<PAGE> PAGE 1
000 B000000 10/31/96
000 C000000 000055619
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 U
001 A000000 KEYSTONE STRATEGIC GROWTH FUND (K-2)
001 B000000 811-97
001 C000000 6173383200
002 A000000 200 BERKELEY STREET
002 B000000 BOSTON
002 C000000 MA
002 D010000 02116
002 D020000 5034
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 KEYSTONE INVESTMENT MANAGEMENT COMPANY
008 B000001 A
008 C000001 801-8327
008 D010001 BOSTON
008 D020001 MA
008 D030001 02116
008 D040001 5034
010 A000001 KEYSTONE INVESTMENTS INC.
010 C010001 BOSTON
010 C020001 MA
010 C030001 02116
010 C040001 5034
011 A000001 KEYSTONE INVESTMENT DISTRIBUTORS COMPANY INC
011 B000001 8-395
011 C010001 BOSTON
011 C020001 MA
011 C030001 02116
011 C040001 5034
<PAGE> PAGE 2
012 A000001 KEYSTONE INVESTOR RESOURCE CENTER
012 B000001 84-1571
012 C010001 BOSTON
012 C020001 MA
012 C030001 02116
012 C040001 5034
013 A000001 KPMG - PEAT MARWICK,LLP
013 B010001 BOSTON
013 B020001 MA
013 B030001 02109
015 A000001 STATE STREET BANK & TRUST
015 B000001 C
015 C010001 BOSTON
015 C020001 MA
015 C030001 02110
015 E010001 X
018 000000 Y
019 A000000 Y
019 B000000 35
019 C000000 KEYGROUPPA
020 A000001 DONALD, LUFKIN & JENRETTE
020 B000001 13-2741729
020 C000001 178
020 A000002 MERRILL LYNCH PIERCE FERNER & SMITH
020 B000002 22-2347336
020 C000002 122
020 A000003 BANK OF TOKYO TRUST CO.`
020 C000003 111
020 A000004 PAINE WEBBER INCORPORATED
020 B000004 13-2638166
020 C000004 82
020 A000005 SMITH BARNEY SHEARSON INC.
020 B000005 13-1912900
020 C000005 82
020 A000006 ES 1 SECURITIES COMPANY
020 C000006 79
020 A000007 BEAR STEARNS SECURITIES
020 B000007 13-3299429
020 C000007 72
020 A000008 NEWBRIDGE SECURITIES, INC.
020 B000008 13-3214963
020 C000008 63
020 A000009 PRUDENTIAL SECURITIES
020 B000009 22-2347336
020 C000009 61
020 A000010 ROBERTSON, STEPHEN & CLARK
020 C000010 60
021 000000 1990
022 A000001 GOLDMAN SACHS
022 B000001 13-5108880
022 C000001 1338027
<PAGE> PAGE 3
022 D000001 33017
022 A000002 HSBC SECURITIES, INC.
022 C000002 131555
022 D000002 0
022 A000003 FIRST BOSTON CORP.
022 C000003 81495
022 D000003 0
022 A000004 MERRILL LYNCH PIERCE FENNER & SMITH
022 B000004 13-5674085
022 C000004 29020
022 D000004 34428
022 A000005 PRUDENTIAL BACHE SECURITIES
022 C000005 57267
022 D000005 0
022 A000006 MORGAN STANLEY AND CO. INC.
022 B000006 13-2655998
022 C000006 15638
022 D000006 25490
022 A000007 PAINE WEBBER INCORPORATED
022 B000007 13-2638166
022 C000007 21664
022 D000007 11038
022 A000008 SHEARSON LEHMAN BROS.
022 C000008 16611
022 D000008 0
022 A000009 CANTOR FITZGERALD & CO.
022 B000009 13-3680184
022 C000009 6497
022 D000009 8659
022 C000010 0
022 D000010 0
023 C000000 5709570
023 D000000 5342696
024 000000 N
025 D000001 0
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
026 A000000 Y
026 B000000 Y
026 C000000 N
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
<PAGE> PAGE 4
027 000000 Y
028 A010000 2692
028 A020000 0
028 A030000 0
028 A040000 8644
028 B010000 2225
028 B020000 0
028 B030000 0
028 B040000 6546
028 C010000 2515
028 C020000 0
028 C030000 0
028 C040000 9725
028 D010000 2643
028 D020000 0
028 D030000 0
028 D040000 6257
028 E010000 2967
028 E020000 0
028 E030000 0
028 E040000 8033
028 F010000 6266
028 F020000 0
028 F030000 0
028 F040000 14727
028 G010000 19308
028 G020000 0
028 G030000 0
028 G040000 53932
028 H000000 0
030 A000000 0
030 B000000 0.00
030 C000000 0.00
031 A000000 0
031 B000000 0
032 000000 0
033 000000 0
034 000000 Y
035 000000 1006
036 A000000 N
036 B000000 25
037 000000 N
038 000000 0
039 000000 N
040 000000 Y
041 000000 Y
042 A000000 0
042 B000000 0
042 C000000 100
042 D000000 0
042 E000000 0
<PAGE> PAGE 5
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 2996
044 000000 0
045 000000 Y
046 000000 N
047 000000 Y
048 000000 0.000
048 A010000 100000
048 A020000 0.700
048 B010000 100000
048 B020000 0.650
048 C010000 100000
048 C020000 0.600
048 D010000 100000
048 D020000 0.550
048 E010000 100000
048 E020000 0.500
048 F010000 500000
048 F020000 0.450
048 G010000 500000
048 G020000 0.400
048 H010000 1500000
048 H020000 0.350
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 0
048 K020000 0.000
049 000000 N
050 000000 N
051 000000 N
052 000000 Y
053 A000000 N
054 A000000 Y
054 B000000 N
054 C000000 N
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 N
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 Y
054 N000000 Y
054 O000000 N
<PAGE> PAGE 6
055 A000000 Y
055 B000000 N
056 000000 N
057 000000 N
058 A000000 N
060 A000000 Y
060 B000000 Y
061 000000 1000
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 0.0
066 A000000 Y
066 B000000 N
066 C000000 N
066 D000000 Y
066 E000000 N
066 F000000 N
066 G000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
070 B010000 Y
070 B020000 N
070 C010000 Y
070 C020000 N
070 D010000 Y
070 D020000 N
070 E010000 Y
070 E020000 N
070 F010000 Y
070 F020000 N
<PAGE> PAGE 7
070 G010000 Y
070 G020000 N
070 H010000 Y
070 H020000 N
070 I010000 Y
070 I020000 N
070 J010000 Y
070 J020000 N
070 K010000 Y
070 K020000 N
070 L010000 Y
070 L020000 Y
070 M010000 Y
070 M020000 Y
070 N010000 Y
070 N020000 N
070 O010000 Y
070 O020000 N
070 P010000 Y
070 P020000 N
070 Q010000 N
070 Q020000 N
070 R010000 N
070 R020000 N
071 A000000 744598
071 B000000 824803
071 C000000 478754
071 D000000 156
072 A000000 12
072 B000000 1152
072 C000000 5944
072 D000000 0
072 E000000 0
072 F000000 2995
072 G000000 0
072 H000000 0
072 I000000 1228
072 J000000 226
072 K000000 0
072 L000000 30
072 M000000 31
072 N000000 58
072 O000000 0
072 P000000 0
072 Q000000 24
072 R000000 27
072 S000000 19
072 T000000 4845
072 U000000 0
072 V000000 0
072 W000000 26
<PAGE> PAGE 8
072 X000000 9509
072 Y000000 0
072 Z000000 -2413
072AA000000 70338
072BB000000 0
072CC010000 0
072CC020000 7284
072DD010000 479
072DD020000 0
072EE000000 22080
073 A010000 0.0100
073 A020000 0.0000
073 B000000 0.3600
073 C000000 0.0000
074 A000000 11
074 B000000 0
074 C000000 32250
074 D000000 0
074 E000000 10676
074 F000000 443963
074 G000000 0
074 H000000 0
074 I000000 11
074 J000000 16837
074 K000000 0
074 L000000 558
074 M000000 41
074 N000000 504347
074 O000000 6995
074 P000000 0
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 476
074 S000000 0
074 T000000 496876
074 U010000 57242
074 U020000 0
074 V010000 8.68
074 V020000 0.00
074 W000000 0.0000
074 X000000 0
074 Y000000 0
075 A000000 0
075 B000000 499921
076 000000 0.00
077 A000000 Y
077 Q010000 Y
078 000000 N
080 A000000 ICI MUTUAL INSURANCE CO.
<PAGE> PAGE 9
080 B000000 SEDGWICK JAMES
080 C000000 35000
081 A000000 Y
081 B000000 35
082 A000000 N
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 N
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
SIGNATURE J. KEVIN KENELY
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> KEYSTONE STRATEGIC GROWTH FUND (K-2) CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 411,108,575
<INVESTMENTS-AT-VALUE> 486,889,533
<RECEIVABLES> 17,395,436
<ASSETS-OTHER> 62,450
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 504,347,419
<PAYABLE-FOR-SECURITIES> 6,995,054
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 475,904
<TOTAL-LIABILITIES> 7,470,958
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 361,396,355
<SHARES-COMMON-STOCK> 57,242,129
<SHARES-COMMON-PRIOR> 61,095,706
<ACCUMULATED-NII-CURRENT> 85,978
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 59,696,846
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 75,697,282
<NET-ASSETS> 496,876,461
<DIVIDEND-INCOME> 5,944,232
<INTEREST-INCOME> 1,151,763
<OTHER-INCOME> 0
<EXPENSES-NET> (9,508,612)
<NET-INVESTMENT-INCOME> (2,412,617)
<REALIZED-GAINS-CURRENT> 70,337,618
<APPREC-INCREASE-CURRENT> (7,283,970)
<NET-CHANGE-FROM-OPS> 60,641,031
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (478,981)
<DISTRIBUTIONS-OF-GAINS> (22,079,862)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,012,349
<NUMBER-OF-SHARES-REDEEMED> (14,456,998)
<SHARES-REINVESTED> 2,591,072
<NET-CHANGE-IN-ASSETS> 5,266,643
<ACCUMULATED-NII-PRIOR> 487,981
<ACCUMULATED-GAINS-PRIOR> 26,065,648
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (2,994,500)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (9,508,612)
<AVERAGE-NET-ASSETS> 499,920,611
<PER-SHARE-NAV-BEGIN> 8.05
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 1.04
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.36)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.68
<EXPENSE-RATIO> 1.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
The Trustees and Shareholders
Keystone Strategic Growth Fund (K-2)
In planning and performing our audit of the financial statements of Keystone
Strategic Growth Fund (K-2)for the year ended October 31, 1996, we considered
their internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing an opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management Keystone Strategic Growth Fund of is responsible for establishing
and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments made by management are required to
assess the expected benefits and related costs of internal control structure
policies and procedures. Two of the objectives of an internal control structure
are to provide management with reasonable, but not absolute, assurance that
assets are safeguarded against loss from unauthorized use or disposition and
that transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors and
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
October 31, 1996.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
KPMG Peat Marwick LLP
Boston, Massachusetts
December 19, 1996
<PAGE>
