may from time to time elect."
The Board of Directors can then take action to increase the number of
Directors.
RECOMMENDATION OF THE DIRECTORS
The Board of Directors of International, including its Independent
Directors, recommends that the shareholders vote FOR approval of this Proposal.
4. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC
ACCOUNTANT FOR INTERNATIONAL AND
PRECIOUS METALS FOR THE CURRENT FISCAL YEAR
The audit services expected to be provided by KPMG Peat Marwick for the
current fiscal year include work in connection with the expression of an opinion
on the annual financial statements of International and Precious Metals and
review of the Funds' Annual Reports to shareholders and their filings with the
SEC. For its services, International and Precious Metals paid KPMG Peat Marwick
$25,395 and $30,727, respectively, for their fiscal years ended October 31, 1995
and February 28, 1996, respectively.
A representative of KPMG Peat Marwick is expected to attend the Meeting and
will be given an opportunity to make a statement and respond to appropriate
questions from shareholders.
RECOMMENDATION OF THE DIRECTORS
The Board of Directors, including the Independent Directors, of each of
International and Precious Metals, respectively, recommends that the
shareholders of International and Precious Metals, respectively, vote FOR the
ratification of the selection of KPMG Peat Marwick as independent public
accountant for such Funds.
GENERAL INFORMATION
CERTAIN BROKERAGE
Pursuant to principal underwriting agreements with certain Keystone funds,
Kokusai Securities Co., Ltd. ("Kokusai") and Nomura Securities Co., Ltd.
("Nomura") each acts as principal underwriter for the sale of Shares of such
Funds in Japan.
Exhibit L contains the total of brokerage commissions paid, the total amount
of brokerage commissions paid to Kokusai and Nomura and the percentage of
aggregate brokerage commissions paid to Kokusai and Nomura by each Fund in the
Keystone Family of Funds during its most recent fiscal year.
TRANSFER AGENCY AGREEMENTS
KIRC is the transfer agent of the Shares of each Fund and performs transfer
agency, recordkeeping, dividend disbursing and other related services for each
Fund.
Exhibit M to this Proxy Statement contains a schedule of fees for such
services paid by each Fund for its most recent fiscal year.
OTHER SERVICES PROVIDED TO THE FUNDS BY KIMCO
The Fund Administration Department of Keystone Investments provides
accounting and bookkeeping services to each of the Funds. Exhibit M of this
Proxy Statement contains a schedule of fees paid by each Fund to the Fund
Administration Department of Keystone Investments for such services for its most
recent fiscal year.
ADDITIONAL INFORMATION
PAYMENT OF EXPENSES
Each Fund will pay its proportionate share of expenses of the preparation,
printing and mailing to its shareholders of the Proxy, accompanying Notice of
Meeting and this Proxy Statement and any supplementary solicitation of its
shareholders.
SUPPLEMENTARY SOLICITATION
Supplementary solicitation for each Fund may be made by mail, telephone,
telegraph or personal interview by officers of the Funds, by officers or
employees of KIRC, KIMCO, Keystone Investments, First Union or their
subsidiaries, or by securities dealers through whom Shares have been sold.
The Funds may also retain First Data Corp. Investors Services Group ("First
Data") to assist in the Proxy solicitation process, and may contact certain
shareholders of the Funds by telephone. Shareholders of certain Funds that are
contacted by KIRC or First Data may be asked to cast their votes by telephonic
Proxy. Such Proxies will be recorded in accordance with the procedures set forth
below. The Funds believe these procedures are reasonably designed to ensure that
the identity of the shareholder casting the vote is accurately determined and
that the voting instructions of the shareholder are accurately reflected. KIRC
expects to receive opinions of counsel which address the validity, under the
applicable laws of the Commonwealths of Massachusetts and Pennsylvania, of
proxies given orally by shareholders of each Fund other than Precious Metals or
International. Such opinions are expected to conclude that a court of
Massachusetts or Pennsylvania would find that there is no Massachusetts or
Pennsylania law or public policy, as applicable, against the acceptance of
proxies signed by an orally-authorized agent.
In all cases where a telephonic Proxy is solicited, a representative of KIRC
or First Data ("representative") will ask for the shareholder's full name,
address, social security or employer identification number, title (if the
shareholder is authorized to act on behalf of an entity, such as a corporation),
and the number of Shares owned. If the information solicited agrees with KIRC's
information or the information provided to First Data by KIRC, then the
representative will explain the process, read the Proposals listed on the Proxy
and ask for the shareholder's instructions on each Proposal. The representative,
although he or she will answer questions about the process, will not recommend
to the shareholder how to vote, other than to read any recommendations set forth
in this Proxy Statement. Within 24 hours, KIRC will send the shareholder a
letter or mailgram to confirm the shareholder's vote and to ask the shareholder
to call KIRC immediately if the shareholder's instructions are not correctly
reflected in the confirmation.
If the shareholder wishes to participate in the Meeting, but does not wish
to give his/her Proxy by telephone, he/she may still submit the Proxy included
with this Proxy Statement or attend the Meeting in person. Any Proxy given by
the shareholder, whether in writing or by telephone, is revocable.
It is expected that the cost of retaining First Data to assist in the Proxy
solicitation process will not exceed $80,000, which cost will be allocated among
the Funds pro rata based on their respective net assets.
SUBSTANTIAL SHAREHOLDERS
Exhibit N contains information about the beneficial ownership by
shareholders of 5% or more of each Fund's outstanding Shares, as of September
30, 1996. On that date, the existing Trustees, nominees for election as Trustees
and officers of the Fund, together as a group, "beneficially owned" less than 1%
of each Fund's outstanding Shares.
The term "beneficial ownership" is as defined under Section 13(d) of the
1934 Act. The information as to beneficial ownership is based on statements
furnished to each Fund by the existing Trustees, officers of such Fund, nominees
for Trustees and/or on records of KIRC.
SHAREHOLDER PROPOSALS
Except for International and Precious Metals, no Fund is required or intends
to hold annual or other periodic meetings of shareholders except as required by
the 1940 Act. The next meeting of the shareholders of each Fund will be held at
such time as the Board of Trustees may determine or at such time as may be
legally required. Proposals of shareholders intended to be presented at a Fund's
next meeting must be received by the Fund for inclusion in the Fund's Proxy
Statement and Proxy within a reasonable time before the meeting.
It is suggested that shareholders submit their proposals by Certified Mail -
Return Receipt Requested. The SEC has adopted certain requirements which apply
to any proposals of shareholders.
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS
EACH OF THE FUNDS WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT
ANNUAL REPORT (AND MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT,
IF ANY) TO A SHAREHOLDER OF THE FUND UPON REQUEST. ANY SUCH REQUEST SHOULD BE
DIRECTED TO KIRC AT 200 BERKELEY STREET, BOSTON, MASSACHUSETTS 02116-5034 or
(800) 343-2898.
CERTAIN DEFINITIONS USED IN THIS PROXY STATEMENT
"12b-1 Plan(s)" The Distribution Plans adopted by the Funds
pursuant to Rule 12b-1 issued under the 1940
Act.
"1933 Act" The Securities Act of 1933, as amended.
"1934 Act" The Securities Exchange Act of 1934, as
amended.
"1940 Act" The Investment Company Act of 1940, as
amended.
"Board(s) of Trustees" The Boards of Trustees or Directors of the
Funds.
"First Union" First Union Corporation, One First Union
Center, Charlotte, North Carolina 28288.
First Union owns all of the outstanding
shares of FUNB-NC (except for directors'
qualifying shares).
"FKI" First Union Keystone, Inc., One First Union
Center, Charlotte, North Carolina 28288. Upon
the effectiveness of the Merger, FKI will
become the successor to Keystone Investments
and will be renamed "Keystone Investments,
Inc."
"FUNB-NC" First Union National Bank of North Carolina,
One First Union Center, Charlotte, North
Carolina 28288.
"Furman Selz" Furman Selz LLC, 230 Park Avenue, New York, New
York 10169. If the Merger occurs, Furman Selz
will provide certain personnel and
administrative services to the Funds.
"Independent Trustees" Those Trustees or Directors of the Funds who
are not "interested persons" of the Funds as
defined in the 1940 Act and who have no
direct or indirect financial interest in the
operation of a 12b-1 Plan or in any
agreements related to the Plan.
"KID" Keystone Investment Distributors Company, 200
Berkeley Street, Boston, Massachusetts
02116-5034, a wholly-owned subsidiary of KIMCO.
KID is the principal underwriter of the Funds
(other than Adjustable Rate and Institutional)
and of other Keystone funds.
"KIMCO" Keystone Investment Management Company, 200
Berkeley Street, Boston, Massachusetts
02116-5034, a wholly-owned subsidiary of
Keystone Investments, Inc. and the investment
adviser of each of the Funds, except where a
subadviser is employed.
"Keystone Investments" Keystone Investments, Inc., 200 Berkeley
Street, Boston, Massachusetts 02116-5034,
which owns all of the outstanding shares of
KIMCO. Keystone Investments is predominantly
owned by current and former employees of
Keystone Investments and its affiliates,
their family members and their trusts.
"KPMG Peat Marwick" KPMG Peat Marwick LLP, independent public
accountant. KPMG Peat Marwick is the
independent public accountant for each of the
Keystone funds, First Union and certain
mutual funds managed or advised by
subsidiaries of First Union.
"Merger Agreement" Agreement and Plan of Acquisition and Merger,
dated September 6, 1996, by and among First
Union, FUNB-NC, FKI, Inc., and Keystone
Investments, as amended from time to time.
"Merger" The proposed merger of Keystone Investments with
and into an affiliate of First Union pursuant to
the Merger Agreement.
"mutual fund" An open-end management investment company
registered under the 1940 Act.
October 21, 1996
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT made the _____ day of ___________ , by and between _______________
[FUND], a Pennsylvania common law trust/Massachusetts business trust (the
"Fund"), and KEYSTONE INVESTMENT MANAGEMENT COMPANY, a Delaware corporation (the
"Adviser").
WHEREAS, the Fund and the Adviser wish to enter into an Agreement setting
forth the terms on which the Adviser will perform certain services for the Fund.
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Fund and the Adviser agree as follows:
1. The Fund hereby employs the Adviser to manage and administer the
operation of the Fund, to supervise the provision of services to the Fund by
others, and to manage the investment and reinvestment of the assets of the Fund
in conformity with the Fund's investment objectives and restrictions as may be
set forth from time to time in the Fund's then current prospectus and statement
of additional information, if any, and other governing documents, all subject to
the supervision of the Board of Trustees of the Fund, for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
and agrees during such period, at its own expense, to render the services and to
assume the obligations set forth herein, for the compensation provided herein.
The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. The Adviser shall place all orders for the purchase and sale of portfolio
securities for the account of the Fund with broker-dealers selected by the
Adviser. In executing portfolio transactions and selecting broker-dealers, the
Adviser will use its best efforts to seek best execution on behalf of the Fund.
In assessing the best execution available for any transaction, the Adviser shall
consider all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker-dealer, and the reasonableness of the commission, if
any (all for the specific transaction and on a continuing basis). In evaluating
the best execution available, and in selecting the broker-dealer to execute a
particular transaction, the Adviser may also consider the brokerage and research
services (as those terms are used in Section 28(e) of the Securities Exchange
Act of 1934 (the "1934 Act") provided to the Fund and/or other accounts over
which the Adviser or an affiliate of the Adviser exercises investment
discretion. The Adviser is authorized to pay a broker-dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction if, but only if,
the Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer viewed in terms of that particular transaction or in terms of all
of the accounts over which investment discretion is so exercised.
3. The Adviser, at its own expense, shall furnish to the Fund office space
in the offices of the Adviser or in such other place as may be agreed upon by
the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Fund, for members of the Adviser's organization to serve without
salaries from the Fund as officers or, as may be agreed from time to time, as
agents of the Fund. The Adviser assumes and shall pay or reimburse the Fund for:
(1) the compensation (if any) of the Trustees of the Fund who are affiliated
with the Adviser or with its affiliates, or with any adviser retained by the
Adviser, and of all officers of the Fund as such, and (2) all expenses of the
Adviser incurred in connection with its services hereunder. The Fund assumes and
shall pay all other expenses of the Fund, including, without limitation: (1) all
charges and expenses of any custodian or depository appointed by the Fund for
the safekeeping of its cash, securities and other property; (2) all charges and
expenses for bookkeeping and auditors; (3) all charges and expenses of any
transfer agents and registrars appointed by the Fund; (4) all fees of all
Trustees of the Fund who are not affiliated with the Adviser or any of its
affiliates, or with any adviser retained by the Adviser; (5) all brokers' fees,
expenses and commissions and issue and transfer taxes chargeable to the Fund in
connection with transactions involving securities and other property to which
the Fund is a party; (6) all costs and expenses of distribution of its shares
incurred pursuant to a Plan of Distribution adopted under Rule 12b-1 under the
Investment Company Act of 1940 ("1940 Act"); (7) all taxes and trust fees
payable by the Fund to Federal, state or other governmental agencies; (8) all
costs of certificates representing shares of the Fund; (9) all fees and expenses
involved in registering and maintaining registrations of the Fund and of its
shares with the Securities and Exchange Commission (the "Commission") and
registering or qualifying its shares under state or other securities laws,
including, without limitation, the preparation and printing of registration
statements, prospectuses and statements of additional information for filing
with the Commission and other authorities; (10) expenses of preparing, printing
and mailing prospectuses and statements of additional information to
shareholders of the Fund; (11) all expenses of shareholders' and Trustees'
meetings and of preparing, printing and mailing notices, reports and proxy
materials to shareholders of the Fund; (12) all charges and expenses of legal
counsel for the Fund and for Trustees of the Fund in connection with legal
matters relating to the Fund, including, without limitation, legal services
rendered in connection with the Fund's existence, trust and financial structure
and relations with its shareholders, registrations and qualifications of
securities under Federal, state and other laws, issues of securities, expenses
which the Fund has herein assumed, whether customary or not, and extraordinary
matters, including, without limitation, any litigation involving the Fund, its
Trustees, officers, employees or agents; (13) all charges and expenses of filing
annual and other reports with the Commission and other authorities; and (14) all
extraordinary expenses and charges of the Fund. In the event that the Adviser
provides any of these services or pays any of these expenses, the Fund will
promptly reimburse the Adviser therefor.
The services of the Adviser to the Fund hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others.
4. As compensation for the Adviser's services to the Fund during the period
of this Agreement, the Fund will pay to the Adviser a fee at the annual rate of:
For each Fund's Advisory Fee Schedule see Appendix I attached hereto.
5. The Adviser may enter into an agreement to retain, at its own expense, a
firm or firms ("SubAdviser") to provide the Fund all of the services to be
provided by the Adviser hereunder, if such agreement is approved as required by
law. Such agreement may delegate to such SubAdviser all of Adviser's rights,
obligations and duties hereunder.
6. The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the performance of
this Agreement, except a loss resulting from the Adviser's willful misfeasance,
bad faith, gross negligence or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
Director, partner, employee, or agent of the Adviser, who may be or become an
officer, Trustee, employee or agent of the Fund, shall be deemed, when rendering
services to the Fund or acting on any business of the Fund (other than services
or business in connection with the Adviser's duties hereunder), to be rendering
such services to or acting solely for the Fund and not as an officer, Director,
partner, employee, or agent or one under the control or direction of the Adviser
even though paid by it. The Fund agrees to indemnify and hold the Adviser
harmless from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state and foreign securities and blue
sky laws, as amended from time to time) and expenses, including (without
limitation) attorneys' fees and disbursements, arising directly or indirectly
from any action or thing which the Adviser takes or does or omits to take or do
hereunder provided that the Adviser shall not be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of a breach of fiduciary duty with respect to the receipt
of compensation for services, willful misfeasance, bad faith, or gross
negligence on the part of the Adviser in the performance of its duties, or from
reckless disregard by it of its obligations and duties under this Agreement.
7. The Fund shall cause its books and accounts to be audited at least once
each year by a reputable independent public accountant or organization of public
accountants who shall render a report to the Fund.
8. Subject to and in accordance with the Trust Agreement/Declaration of
Trust of the Fund, the Articles of Incorporation of the Adviser and the
governing documents of any SubAdviser, it is understood that Trustees,
Directors, officers, agents and shareholders of the Fund or any Adviser are or
may be interested in the Adviser (or any successor thereof) as Directors and
officers of the Adviser or its affiliates, as stockholders of Keystone
Investments, Inc. or otherwise; that Directors, officers and agents of the
Adviser and its affiliates or stockholders of Keystone Investments, Inc. are or
may be interested in the Fund or any Adviser as Trustees, Directors, officers,
shareholders or otherwise; that the Adviser (or any such successor) is or may be
interested in the Fund or any SubAdviser as shareholder, or otherwise; and that
the effect of any such adverse interests shall be governed by said Trust
Agreement/Declaration of Trust of the Fund, Articles of Incorporation of the
Adviser and governing documents of any SubAdviser.
9. This Agreement shall continue in effect after [ _____________ ] only so
long as (1) such continuance is specifically approved at least annually by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund, and (2) such renewal has been approved by the
vote of a majority of Trustees of the Fund who are not interested persons, as
that term is defined in the 1940 Act, of the Adviser or of the Fund, cast in
person at a meeting called for the purpose of voting on such approval.
10. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time without the payment of any penalty by the Board of
Trustees of the Fund or by vote of the holders of a majority of the outstanding
voting securities of the Fund; and on sixty days' written notice to the Fund,
this Agreement may be terminated at any time without the payment of any penalty
by the Adviser. This Agreement shall automatically terminate upon its assignment
(as that term is defined in the 1940 Act). Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postage prepaid, to the
other party at the main office of such party.
11. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that
with regard to amendments of substance such execution by the Fund shall have
been first approved by the vote of the holders of a majority of the outstanding
voting securities of the Fund and by the vote of a majority of Trustees of the
Fund who are not interested persons (as that term is defined in the 1940 Act) of
the Adviser, any predecessor of the Adviser, or of the Fund, cast in person at a
meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Fund" shall have, for all purposes of this
Agreement, the meaning provided therefor in the 1940 Act.
12. Any compensation payable to the Adviser hereunder for any period other
than a full year shall be proportionately adjusted.
13. The provisions of this Agreement shall be governed, construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
[FUND]
By: ----------------------------------------------------------
Title:
KEYSTONE INVESTMENT MANAGEMENT COMPANY
By: ----------------------------------------------------------
Title:
<PAGE>
APPENDIX I TO EXHIBIT A
FOR B-1, B-2, B-4:
AGGREGATE NET ASSET VALUE
MANAGEMENT FEE OF THE SHARES OF THE FUND
- ------------------------------------------------------------------------------
2.0% of gross dividend and interest income plus
0.50% of the first $100,000,000, plus
0.45% of the next $100,000,000, plus
0.40% of the next $100,000,000, plus
0.35% of the next $100,000,000, plus
0.30% of the next $100,000,000, plus
0.25% of amounts over $500,000,000
- ------------------------------------------------------------------------------
computed as of the close of business on each business day.
FOR K-1:
AGGREGATE NET ASSET VALUE
MANAGEMENT FEE OF THE SHARES OF THE FUND
- ------------------------------------------------------------------------------
1.5% of gross dividend and interest income plus
0.60% of the first $100,000,000, plus
0.55% of the next $100,000,000, plus
0.50% of the next $100,000,000, plus
0.45% of the next $100,000,000, plus
0.40% of the next $100,000,000, plus
0.35% of the next $500,000,000, plus
0.30% of amounts over $1,000,000,000
- ------------------------------------------------------------------------------
computed as of the close of business on each business day.
FOR K-2, S-1, S-3, AND S-4:
AGGREGATE NET ASSET VALUE
MANAGEMENT FEE OF THE SHARES OF THE FUND
- ------------------------------------------------------------------------------
0.70% of the first $100,000,000, plus
0.65% of the next $100,000,000, plus
0.60% of the next $100,000,000, plus
0.55% of the next $100,000,000, plus
0.50% of the next $100,000,000, plus
0.45% of the next $500,000,000, plus
0.40% of the next $500,000,000, plus
0.35% of amounts over $1,500,000,000
- ------------------------------------------------------------------------------
computed as of the close of business on each business day.
FOR INSTITUTIONAL TRUST:
AGGREGATE NET ASSET VALUE
MANAGEMENT FEE OF THE SHARES OF THE FUND
- ------------------------------------------------------------------------------
0.80% of the first $100,000,000, plus
0.75% of the next $150,000,000, plus
0.65% of amounts over $250,000,000
- ------------------------------------------------------------------------------
computed as of the close of business on each business day and payable daily.
A pro rata portion of each Fund's fee shall be payable in arrears at the end of
each day or calendar month as the Adviser may from time to time specify to the
Fund. If and when this Agreement terminates, any compensation payable hereunder
for the period ending with the date of such termination shall be payable upon
such termination. Amounts payable hereunder shall be promptly paid when due.
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Agreement dated _________________ between KEYSTONE TAX FREE FUND, a
Massachusetts business trust organized under a Declaration of Trust dated June
20, 1985 (the "Fund"), and KEYSTONE INVESTMENT MANAGEMENT COMPANY, a Delaware
corporation (the "Company").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is agreed
as follows:
1. SERVICES TO BE RENDERED BY THE COMPANY TO THE FUND.
The Company will provide investment management and other services to the
Fund as specified below.
A. In providing investment management services to the Fund, the Company will
determine from time to time what securities shall be acquired, held or disposed
of and what portion of the assets of the Fund shall be held uninvested. Should
the Board of Trustees of the Fund at any time, however, notify the Company in
writing of any portfolio transaction to be made or not to be made or any
investment policy to be followed by the Fund, the Company shall be obliged to
follow such direction or such investment policies for the period, if any,
specified in such notice or until the Company has received written notice that
such investment policy is no longer to be followed. The Company shall take, on
behalf of the Fund, all actions which it deems necessary to implement the
investment policies of the Fund, and in particular shall place all orders for
the purchase, sale or loan of portfolio securities for the Fund's account with
brokers or dealers or others selected by it, and to that end the Company is
authorized to give instructions to the custodian of the Fund's assets as to
deliveries of securities and payments of cash for the account of the Fund. In
the placement of such orders and the selection of brokers or dealers, the
Company shall conform to the Fund's policies concerning such matters as may be
from time to time determined by the Board of Trustees of the Fund or set forth
in the Fund's most recent prospectus under the Securities Act of 1933. In the
performance of these duties, the Company will use its best efforts to safeguard
and promote the welfare of the Fund. However, nothing in this agreement shall be
construed to constitute the Company as an agent of the Fund.
B. The Company, at its own expense, shall furnish to the Fund office space
in the offices of the Company or in such other place as may be agreed upon from
time to time, and all necessary office facilities, equipment and personnel for
managing the affairs of the Fund, and shall arrange, if desired by the Fund, for
members of the Company's organization to serve without salaries from the Fund as
officers and agents of the Fund.
C. At the request of the Board of Trustees of the Fund, the Company at its
own expense will provide or cause to be provided to the Fund the following
management and operating services, facilities and personnel (a) the officers of
the Fund and each Trustee of the Fund who is an affiliated person of the Company
or any investment adviser retained by the Company as contemplated in Section 4;
(b) determination from time to time of the value of the net assets of the Fund,
the keeping of its books and records and the safekeeping of its cash, securities
and other property; (c) auditors and accountants; (d) transfer agents, dividend
disbursing agents and registrars, including checks, stationery and other
supplies for the performance of such functions; (e) insurance and membership in
trade associations; (f) share certificates representing shares of the Fund; (g)
registration and maintenance of registrations of the Fund and of its shares with
various states and with the Securities and Exchange Commission, including the
preparation and printing of prospectuses for filing with said Commission; (h)
for shareholders' and Trustees' meetings and the preparation, printing and
mailing of reports and other material to shareholders; (i) legal counsel in
connection with the Fund's existence, organization and financial structure and
relations with its shareholders, in connection with any of the foregoing items
or otherwise, and in connection with other legal matters with respect to which
the Fund may require and desire advice of legal counsel; and (j) all other
services and facilities, the expenses of which are not hereinafter specifically
assumed by the Fund, for the management of the investment and reinvestment of
the assets of the Fund, the offering and sale of the shares of the Fund and the
administration of the affairs of the Fund. The expense, charges, dues, fees and
other costs to be borne by the Company in providing or causing to be provided to
the Fund the services, facilities and personnel described in clauses (b) through
(i) are hereinafter referred to as the "Reimbursable Expenses of the Company".
The additional management and operating services, facilities and personnel
required by clauses (b) through (i), of the immediately preceding paragraph and
the performance of the same shall be paid for solely by the Company, but shall
be at all times subject to the directions, instructions and requests of the
Board of Trustees of the Fund, including, without limitation, directions as to
the identity of the person or organization providing or performing the same, the
manner of performance and the rates of fees and charges of such persons or
organizations.
D. The Fund assumes and shall pay (1) brokers' commissions (which may be
higher than other brokers would charge if paid to a broker which provides
brokerage and research services to the Company or any investment adviser
retained by the Company as contemplated by Section 4 or any affiliate of either,
for use in rendering investment management, advisory or similar services to the
Fund or other clients of the Company, of such investment adviser or of any
affiliate of either); (2) issue and transfer taxes chargeable to the Fund in
connection with securities transactions to which the Fund is a party; (3) its
interest charges and all taxes and fees (not hereinabove specifically required
to be borne by the Company) payable by the Fund to federal, state or other
governmental agencies and (4) the compensation of each Trustee of the Fund who
is not an affiliated person of the Company or any investment adviser retained by
the Company as contemplated by Section 4.
E. The Company may delegate its obligation to provide all of the services
required hereunder to the Fund to an investment adviser as contemplated by
Section 4.
F. The services of the Company to the Fund hereunder are not to be deemed
exclusive, and the Company shall be free to render similar services to others or
to have any other business or management interests.
2. COMPENSATION TO BE PAID BY THE FUND TO THE COMPANY.
As compensation for the services, facilities and personnel which the
Company is to provide or cause to be provided pursuant to Section 1, the Fund
shall pay to the Company at the end of each calendar month (i) an amount
calculated as set forth below:
ANNUAL AGGREGATE NET ASSET VALUE
MANAGEMENT OF THE SHARES
FEE INCOME OF THE FUND
- ------------------------------------------------------------------------------
2.0% of
Gross Dividend and
Interest Income
Plus
0.50% of the first $100,000,000, plus
0.45% of the next $100,000,000, plus
0.40% of the next $100,000,000, plus
0.35% of the next $100,000,000, plus
0.30% of the next $100,000,000, plus
0.25% of amounts over $500,000,000;
and (ii) an amount equal to the amount of the Reimbursable Expenses of the
Company accrued during such calendar month.
Any other provision of this agreement to the contrary notwithstanding, the
total monthly compensation payable to the Company shall not exceed (i) the
largest amount which would not cause the Fund's expenses to exceed the lowest
applicable expense limitation imposed as of the beginning of the fiscal year by
any statute or any regulatory authority of any jurisdiction in which shares of
the Fund are qualified for offer and sale as such limitation is set forth in the
most recent notice furnished by the Company to the Fund not later than the first
day of the fiscal year or (ii) such lower percentage limit as the Company may by
written notice to the Fund declare to be effective for such period of time as
shall be stated in the notice. For purposes of clause (i) of this paragraph,
there shall be excluded from the "Fund's expenses" any amount borne directly or
indirectly by the Fund which is permitted to be excluded from the computation of
such limitation by such statute or regulatory authority. If the Company shall
serve under this agreement for less than the whole of any calendar month, the
foregoing compensation will be prorated. The Company shall submit to the Fund
detailed statements of all Reimbursable Expenses of the Company promptly after
the end of each such calendar month. The Fund and its agents, accountants and
employees shall have the right at reasonable times during normal business hours
to inspect the books and records of the Company pertaining to such Reimbursable
Expenses of the Company.
3. PUBLIC ACCOUNTANT'S REPORT.
The Fund's books and accounts shall be audited at least once each year by a
reputable, independent public accountant or organization of public accountants
who shall render a report to the Fund.
4. SUBADVISER.
The Company may enter into an agreement to retain at its own expense a firm
or firms ("SubAdviser") to provide the Fund all of the services to be provided
by the Company hereunder if such agreement is approved as required by law. Such
agreement may delegate to such SubAdviser all of the Company's rights,
obligations and duties hereunder.
5. INTERESTED AND AFFILIATED PERSONS.
Subject to and in accordance with the Declaration of Trust of the Fund, the
Articles of Incorporation of the Company and the governing documents of any
SubAdviser, it is understood that Trustees, officers, agents and shareholders of
the Fund or any Adviser are or may be interested in the Company (or any
successor thereof) as Directors and officers of the Company or its affiliates,
as stockholders of Keystone Investments, Inc. or otherwise; that Directors,
officers and agents of the Company and its affiliates or stockholders of
Keystone Investments, Inc. are or may be interested in the Fund or any Adviser
as Trustees, Directors, officers, shareholders or otherwise; that the Company
(or any such successor) is or may be interested in the Fund or any SubAdviser as
shareholder, or otherwise, and that the effect of any such adverse interests
shall be governed by said Declaration of Trust of the Fund, Articles of
Incorporation of the Company and governing documents of any SubAdviser.
6. TERMINATION AND AMENDMENT.
This agreement shall continue in effect until [ ____________ ], after which
it will terminate unless its continuance after said date is specifically
approved at least annually by the vote of a majority of the Trustees of the Fund
who are not interested persons of the Fund or interested persons of the Company
(as defined in the Investment Company Act of 1940) cast in person at a meeting
called for the purpose of voting on such approval; provided, however, that (1)
this agreement may at any time be terminated without the payment of any penalty
either by the vote of the Board of Trustees of the Fund or by the vote of a
majority of the outstanding voting securities of the Fund, on 60 days' written
notice to the Company, (2) this agreement shall immediately terminate in the
event of its assignment (within the meaning of the Investment Company Act of
1940), and (3) this agreement may be terminated by the Company on 90 days'
written notice to the Fund. The aforesaid requirement that continuance of this
agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the Rules and
Regulations thereunder. Any notice under this agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the other party at any
office of such party.
This agreement may be amended at any time by mutual consent of the parties,
provided that such consent on the part of the Fund shall have been approved by
the vote of a majority of the outstanding voting securities of the Fund and by
the vote of a majority of the Trustees of the Fund who are not interested
persons of the Fund or interested persons of the Company (as defined in the
Investment Company Act of 1940) cast in person at a meeting called for the
purpose of voting on such approval.
7. LIABILITY OF THE COMPANY.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Company, or of reckless disregard of its obligations and duties
hereunder, the Company shall not be subject to liability for any act or omission
in the course of, or connected with, rendering services hereunder. The Fund
agrees to indemnify and hold the Company harmless from all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the Securities Act of 1933, the Securities Exchange
Act of 1934, the Investment Company Act of 1940, and any state and foreign
securities and blue sky laws, as amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or thing which the Company takes or does
or omits to take or do hereunder provided that the Company shall not be
indemnified against any liability to the Fund or to its shareholders (or any
expenses incident to such liability) arising out of a breach of fiduciary duty
with respect to the receipt of compensation for services, willful misfeasance,
bad faith, or gross negligence on the part of the Company in the performance of
its duties, or from reckless disregard by it of its obligations and duties under
this agreement.
8. DEFINITIONS.
For the purpose of this agreement the words: (1) "vote of a majority of the
outstanding voting securities of the Fund" mean the affirmative vote, at a duly
held meeting of shareholders of the Fund, (a) of the holders of 67% or more of
the shares of the Fund present in person or by proxy and entitled to vote at
such meeting, if the holders or more than 50% of the outstanding shares of the
Fund are present in person or by proxy and entitled to vote at such meeting, or
(b) of the holders of more than 50% of the outstanding shares of the Fund,
whichever is less, and (2) the words "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.
A copy of the Declaration of Trust of the Fund is on file with the Secretary
of The Commonwealth of Massachusetts and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Fund as Trustees and not
individually and that the obligations of this instrument are not binding upon
the Trustees or holders of Shares of the Fund individually but are binding only
upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto authorized at Boston,
Massachusetts, on the day and year first above written.
KEYSTONE TAX FREE FUND
By:
----------------------------------------------------
Title:
KEYSTONE INVESTMENT MANAGEMENT COMPANY
By:
----------------------------------------------------
Title:
<PAGE>
EXHIBIT C
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Agreement made the _____ day of _____________ , by and between KEYSTONE
INSTITUTIONAL ADJUSTABLE RATE FUND, a Massachusetts business trust (the "Fund"),
and KEYSTONE INVESTMENT MANAGEMENT COMPANY, a Delaware corporation (the
"Adviser").
WHEREAS, the Fund and the Adviser wish to enter into an agreement setting
forth the terms on which the Adviser will perform certain services for the Fund.
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Fund and the Adviser agree as follows:
1. The Fund hereby employs the Adviser to manage and administer the
operation of the Fund, to supervise the provision of services to the Fund by
others and to manage the investment and reinvestment of the assets of the Fund
in conformity with the Fund's investment objectives and restrictions as may be
set forth from time to time in the Fund's then current prospectus and statement
of additional information, if any, and other governing documents, all subject to
the supervision of the Board of Trustees of the Fund, for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
and agrees during such period, at its own expense, to render the services and to
assume the obligations set forth herein for the compensation provided herein.
The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. The Adviser shall place all orders for the purchase and sale of portfolio
securities for the account of the Fund with broker-dealers selected by the
Adviser. In executing portfolio transactions and in selecting broker-dealers,
the Adviser will use its best efforts to seek best execution on behalf of the
Fund. In assessing the best execution available for any transaction, the Adviser
shall consider all factors it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker-dealer, and the reasonableness of the
commission, if any (all for the specific transaction and on a continuing basis).
In evaluating the best execution available, and in selecting the broker-dealer
to execute a particular transaction, the Adviser may also consider the brokerage
and research services (as those terms are used in Section 28(e) of the
Securities Exchange Act of 1934 (the "1934 Act")) provided to the Fund and/or
other accounts over which the Adviser or an affiliate of the Adviser exercises
investment discretion. The Adviser is authorized to pay a broker-dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer viewed in terms of that particular
transaction or in terms of all of the accounts over which investment descretion
is so exercised.
3. The Adviser, at its own expense, shall furnish to the Fund office space
in the offices of the Adviser or in such other place as may be agreed upon by
the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Fund, for members of the Adviser's organization to serve without
salaries from the Fund as officers or, as may be agreed from time to time, as
agents of the Fund. The Adviser assumes and shall pay or reimburse the Fund for:
(1) the compensation (if any) of the Trustees of the Fund who are affiliated
with the Adviser or with its affiliates, or with any adviser retained by the
Adviser, and of all officers of the Fund as such; (2) all expenses of the
Adviser incurred in connection with its services hereunder; (3) all charges and
expenses of any custodian or depository appointed by the Fund for the
safekeeping of its cash, securities and other property; (4) all charges and
expenses for bookkeeping and auditors; (5) all charges and expenses of any
transfer agents and registrars appointed by the Fund; (6) all costs of
certificates representing shares of the Fund; (7) all fees and expenses involved
in registering and maintaining registrations of the Fund and of its shares with
the Securities and Exchange Commission ("Commission") and registering or
qualifying its shares under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses and statements of additional information for filing with the
Commission and other authorities; (8) expenses of preparing, printing and
mailing prospectuses and statements of additional information to shareholders of
the Fund; (9) all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing notices, reports and proxy materials to
shareholders of the Fund; and (10) all charges and expenses of filing annual and
other reports with the Commission and other authorities. The Fund assumes and
shall pay all other expenses of the Fund, including, without limitation; (1) all
fees of all Trustees of the Fund who are not affiliated with the Adviser or any
of its affiliates, or with any adviser retained by the Adviser; (2) all brokers'
fees, expenses and commissions and issue and transfer taxes chargeable to the
Fund in connection with transactions involving securities and other property to
which the Fund is a party; (3) all taxes and business trust fees payable by the
Fund to federal, state or other governmental agencies; (4) all interest costs of
the Fund; (5) all charges and expenses of legal counsel to the Fund and to the
Trustees of the Fund in connection with routine legal matters relating to the
Fund, including, without limitation, legal services rendered in connection with
the Fund's existence, business trust and financial structure and relations with
its shareholders, registrations and qualifications of securities under federal,
state and other laws and issues of securities, including all charges and
expenses of legal counsel to the Fund in connection with extraordinary matters,
including, without limitation, any litigation involving the Fund, its Trustees,
officers, employees of agents; and (6) all extraordinary expenses and charges of
the Fund. In the event the Adviser provides any of these services or pays any of
these expenses, the Fund will promptly reimburse the Adviser therefor.
The services of the Adviser to the Fund hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others.
4. As compensation for the Adviser's services to the Fund during the period
of this Agreement, the Fund will pay to the Adviser a fee at the annual rate of
0.30% of the average daily net asset value of the shares of the Fund.
A pro rata portion of the fee shall be payable in arrears at the end of each
day or calendar month as the Adviser may from time to time specify to the Fund.
If and when this Agreement terminates, any compensation payable hereunder for
the period ending with the date of such termination shall be payable upon such
termination. Amounts payable hereunder shall be promptly paid when due.
5. The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the performance of
this Agreement, except a loss resulting from the Adviser's willful misfeasance,
bad faith, gross negligence or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
director, partner, employee, or agent of the Adviser who may be or become an
officer, trustee, employee or agent of the Fund, shall be deemed, when rendering
services to the Fund or acting on any business of the Fund (other than services
or business in connection with the Adviser's duties hereunder), to be rendering
such services to or acting solely for the Fund and not as an officer, director,
partner, employee, or agent or one under the control or direction of the Adviser
even though paid by it. The Fund agrees to indemnify and hold the Adviser
harmless from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the Securities Act of
1933, the 1934 Act, the Investment Company Act of 1940 (the "1940 Act" ) and any
state and foreign securities and blue sky laws, as amended from time to time)
and expenses, including (without limitation) attorneys' fees and disbursements,
arising directly or indirectly from any action or thing which the Adviser takes
or does or omits to take or do hereunder provided that the Adviser shall not be
indemnified against any liability to the Fund or to its shareholders (or any
expenses incident to such liability) arising out of breach of fiduciary duty
with respect to the receipt of compensation for services, willful misfeasance,
bad faith, or gross negligence on the part of the Adviser in the performance of
its duties, or from reckless disregard by it of its obligations and duties under
the Agreement.
6. The Fund shall cause its books and accounts to be audited at least once
each year by a reputable independent public accountant or organization of public
accountants who shall render a report to the Fund.
7. Subject to and in accordance with the Declaration of Trust of the Fund,
the Articles of Incorporation of the Adviser and the governing documents of any
adviser, it is understood that trustees, directors, officers, agents and
shareholders of the Fund or any Adviser are or may be interested in the Adviser
(or any successor thereof) as directors and officers of the Adviser or its
affiliates, as stockholders of Keystone Investments, Inc. or otherwise; that
directors, officers and agents of the Adviser and its affiliates or stockholders
of Keystone Investments, Inc. are or may be interested in the Fund or any
Adviser as trustees, directors, officers, shareholders or otherwise; that the
Adviser (or any such successor) is or may be interested in the Fund or any such
Adviser as shareholder, or otherwise; and that the effect or any such adverse
interests shall be governed by said Declaration of Trust of the Fund, Articles
of Incorporation of the Adviser and governing documents of any such adviser.
8. This Agreement shall continue in effect after [ ____________ ] only so
long as (1) such continuance is specifically approved at least annually by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund, and (2) such renewal has been approved by the
vote of a majority of Trustees of the Fund who are not interested pesons, as
that term is defined in the 1940 Act, of the Adviser or of the Fund, cast in
person at a meeting called for the purpose of voting on such approval.
9. On sixty days' written notice to the Adviser, this Agreement may be
terminated without the payment of any penalty at any time by the Board of
Trustees of the Fund or by vote of the holders of a majority of the outstanding
voting securities of the Fund; and on sixty days' written notice to the Fund,
this Agreement may be terminated without the payment of any penalty at any time
by the Adviser. This Agreement shall automatically terminate upon its assignment
(as that term is defined in the 1940 Act). Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postage prepaid, to the
other party at the main office of such party.
10. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that
with regard to amendments of substance such execution by the Fund shall have
been first approved by the vote of the holders of a majority of the outstanding
voting securities of the Fund and by the vote of a majority of Trustees of the
Fund who are not interested persons (as that term is defined in the 1940 Act) of
the Adviser, any predecessor of the Adviser or of the Fund, cast in person at a
meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Fund" shall have, for all purposes of this
Agreement, the meaning provided therefor in the 1940 Act.
11. Any compensation payable to the Adviser hereunder for any period other
than a full year shall be proportionately adjusted.
12. The provisions of the Agreement shall be governed, construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
13. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of the Commonwealth of Massachusetts. This instrument is executed on
behalf of the Trustees of the Fund as trustees and not individually, and the
obligations of this instrument are not binding upon the Trustees or holders of
shares of the Fund individually but are binding only upon the assets and
property of the Fund.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
KEYSTONE INSTITUTIONAL ADJUSTABLE RATE FUND
By: -------------------------------------------------------
Title:
KEYSTONE INVESTMENT MANAGEMENT COMPANY
By: -------------------------------------------------------
Title:
<PAGE>
EXHIBIT D
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Agreement made the ______ day of _____________ , 199 , by and between
KEYSTONE PRECIOUS METALS HOLDINGS, INC. (hereinafter sometimes called the
"Fund"), a Delaware corporation, and KEYSTONE INVESTMENT MANAGEMENT COMPANY
(hereinafter sometimes called the "Investment Adviser"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Fund and the Investment Adviser wish to enter into an Agreement
setting forth the terms on which the Investment Adviser will perform certain
services for the Fund.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Adviser agree as follows:
1. The Fund hereby employs the Investment Adviser to manage the investment
and reinvestment of the assets of the Fund, subject to the supervision of the
Board of Directors of the Fund, for the period and on the terms in this
Agreement set forth. The Investment Adviser hereby accepts such employment and
agrees during such period, at its own expense, to render the services and to
assume the obligations herein set forth, for the compensation herein provided.
The Investment Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
2. The Investment Adviser, at its own expense, shall furnish to the Fund
office space in the offices of the Investment Adviser or in such other place as
may be agreed upon by the parties from time to time, and all necessary office
facilities, equipment and personnel for managing the investment and reinvestment
of the assets of the Fund, and shall arrange, if desired by the Fund, for
members of the Investment Adviser's organization to serve without salaries from
the Fund as officers or as agents of the Fund. The Investment Adviser assumes
and shall pay or reimburse the Fund for: (1) the compensation (if any) of the
Directors of the Fund who are affiliated persons (as such term is defined in the
Investment Company Act of 1940, as amended) of the Investment Adviser and of all
officers of the Fund as such, and (2) all expenses of the Investment Adviser and
the Fund incurred for the management of the investment and reinvestment of the
assets of the Fund, including any fee for services paid to any Sub-Investment
Adviser appointed pursuant to paragraph 6 hereunder. The Fund assumes and shall
pay all other expenses of the Fund, including, without limitation: (1) all
charges and expenses of any custodian or depository appointed by the Fund for
the safekeeping of its cash, securities and other property; (2) all charges and
expenses for bookkeeping and auditors; (3) all charges and expenses of any
transfer agents and registrars appointed by the Fund; (4) all fees of all
Directors of the Fund who are not affiliated persons (as such term is defined in
the Investment Company Act of 1940, as amended (the "Act")) of the Investment
Adviser or any Sub-Investment Adviser appointed pursuant to paragraph 6
hereunder; (5) all broker's fees, expenses and commissions and issue and
transfer taxes chargeable to the Fund in connection with transactions involving
securities and other property to which the Fund is a party; (6) all taxes and
corporate fees payable by the Fund to federal, state or other governmental
agencies; (7) all costs of stock certificates representing shares of the Fund;
(8) all fees and expenses involved in registering and maintaining registrations
of the Fund and of its shares with the Securities and Exchange Commission and
registering or qualifying its shares under state or other securities laws
including the preparation and printing of prospectuses for filing with said
Commission and other authorities (but not the expense of preparing any sales
literature or of printing the same or of printing any prospectus for use in
selling Fund shares, which expenses neither party undertakes by this agreement
to bear); (9) all expenses of shareholders' and Directors' meetings and of
preparing and printing reports to shareholders dealing with the shareholders;
and (10) all charges and expenses of legal counsel for the Fund in connection
with legal matters relating to the Fund, including, without limitation, legal
services rendered in connection with the Fund's corporate existence, corporate
and financial structure and relations with its shareholders, registrations and
qualifications of securities under federal, state and other laws, issues of
securities and expenses which the Fund has herein assumed. In the event the
Investment Adviser provides any services (excluding printing) involved in
registering and maintaining registrations of the Fund and of its shares with the
Securities and Exchange Commission or any services involved in preparing reports
to shareholders, the Fund will promptly reimburse the Investment Adviser
therefor on a cost basis.
The services of the Investment Adviser to the Fund hereunder are not to be
deemed exclusive, and the Investment Adviser shall be free to render similar
services to others.
3. As compensation for the Investment Adviser's services during the period
of this Agreement, the Fund will pay to the Investment Adviser a fee at the
annual rate of 3/4 of 1% of the first $100,000,000, 5/8 of 1% of the next
$100,000,000 and 1/2 of 1% of the excess over $200,000,000 of the average of the
daily net asset values of the Fund computed as of the close of business on each
business day. Such fee shall be reduced by the amount of any compensation paid
to the Investment Adviser by or on behalf of the Fund's wholly owned
subsidiaries in consideration for services rendered in connection with the
investment and reinvestment of the assets of such subsidiaries.
A pro rata portion of the fee shall be payable in arrears at the end of each
calendar month or fiscal quarter of the Fund as the Investment Adviser may from
time to time specify in writing to the Fund. If this Agreement terminates other
than at the end of a fiscal year of the Fund, any compensation payable hereunder
for the period ending with the date of such termination shall be payable upon
such termination.
Notwithstanding the foregoing, the Investment Adviser agrees to bear any
expenses of the Fund which would cause the Fund to exceed in any fiscal year the
most restrictive expense limitation applicable to the Fund under state law or
regulation and agrees to seek and obtain the approval of a majority of the
Directors of the Fund who are not interested persons (as that term is defined in
the Act) of the Investment Adviser or the Fund before requesting the Fund to
withdraw from offering its shares in any state in which the Fund is presently
offering its shares.
4. The Fund shall cause its books and accounts to be audited at least once
each year by a reputable, independent public accountant or organization of
public accountants who shall render a report to the Fund.
5. Subject to and in accordance with the Certificate of Incorporation of the
Fund, and the Certificate of Incorporation of the Investment Adviser,
respectively, it is understood that Directors, officers, agents and shareholders
of the Fund are or may be interested in the Investment Adviser (or any successor
thereof) as Directors and officers of the Investment Adviser and its affiliates,
as stockholders of Keystone Investments, Inc. or otherwise; that Directors,
officers and agents of the Investment Adviser and its affiliates, or
stockholders of Keystone Investments, Inc. are or may be interested in the Fund
as Directors, officers, shareholders or otherwise, that the Investment Adviser
(or any such successor) is or may be interested in the Fund as shareholder or
otherwise; and that the effect of any such adverse interests shall be governed
by said Certificate of Incorporation of the Fund and Certificate of
Incorporation of the Investment Adviser, respectively.
6. The Investment Adviser may enter into an agreement to retain at its own
expense any other firm or firms to provide the Fund investment advisory
services, if such agreement is approved by a vote of a majority of the
outstanding voting securities of the Fund and by the vote of a majority of the
Directors of the Fund who are not parties to such agreement or interested
persons (as that term is defined in the Act) of the Fund or of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
7. This Agreement shall continue in effect after [ _____________ ] only so
long as (1) such continuance is specifically approved at least annually by the
Board of Directors of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund, and (2) such renewal has been approved by the
vote of a majority of Directors of the Fund who are not interested persons (as
that term is defined in the Act) of the Investment Adviser or of the Fund, cast
in person at a meeting called for the purpose of voting on such approval.
8. On sixty days' written notice to the Investment Adviser, this Agreement
may be terminated at any time, without the payment of any penalty, by the Board
of Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Fund; and on ninety days' written notice to the Fund, this
Agreement may be terminated at any time, without the payment of any penalty, by
the Investment Adviser. This Agreement shall automatically terminate upon its
assignment (as that term is defined in the Act). Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed prepaid, to the
other party at any office of such party.
9. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have been
approved by a vote of a majority of the outstanding voting securities of the
Fund. A "majority of the outstanding voting securities of the Fund" shall have,
for all purposes of this Agreement, the meaning provided therefor in the Act.
10. Any compensation payable to the Investment Adviser hereunder or any
reimbursement by the Investment Adviser of expenses of the Fund pursuant to
paragraph 3 above for any period other than a full year shall be proportionately
adjusted.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
KEYSTONE PRECIOUS METALS HOLDINGS, INC.
By: ------------------------------------------------------------
Title:
KEYSTONE INVESTMENT MANAGEMENT COMPANY
By: ------------------------------------------------------------
Title:
<PAGE>
EXHIBIT E
KEYSTONE INTERNATIONAL FUND INC.
BOSTON, MASSACHUSETTS
Keystone Investment Management Company
200 Berkeley Street
Boston, Massachusetts 02116
Dear Sirs:
INVESTMENT ADVISORY AGREEMENT
KEYSTONE INTERNATIONAL FUND INC. (the "Fund") has been incorporated under
the laws of Massachusetts to engage in the business of investing in securities.
Its Board of Directors has selected you to act as investment manager of the Fund
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment manager and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Fund agrees
with you as follows:
1. Advisory Services -- You will regularly provide the Fund with investment
research, advice and supervision and will furnish continuously an investment
program for the Fund's portfolio. You will recommend what securities shall be
purchased for the portfolio of the Fund, what portfolio securities shall be sold
by the Fund, and what portion of the Fund's assets shall be held uninvested. You
shall advise and assist the officers of the Fund in taking such steps as are
necessary or appropriate to carry out the decisions of its Board of Directors
and the appropriate committees of such Board regarding the foregoing matters and
the general conduct of the investment business of the Fund.
2. Expenses of Operation -- You will pay the ordinary office expenses of the
Fund including its rent and will provide investment advisory, research and
statistical facilities and all clerical services relating to research,
statistical and investment work. You will not be required to pay any expenses of
the Fund other than those enumerated in this paragraph 2 and in particular, but
without limiting the generality of the foregoing, will not be required to pay
brokers' commissions; legal, auditing, and registrar's fees and expenses; taxes
and governmental fees; the cost of sale, underwriting, distribution, redemption,
transfer or repurchase of shares of the Fund; the expenses of registering or
qualifying securities for sale; the cost of preparing and distributing reports
and notices to shareholders; or the fees or disbursements of custodians of the
Fund's assets including expenses incurred in the performance of any obligations
enumerated in the Articles of Organization or Bylaws of the Fund, insofar as
they govern agreements with any such custodian.
3. Compensation to the Adviser -- For all services to be rendered and
payments made as provided in paragraphs 1 and 2 hereof, the Fund will pay you a
management fee, which shall be deducted daily from the assets of the Fund at the
rate of (a) .75 of 1% per annum of the total daily net asset value of the Fund
for those assets of the Fund which are less than $200,000,000; (b) .65 of 1% per
annum of the total daily net asset value of the Fund for those assets of the
Fund which are $200,000,000 or more, but less than $400,000,000; (c) .55 of 1%
per annum of the total daily net asset value of the Fund for those assets of the
Fund which are $400,000,000 or more, but less than $600,000,000 and (d) .45 of
1% per annum of the total daily net asset value of the Fund for those assets of
the Fund which are $600,000,000 or more.
4. Avoidance of Inconsistent Position -- In connection with purchases or
sales of portfolio securities for the account of the Fund, neither you nor any
of your directors, officers or employees will act as principal or agent or
receive any commission.
5. Investment Adviser -- You may enter into an agreement to retain, at your
own expense, a firm or firms ("SubAdviser") to provide the Fund all of the
services to be provided by you hereunder, if such agreement is approved as
required by law. Such agreement may delegate to such SubAdviser all of your
rights, obligations and duties hereunder.
6. Limitation of Liability of Adviser -- You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed when acting within the scope of his employment by the Fund to be
acting in such employment solely for the Fund and not as your employee or agent.
7. Duration and Termination of this Agreement -- This Agreement shall go
into effect on the date hereof and, unless terminated as provided in this
paragraph 6 or in paragraph 7 hereof shall continue in effect until [ _______ ];
thereafter it shall continue in effect from year to year but only so long as
such continuance is approved at least annually by the Board of Directors of the
Fund or by the vote of a majority of the outstanding voting securities of the
Fund. In addition, this Agreement shall not be entered into, renewed or
performed unless the terms of this Agreement and any renewal thereof have been
approved by the vote of a majority of the Directors of the Fund, who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated either by the Board of Directors of the Fund or by
the vote of a majority of the outstanding voting securities of the Fund or by
you. Such termination shall be effective after 60-days' notice and shall be
without penalty. This Agreement shall automatically terminate in the event of
its assignment.
8. Amendment of this Agreement -- No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the Fund's outstanding
voting securities.
9. Miscellaneous -- The captions in this Agreement are included for
convenience or reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction of effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
As used in this Agreement, the terms "assignment" and "majority of the
outstanding voting securities" shall have the meanings given to them by Sections
2(a)(4) and 2(a)(42), respectively, of the Investment Company Act of 1940.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Yours very truly,
KEYSTONE INTERNATIONAL FUND INC.
By: ------------------------------------------------------
Title:
The foregoing Agreement is hereby accepted as of the date thereof.
KEYSTONE INVESTMENT MANAGEMENT COMPANY
By: ------------------------------------------------------
Title:
<PAGE>
EXHIBIT F
SHARES OUTSTANDING ON OCTOBER 1, 1996
NUMBER OF
SHARES OUTSTANDING
NAME OF FUND AS OF 10/1/96
- ------------ ------------------
B-1 ...................................................... 15,476,632
B-2 ...................................................... 37,515,300
B-4 ...................................................... 144,206,451
K-1 ...................................................... 129,015,635
K-2 ...................................................... 58,154,269
S-1 ...................................................... 8,978,134
S-3 ...................................................... 31,056,053
S-4 ...................................................... 217,287,272
Adjustable Rate .......................................... 8,025,797
Institutional ............................................ 210,000
International ............................................ 19,065,898
Precious Metals .......................................... 7,870,692
Tax Free ................................................. 212,183,210
<PAGE>
EXHIBIT G
COMPENSATION OF TRUSTEES
<TABLE>
<CAPTION>
COMPENSATION OF
FISCAL YEAR TRUSTEES AS A ANNUAL MEETING
NAME OF FUND ENDED GROUP RETAINER FEE
- ---------- ---------------- ------------------- ------------ -----------
<S> <C> <C> <C> <C>
B-1 ................................. 10/31/95 $29,898 $2,000 $ 80
B-2 ................................. 8/31/96 35,248 2,500 100
B-4 ................................. 7/31/96 42,995 2,500 100
K-1 ................................. 6/30/96 44,064 3,000 120
K-2 ................................. 10/31/95 36,448 2,000 80
S-1 ................................. 8/31/96 9,311 500 20
S-3 ................................. 8/31/96 9,417 500 20
S-4 ................................. 5/31/96 46,542 3,000 120
Adjustable Rate ..................... 9/30/96 0 0 0
Institutional ....................... 6/30/96 0 0 0
International ....................... 10/31/95 8,476 500 20
Precious Metals ..................... 2/28/96 9,336 500 20
Tax Free ............................ 12/31/95 55,248 5,500 220
</TABLE>
<PAGE>
EXHIBIT H
TRUSTEES' MEETINGS
<TABLE>
<CAPTION>
FISCAL BOARD OF AUDIT NOMINATING
YEAR TRUSTEES COMMITTEE COMMITTEE
FUND ENDED MEETINGS MEETINGS MEETINGS
- ---- ---- ------------ ------------- --------------
<S> <C> <C> <C> <C>
B-1 ........................................ 10/31/95 7 3 0
B-2 ........................................ 8/31/96 6 2 1
B-4 ........................................ 7/31/96 6 2 1
K-1 ........................................ 6/30/96 6 2 1
K-2 ........................................ 10/31/95 7 3 0
S-1 ........................................ 8/31/96 6 2 1
S-3 ........................................ 8/31/96 6 2 1
S-4 ........................................ 5/31/96 6 2 0
Adjustable Rate ............................ 9/30/96 7 2 2
Institutional .............................. 12/31/96 4 2 2
International .............................. 10/31/95 7 3 1
Precious Metals ............................ 2/28/96 7 2 1
Tax Free ................................... 12/31/95 8 2 0
</TABLE>
<PAGE>
EXHIBIT I
KEYSTONE FUNDS ADVISED BY KIMCO WITH SUBSTANTIALLY
SIMILAR INVESTMENT OBJECTIVES
(1) LONG-TERM GROWTH OF CAPITAL BY INVESTING IN EQUITY SECURITIES OF
COMPANIES WITH SMALL MARKET CAPITALIZATIONS:
<TABLE>
<CAPTION>
ANNUAL EXPENSE
NET ASSETS ANNUAL INVESTMENT ADVISORY LIMITATION, IF ANY
AS OF FEES (PERCENT OF AVERAGE (AS A PERCENTAGE OF
FUND NAME 9/30/96 DAILY NET ASSETS) AVERAGE NET ASSETS)*
--------- ------- ----------------- --------------------
<S> <C> <C> <C>
Keystone $ 99,047,880 Basic monthly fee of 1.00% up to N/A
America Hartwell Emerging and including $100,000,000,
Growth Fund, Inc. declining to 0.65% of amounts
over $400,000,000, plus an
incentive fee of up to 1/2 of 1%
depending on the fund's
investment performance relative
to the S&P 500
Keystone Small Company 1,887,126,536 0.70% of the first $100,000,000, N/A
Growth Fund (S-4) declining to 0.35% of amounts
over $1,500,000,000.
Keystone Small Company 49,961,602 0.70% of the first $100,000,000, Class A, B and C expenses
Growth Fund II declining to 0.35% of amounts are limited to 1.95%,
over $1,500,000,000. 2.70% and 2.70%,
respectively, on a month-
by-month basis
Keystone Institutional 2,424,779 0.80% of the first $100,000,000, Expenses are limited to
Trust - Small declining to 0.65% of amounts 1.00% until 12/31/96 and
Capitalization Growth Fund over $250,000,000. month-by-month thereafter
</TABLE>
(2) CURRENT INCOME CONSISTENT WITH LOW VOLATILITY OF PRINCIPAL BY
INVESTING PRIMARILY IN ADJUSTABLE RATE SECURITIES:
<TABLE>
<CAPTION>
ANNUAL EXPENSE
NET ASSETS ANNUAL INVESTMENT ADVISORY LIMITATION, IF ANY
AS OF FEES (PERCENT OF AVERAGE (AS A PERCENTAGE OF
FUND NAME 9/30/96 DAILY NET ASSETS) AVERAGE NET ASSETS)*
--------- ------- ----------------- --------------------
<S> <C> <C> <C>
Keystone Capital $ 70,932,291 2.0% of gross dividend and Class A, B and C expenses
Preservation and Income interest income, plus 0.50% of are limited to 0.90%,
Fund the first $100,000,000, declining 1.65% and 1.65%,
to 0.25% of amounts over respectively, on a month-
$500,000,000. by-month basis
Keystone Institutional 80,334,379 0.30% KIMCO pays substantially
Adjustable Rate Fund all of the Fund's expenses
from its fee
</TABLE>
(3) HIGHEST POSSIBLE INCOME, EXEMPT FROM FEDERAL TAXES, WHILE
PRESERVING CAPITAL BY INVESTING PRIMARILY IN MUNICIPAL BONDS:
<TABLE>
<CAPTION>
ANNUAL EXPENSE
NET ASSETS ANNUAL INVESTMENT ADVISORY LIMITATION, IF ANY
AS OF FEES (PERCENT OF AVERAGE (AS A PERCENTAGE OF
FUND NAME 9/30/96 DAILY NET ASSETS) AVERAGE NET ASSETS)*
--------- ------- ----------------- --------------------
<S> <C> <C> <C>
Keystone Tax Free Fund $1,614,941,007 2.0% of gross dividend and N/A
interest income, plus 0.50% of
the first $100,000,000, declining
to 0.25% of amounts over
$500,000,000
Keystone Tax Free Income 130,422,171 2.0% of gross dividend and N/A
Fund interest income, plus 0.50% of
the first $100,000,000, declining
to 0.25% of amounts over
$500,000,000
</TABLE>
(4) CURRENT INCOME AND CAPITAL APPRECIATION CONSISTENT WITH
CONSERVATION OF PRINCIPAL:
<TABLE>
<CAPTION>
ANNUAL EXPENSE
NET ASSETS ANNUAL INVESTMENT ADVISORY LIMITATION, IF ANY
AS OF FEES (PERCENT OF AVERAGE (AS A PERCENTAGE OF
FUND NAME 9/30/96 DAILY NET ASSETS) AVERAGE NET ASSETS)*
--------- ------- ----------------- --------------------
<S> <C> <C> <C>
Keystone $1,507,263,796 1.5% of gross dividend and N/A
Balanced interest income, plus 0.60% of
Fund (K-1) the first $100,000,000, declining
to 0.30% of amounts over
$1,000,000,000
Keystone Balanced Fund II 5,918,452 1.5% of gross dividend and Class A, B and C expenses
interest income, plus 0.60% of are limited to 1.50% 2.25%
the first $100,000,000, declining and 2.25%, respectively
to 0.30% of amounts over through June 30, 1997 and
$1,000,000,000 on a month-by-month basis
thereafter
</TABLE>
(5) MONEY MARKET FUNDS THAT SEEK CURRENT INCOME WHILE PRESERVING CAPITAL:
<TABLE>
<CAPTION>
ANNUAL EXPENSE
NET ASSETS ANNUAL INVESTMENT ADVISORY LIMITATION, IF ANY
AS OF FEES (PERCENT OF AVERAGE (AS A PERCENTAGE OF
FUND NAME 9/30/96 DAILY NET ASSETS) AVERAGE NET ASSETS)*
--------- ------- ----------------- --------------------
<S> <C> <C> <C>
Keystone Liquid Trust $ 329,102,669 0.50% of the first $500,000,000, N/A
declining to 0.40% of amounts
over $1,000,000,000
Master Reserves Trust 35,244,197 5% quarterly of gross income KIMCO pays substantially
minus the Fund's net expenses. all of the Fund's expenses
from its fee
</TABLE>
(6) INCOME EXEMPT FROM FEDERAL AND STATE INCOME TAX IN A PARTICULAR STATE:
<TABLE>
<CAPTION>
ANNUAL EXPENSE
NET ASSETS ANNUAL INVESTMENT ADVISORY LIMITATION, IF ANY
AS OF FEES (PERCENT OF AVERAGE (AS A PERCENTAGE OF
FUND NAME 9/30/96 DAILY NET ASSETS) AVERAGE NET ASSETS)*
--------- ------- ----------------- --------------------
<S> <C> <C> <C>
Keystone State Tax Free $ 208,500,751 For each portfolio: 0.55% of the For each portfolio, Class
Fund, which is comprised of first $50,000,000, declining to A, B and C expenses are
the following portfolios: 0.25% of amounts over limited to 0.75%, 1.50%
* Keystone Florida Tax $500,000,000 and 1.50%, respectively,
Free Fund on a month-by-month basis
* Keystone
Massachusetts
Tax Free Fund
* Keystone
Pennsylvania
Tax Free Fund
* Keystone New York
Insured Tax Free Fund
Keystone State Tax Free 55,214,423 For each portfolio: 0.55% of the For each portfolio, Class
Fund -- Series II, which is first $50,000,000, declining to A, B and C expenses are
comprised of the following 0.25% of amounts over limited to 0.75%, 1.50%
portfolios: $500,000,000 and 1.50%, respectively,
* Keystone California on a month-by-month basis
Insured Tax Free Fund
* Keystone
Missouri Tax
Free Fund
*The expense limitations referred to herein are voluntary and temporary. See
"Advisory Fee Waivers and Expense Subsidies" section of this Proxy Statement.
</TABLE>
<PAGE>
EXHIBIT J
<TABLE>
INVESTMENT ADVISORY FEES
<CAPTION>
ANNUAL
EXPENSE
AMOUNT OF NET LIMITATION,
ADVISORY AMOUNT IF ANY (AS A
FISCAL NET ASSETS FEE WITHOUT OF ADVISORY PERCENTAGE OF
YEAR ON SEPT. 30, EXPENSE FEE FOR LAST AVERAGE NET
NAME OF FUND ENDED 1996 LIMITATION* FISCAL YEAR ASSETS)
- -------------------------------------- ---------- -------------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Keystone Quality Bond Fund (B-1) ..... 10/31/95 $ 230,715,654 $1,876,672 $1,876,672 N/A
Keystone Diversified Bond Fund (B-2) . 8/31/96 559,514,552 3,481,728 3,481,728 N/A
Keystone High Income Bond Fund (B-4) . 7/31/96 608,072,883 3,788,171 3,788,171 N/A
Keystone Balanced Fund (K-1) ......... 6/30/96 1,507,263,796 6,447,849 6,447,849 N/A
Keystone Strategic Growth Fund (K-2) . 10/31/95 495,847,080 2,779,544 2,779,544 N/A
Keystone Growth and Income Fund (S-1) 8/31/96 238,062,693 1,492,757 1,492,757 N/A
Keystone Mid-Cap Growth Fund (S-3) ... 8/31/96 296,988,272 1,908,509 1,908,509 N/A
Keystone Small Company
Growth Fund (S-4) .................. 5/31/96 1,887,126,535 8,473,139 8,473,139 N/A
Keystone Institutional Adjustable
Rate Fund .......................... 9/30/96 80,334,379 121,105 121,105 Limited to 0.55%
for Class Y and
0.30% for
Class Z
Keystone Institutional Trust ......... 6/30/96 2,424,779 9,209 0 Limited to 1.00%
Keystone International Fund Inc. ..... 10/31/95 146,207,691 985,652 985,652 N/A
Keystone Precious Metals
Holdings, Inc. ..................... 2/28/96 183,434,527 1,354,605 1,354,605 N/A
Keystone Tax Free Fund ............... 12/31/95 1,614,941,007 5,327,202 5,327,202 N/A
Keystone America Hartwell Emerging
Growth Fund, Inc. .................. 9/30/96 99,047,880 655,127 655,127 N/A
Keystone Balanced Fund II ............ 6/30/97** 5,918,452 2,000 0 Limited to 1.50%
for Class A and
2.25% for
Classes B & C
Keystone Capital Preservation and
Income Fund ........................ 9/30/96 70,932,291 493,147 152,131 Limited to 0.90%
for Class A and
1.65% for
Classes B & C
Keystone Emerging Markets Fund ....... 10/31/96*** 1,410,832 4,999 0 Limited to 0.00%
for Classes
A, B, C
Keystone Fund for Total Return ....... 11/30/95 76,411,739 300,290 300,290 Limited to 1.50%
for Class A
Keystone Fund of the Americas ........ 10/31/95 101,796,477 1,099,920 1,099,920 N/A
Keystone Global Opportunities Fund ... 9/30/96 760,814,697 2,198,709 2,198,709 N/A
Keystone Global Resources and
Development Fund ................... 3/31/96 23,675,381 217,332 217,332 N/A
Keystone Government Securities Fund .. 7/31/96 49,686,570 365,012 212,093 Limited to 1.15%
for Class A and
1.90% for
Classes B & C
Keystone Intermediate Term Bond Fund . 7/31/96 36,360,905 273,644 82,548 Limited to 1.10%
for Class A and
1.85% for
Classes B & C
Keystone Liquid Trust ................ 6/30/96 329,102,669 1,359,239 1,359,239 N/A
Keystone Omega Fund .................. 12/31/95 258,883,032 1,280,436 1,280,436 N/A
Keystone Small Company Growth Fund II 5/31/96 49,961,602 21,221 0 Limited to 1.95%
for Class A and
2.70% for
Classes B & C
Keystone State Tax Free Fund.......... 3/31/96 208,500,751 1,168,889 449,481 Limited to 0.75%
for Class A and
1.50% for
Classes B & C
Keystone State Tax Free Fund II ...... 11/30/95 55,214,423 233,519 21,379 Limited to 0.75%
for Class A and
1.50% for
Classes B & C
Keystone Strategic Income Fund ....... 7/31/96 220,559,401 1,663,669 1,663,669 N/A
Keystone Tax Free Income Fund ........ 11/30/95 130,422,171 919,802 919,802 N/A
Keystone World Bond Fund ............. 10/31/95 14,626,084 93,806 93,806 N/A
<FN>
* The expense limitations referred to herein are voluntary and temporary. See "Advisory Fee Waivers and Expenses
Subsidies" section of this Proxy Statement.
** Balanced Fund began operations on September 3, 1996; these fees are for the period from September 3, 1996 to
September 30, 1996.
*** Emerging Markets began operations on February 20, 1996; these fees are for the period from February 20, 1996 to
September 30, 1996.
</TABLE>
<PAGE>
EXHIBIT K
DISTRIBUTION PLAN EXPENSES
DISTRIBUTION PLAN DEFERRED
EXPENSES PAID BY SALES CHARGES
FISCAL THE FUND TO PAID TO
YEAR PRINCIPAL PRINCIPAL
NAME OF FUND ENDED UNDERWRITER UNDERWRITER
- --------- ------ ----------------- -------------
B-1 ............................ 10/31/95 $ 3,107,302 $ 379,967
B-2 ............................ 8/31/96 6,610,025 655,758
B-4 ............................ 7/31/96 6,747,276 862,707
K-1 ............................ 6/30/96 14,166,573 1,167,950
K-2 ............................ 10/31/95 4,584,433 484,167
S-1 ............................ 8/31/96 1,788,290 98,000
S-3 ............................ 8/31/96 2,154,063 52,515
S-4 ............................ 5/31/96 18,458,861 1,916,107
Adjustable Rate - Class Y ...... 9/30/96 23,210 N/A
Adjustable Rate - Class Z ...... 9/30/96 N/A N/A
Institutional .................. 6/30/96 N/A N/A
International .................. 10/31/95 1,316,980 375,704
Precious Metals ................ 2/28/96 1,979,775 659,545
Tax Free ....................... 12/31/95 4,719,697 95,377
<PAGE>
EXHIBIT L
<TABLE>
BROKERAGE BY FUND
<CAPTION>
% OF FUND'S % OF FUND'S
AGGREGATE AGGREGATE
BROKERAGE BROKERAGE
BROKERAGE COMMISSIONS COMMISSIONS
COMMISSIONS BROKERAGE BROKERAGE PAID TO PAID TO
FISCAL PAID BY COMMISSIONS COMMISSIONS KOKUSAI NOMURA
YEAR FUND PAID TO PAID TO FOR LAST FOR LAST
FUND ENDED FOR FYE KOKUSAI NOMURA FISCAL YEAR FISCAL YEAR
- ---- ---- --------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
B-1 ........................ 10/31/95 N/A N/A N/A N/A N/A
B-2 ........................ 8/31/96 N/A N/A N/A N/A N/A
B-4 ........................ 7/31/96 N/A N/A N/A N/A N/A
K-1 ........................ 6/30/96 $ 3,079,117 $ 78,964 $ 980 2.56% .03%
K-2 ........................ 10/31/95 2,920,975 100,718 11,739 3.45% .40%
S-1 ........................ 8/31/96 1,540,872 169,998 21,019 11.03% 1.36%
S-3 ........................ 8/31/96 2,266,036 49,759 6,370 2.20% .28%
S-4 ........................ 5/31/96 15,176,376 103,309 N/A .68% N/A
Adjustable Rate ............ 9/30/96 N/A N/A N/A N/A N/A
Institutional .............. 6/30/96 17,392 N/A N/A N/A N/A
International .............. 10/31/95 810,683 136,740 35,672 16.87% 4.44%
Precious Metals ............ 2/28/96 216,048 1,750 N/A .81% N/A
Tax Free ................... 12/31/95 N/A N/A N/A N/A N/A
</TABLE>
<PAGE>
EXHIBIT M
FEES PAID TO KIRC AND FUND ADMINISTRATION
FEES PAID FEES PAID
TO TO FUND
FISCAL KIRC ADMINISTRATION
YEAR DURING LAST DURING LAST
NAME OF FUND ENDED FISCAL YEAR FISCAL YEAR
------------ ----- ----------- -----------
B-1............................ 10/31/95 $ 729,430 $25,306
B-2 ........................... 8/31/96 1,454,352 22,638
B-4............................ 7/31/96 1,927,228 18,334
K-1 ........................... 6/30/96 3,226,256 19,572
K-2 ........................... 10/31/95 1,296,268 24,342
S-1 ........................... 8/31/96 611,194 15,735
S-3 ........................... 8/31/96 711,550 24,767
S-4 ........................... 5/31/96 3,683,215 20,669
Adjustable Rate ............... 9/30/96 0 0
Institutional ................. 6/30/96 1,000 N/A
International ................. 10/31/95 616,119 21,518
Precious Metals ............... 2/28/96 831,209 19,093
Tax Free ...................... 12/31/95 1,433,700 21,661
<PAGE>
EXHIBIT N
LIST OF SHAREHOLDERS WITH FUND OWNERSHIP OF 5%
<TABLE>
<CAPTION>
# OF SHARES % OF
NAME OF FUND REGISTRATION OWNED FUND
- ------------ ------------ ----- ----
<S> <C> <C> <C>
Institutional Trust Board of Trustees of Sheet 200,000.000 95.238%
Metal Workers
Local No. 85, Pension Fund
3835 Presidential Parkway, Suite 123
Atlanta, GA 30340-3723
Adjustable Rate -- Solano Partnership Health Plan 1,124,820.266 75.499%
Class Y ATTN: Deborah Cox
421 Executive Ct N #A
Suisun, CA 94585-4019
Skyline Telephone Membership Corp. 107,805.851 7.236%
ATTN; Hobart G. Davis
P.O. Box 759
Jefferson, NC 28694-0759
Willian H. Morgan, Jr. 103,157.587 6.924%
906 Weightman
Greenwood, MS 38930-2438
Adjustable Rate -- Bank of New York Trustee 4,368,060.008 63.809%
Class Z FBO Saatchi & Saatchi Cash
Bal. Retirement Plan Trust
ATTN: Ms. Amy Nellissen
375 Hudson Street
New York, NY 10014-3658
Ampex Retirement Master Trust 1,743,219.774 25.465%
P.O. Box 1992
Boston, MA 02105-1992
Keystone Investment Distributors Co. 514,483.793 7.516%
ATTN: Corporate Finance Dept.,
21st Floor
200 Berkeley Street
Boston, MA 02116-5022
</TABLE>
<PAGE>
[LOGO] KEYSTONE
INVESTMENTS
October 21, 1996
Dear Shareholder:
On December 9, 1996, a Special Meeting of Shareholders of the Keystone
Funds will be held in connection with the proposed acquisition of Keystone
Investments, Inc. by First Union Corporation, the nation's sixth largest bank
holding company whose organization manages the Evergreen Group of Mutual
Funds. The enclosed proxy material describes the important matters to be voted
upon at that meeting.
If you will be unable to attend the special meeting in person, we ask that
you sign the enclosed proxy card and return it as soon as possible in the
accompanying postage-paid envelope. IT IS VERY IMPORTANT THAT YOU VOTE
PROMPTLY SO THAT WE MAY ENSURE THAT THE NECESSARY QUORUM OF VOTING SHARES IS
REPRESENTED AT THE MEETING.
If the proposals described in the proxy statement are approved,
* Keystone Investment Management Company, your Fund's investment adviser,
will become a subsidiary of First Union Corporation and
* Certain Independent Trustees of the Evergreen Funds will join the
present Independent Trustees on the Boards of the Keystone Funds.
THE PROPOSED ACQUISITION WILL NOT ALTER THE INVESTMENT STRATEGY OR
OBJECTIVES OF YOUR FUND, WILL NOT CHANGE YOUR FUND'S MANAGEMENT CONTRACT, AND
WILL NOT INCREASE YOUR FUND'S MANAGEMENT FEES.
The Independent Trustees of the Keystone Funds have unanimously approved
the proposals and encourage you to do the same. They believe that the
acquisition of Keystone by First Union will create significant opportunities
for benefits to the shareholders of the Keystone Funds in a number of
meaningful ways, including,
* Significantly increased financial strength and stability that should
enhance Keystone's ability to attract and retain top quality investment,
administrative and service personnel and provide opportunities for
enhanced future technology and administrative services for the Funds.
First Union has indicated its intention to devote the resources
necessary for it to become one of the largest mutual fund organizations
in the country.
* Potential economies of scale in the Keystone Funds' shareholder
servicing and transfer agency operations by incorporating the Evergreen
Funds into the Keystone operations.
* Potential growth of the Keystone Funds through the retail brokerage
affiliates of First Union, which will make shares available throughout
its network. It has become clear that competitive growth in fund assets
is necessary to attract and retain top quality investment,
administrative and service personnel.
* Future ability to exchange shares of Keystone Funds for shares of the
Evergreen Funds, including types of funds not currently offered by
Keystone.
The accompanying proxy materials are, by their nature, lengthy and
complex. If you have any questions, please call 1-800-343-2898.
Of course, we will be delighted if you can attend the meeting and discuss
these proposals, or any other relevant matter, with us personally. If,
however, time or distance precludes you from joining us, IT IS IMPORTANT THAT
YOU ACT PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD SO THAT WE
WILL HAVE A QUORUM AT THE MEETING ON DECEMBER 9.
We appreciate your continued support and look forward to receiving your
votes of approval.
Sincerely yours,
/s/Albert H. Elfner, III /s/George S. Bissell
Albert H. Elfner, III George S. Bissell
Chairman and Chief Executive Chairman, Board of Trustees
Officer, Keystone Investments, Inc. Keystone Mutual Funds
<PAGE>
MTG
[LOGO] KEYSTONE
INVESTMENTS
October 21, 1996
Dear Shareholder:
On December 9, 1996, a Special Meeting of Shareholders of the Keystone
Funds will be held in connection with the proposed acquisition of Keystone
Investments, Inc. by First Union Corporation, the nation's sixth largest bank
holding company whose organization manages the Evergreen Group of Mutual
Funds. The enclosed proxy material describes the important matters to be voted
upon at that meeting.
If you will be unable to attend the special meeting in person, we ask that
you sign the enclosed proxy card and return it as soon as possible in the
accompanying postage-paid envelope. IT IS VERY IMPORTANT THAT YOU VOTE
PROMPTLY SO THAT WE MAY ENSURE THAT THE NECESSARY QUORUM OF VOTING SHARES IS
REPRESENTED AT THE MEETING.
If the proposals described in the proxy statement are approved,
* Keystone Investment Management Company, your Fund's investment adviser,
will become a subsidiary of First Union Corporation and
* Certain Independent Trustees of the Evergreen Funds will join the
present Independent Trustees on the Boards of the Keystone Funds.
THE PROPOSED ACQUISITION WILL NOT ALTER THE INVESTMENT STRATEGY OR
OBJECTIVES OF YOUR FUND, WILL NOT CHANGE YOUR FUND'S MANAGEMENT CONTRACT, AND
WILL NOT INCREASE YOUR FUND'S MANAGEMENT FEES.
The Independent Trustees of the Keystone Funds have unanimously approved
the proposals and encourage you to do the same. They believe that the
acquisition of Keystone by First Union will create significant opportunities
for benefits to the shareholders of the Keystone Funds in a number of
meaningful ways, including,
* Significantly increased financial strength and stability that should
enhance Keystone's ability to attract and retain top quality investment,
administrative and service personnel and provide opportunities for
enhanced future technology and administrative services for the Funds.
First Union has indicated its intention to devote the resources
necessary for it to become one of the largest mutual fund organizations
in the country.
* Potential economies of scale in the Keystone Funds' shareholder
servicing and transfer agency operations by incorporating the Evergreen
Funds into the Keystone operations.
* Potential growth of the Keystone Funds through the retail brokerage
affiliates of First Union, which will make shares available throughout
its network. It has become clear that competitive growth in fund assets
is necessary to attract and retain top quality investment,
administrative and service personnel.
* Future ability to exchange shares of Keystone Funds for shares of the
Evergreen Funds, including types of funds not currently offered by
Keystone.
Of course, we will be delighted if you can attend the meeting and discuss
these proposals, or any other relevant matter, with us personally. If,
however, time or distance precludes you from joining us, IT IS IMPORTANT THAT
YOU ACT PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD SO THAT WE
WILL HAVE A QUORUM AT THE MEETING ON DECEMBER 9.
We appreciate your continued support and look forward to receiving your
votes of approval.
Sincerely yours,
/s/Albert H. Elfner, III /s/George S. Bissell
Albert H. Elfner, III George S. Bissell
Chairman and Chief Executive Chairman, Board of Trustees
Officer, Keystone Investments, Inc. Keystone Mutual Funds
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
You can help reduce the cost of additional mailings by
[Logo] KEYSTONE promptly returning your signed proxy. No matter how
INVESTMENTS many shares you own, your vote counts!
PLEASE SIGN AND RETURN YOUR PROXY TODAY!
Please fold and detach card at perforation before mailing
FUND NAME PRINTS HERE PROXY FOR THE JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, DECEMBER 9, 1996
The undersigned, revoking all Proxies heretofore given, hereby appoints
Messrs. George S. Bissell and Albert H. Elfner, III and Ms. Rosemary D. Van
Antwerp, or any of them as Proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of the Fund which
the undersigned is entitled to vote at a meeting of shareholders to be held at
3:00 P.M., Boston time, on Monday December 9, 1996 at the offices of the Fund,
200 Berkeley Street, Boston, Massachusetts and at all adjournments thereof, as
fully as the undersigned would be entitled to vote if personally present, on the
proposals set forth in the Notice of such meeting, substantially as described in
the Proxy Statement accompanying such Notice as follows:
NOTE: PLEASE SIGN IN BOX BELOW EXACTLY AS
YOUR NAME(S) APPEAR ON THIS CARD.
Dated: ____________________, 1996
NOTE: When signing as attorney, executor,
administrator, trustee, guardian, or as
custodian for a minor, please sign your
name and give your full title as such. If
signing on behalf of a corporation,
please sign the full corporate name and
your name and indicate your title. If you
are a partner signing for a partnership,
please sign the partnership name and your
name. Joint owners should each sign this
proxy. Please sign, date and return.
_________________________________________
_________________________________________
Signature(s) K
<PAGE>
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES (DIRECTORS) OF THE FUND.
THE BOARD OF TRUSTEES (DIRECTORS) OF THE FUND RECOMMENDS A VOTE FOR PROPOSALS 1
---
THROUGH 4, INCLUDING A VOTE FOR THE ELECTION OF ALL NOMINEES FOR TRUSTEE
---
(DIRECTOR).
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR ANY PROPOSAL IF
---
NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OF BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. [ ]
Please fold and detach card at perforation before mailing
1. FOR THE SHAREHOLDERS OF ALL FUNDS, FOR AUTHORITY TO VOTE
to elect the following persons as WITHHELD ON ALL
Trustee (Director) of the Fund: TRUSTEES (DIRECTORS)
Laurence B. Ashkin, Frederick Amling,
Charles A. Austin III, Foster Bam, [ ] [ ]
George S. Bissell, Edwin D. Campbell,
Charles F. Chapin, K. Dun Gifford,
James S. Howell, Leroy Keith, Jr.,
F. Ray Keyser, Gerald M. McDonnell,
Thomas L. McVerry, William Walt
Pettit, David M. Richardson, Russell
A. Salton, III M.D., Michael S.
Scofield, Richard J. Shima and Andrew
J. Simons, subject to the completion
of the Merger, substantially as described
in the Proxy Statement.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PLEASE
WRITE HIS NAME BELOW:)
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2. FOR THE SHAREHOLDERS OF ALL FUNDS, FOR AGAINST ABSTAIN
to approve an Investment Advisory and [ ] [ ] [ ]
Management Agreement between Keystone
Investment Management Company and the
Fund, subject to completion of the
Merger, substantially as described
in the Proxy Statement. (Advisory fee
rates will NOT change.)
3. FOR THE SHAREHOLDERS OF KEYSTONE [ ] [ ] [ ]
INTERNATIONAL FUND INC. ONLY, to
approve an amendment to the Fund's
By-Laws to permit the Board of
Directors to fix the number of
Directors from time to time.
4. FOR THE SHAREHOLDERS OF EACH OF [ ] [ ] [ ]
KEYSTONE INTERNATIONAL FUND INC. AND
KEYSTONE PRECIOUS METALS HOLDINGS, INC.
ONLY, to ratify the selection of KPMG
Peat Marwick LLP as the independent
public accountant of the Fund for its
current fiscal year.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
