KEYSTONE OMEGA FUND, 497, 1996-12-13

KEYSTONE OMEGA FUND
497, 1996-12-13

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<PAGE>

KEYSTONE OMEGA FUND
PROSPECTUS DECEMBER 10, 1996
AS SUPPLEMENTED DECEMBER 11, 1996

CLASS Y

Keystone Omega Fund (the "Fund") is a mutual fund that seeks maximum capital
growth by investing in a varied portfolio consisting primarily of common
stocks and securities convertible into common stocks.

This prospectus provides information regarding the Fund's Class Y shares,
which the Fund will begin offering January 2, 1997. Information on share
classes may be found in the "Fund Shares" section of this prospectus.

This prospectus concisely states information about the Fund that you should
know before investing. Please read it and retain it for future reference.

Additional information about the Fund is contained in a statement of
additional information dated December 10, 1996, as supplemented December 11,
1996, which has been filed with the Securities and Exchange Commission and is
incorporated by reference into this prospectus. For a free copy, or for other
information about the Fund, write to the address or call the telephone number
provided on this page.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED OR OTHERWISE PROTECTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY AND INVOLVE RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.

KEYSTONE OMEGA FUND
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116-5034
CALL TOLL FREE 1-800-343-2898

TABLE OF CONTENTS
Page
Expense Information 2
Financial Highlights 3
The Fund 6
Investment Objective and Policies 6
Investment Restrictions 7
Risk Factors 8
Pricing Shares 9
Dividends and Taxes 9
Fund Management and Expenses 10
How to Buy Shares 13
How to Redeem Shares 14
Shareholder Services 15
Performance Data 17
Fund Shares 17
Additional Information 18
Additional Investment Information (i)

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>

EXPENSE INFORMATION

KEYSTONE OMEGA FUND

The purpose of this fee table is to assist investors in understanding the
costs and expenses that an investor in Class Y shares of the Fund will bear
directly or indirectly. For more complete descriptions of the various costs
and expenses, see the following sections of this prospectus: "Fund Management
and Expenses;" "How to Buy Shares;" and "Shareholder Services."

<TABLE>
<CAPTION>
CLASS Y SHARES
NO LOAD
OPTION(1)
----------------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases ....................................................... None
(as a percentage of offering price)
Deferred Sales Load ........................................................................... None
(as a percentage of original purchase price or redemption proceeds, as applicable)
Exchange Fee .................................................................................. None

ANNUAL FUND OPERATING EXPENSES(2)
(as a percentage of average net assets)
Management Fees ............................................................................... 0.75%
12b-1 Fees .................................................................................... None
Other Expenses ................................................................................ 0.69%
----
Total Fund Operating Expenses ................................................................. 1.44%
====

EXAMPLES(3) 1 YEAR 3 YEARS
------ -------

You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each period:
Class Y ....................................................................... $ 15 $ 46

You would pay the following expenses on the same investment, assuming
no redemption at the end of each period:

Class Y ....................................................................... $ 15 $ 46

AMOUNTS SHOWN IN THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
- ----------
(1) Class Y shares are only available to certain investors through broker-dealers who have entered into
special distribution agreements with Evergreen Keystone Distributor, Inc., the Fund's principal
underwriter. See "How to Buy Shares."

(2) Expense ratio is estimated for the Fund's fiscal year ending December 31, 1997. Total Fund Operating
Expenses include indirectly paid expenses. Excluding indirectly paid expenses, the expense ratio for
Class Y shares is expected to be 1.43%. The Fund also offers Class A, B and C shares which have
different expenses and sales charges.

(3) The Securities and Exchange Commission requires use of a 5% annual return figure for purposes of this
example. Actual return for the Fund may be greater or less than 5%.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS

KEYSTONE OMEGA FUND
CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

The following table contains important financial information relating to
the Fund. The financial information for the years ended December 31, 1989
through December 31, 1995 has been audited by KPMG Peat Marwick LLP, the
Fund's independent auditors. The financial highlights for the years ended
December 31, 1986 to December 31, 1988 were audited by other auditors. The
financial highlights for the six-month period ended June 30, 1996 are
unaudited. The audited portion of the table appears in the Fund's 1995 Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which also appear, together with the independent auditors'
report, in the Fund's Annual Report. The Fund's 1995 financial statements,
related notes, and independent auditors' report as well as the Fund's
unaudited Semi-Annual Report for the six months ended June 30, 1996 have been
incorporated by reference into the statement of additional information.
Additional information about the Fund's performance is contained in its Annual
and Semi-Annual Reports, which will be made available upon request and without
charge.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 ------------------------------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992(B) 1991 1990 1989 1988 1987 1986
----------- ---- ---- ---- ----- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF YEAR ..... $ 19.56 $ 15.54 $ 17.11 $ 15.84 $ 17.68 $ 13.37 $ 16.03 $ 13.66 $ 12.08 $ 13.44 $ 14.12

Income from investment operations
Net investment income
(loss)............... (0.05) 0.00 0.04 (0.07) 0.00 (0.04) 0.11 0.17 0.30(d) 0.02 0.23
Net realized and
unrealized gains
(losses) on
investments .......... 0.70 5.58 (1.00) 3.07 0.39 6.92 (0.39) 4.30 1.40 1.11 1.49
-------- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total from
investment
operations ......... 0.65 5.58 (0.96) 3.00 0.39 6.88 (0.28) 4.47 1.70 1.13 1.72
-------- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions from:
Net investment
income .............. 0.00 0.00 0.00 0.00 0.00 (0.02) (0.25) (0.20) (0.12) (0.24) (0.28)
In excess of net
investment income.... 0.00 0.00 0.00 0.00 0.00 (0.05) (0.04) 0.00 0.00 0.00 0.00
Capital gains ......... (1.78) (1.56) (0.61) (1.73) (2.23) (2.50) (2.09) (1.90) 0.00 (2.25) (2.12)
-------- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions . (1.78) (1.56) (0.61) (1.73) (2.23) (2.57) (2.38) (2.10) (0.12) (2.49) (2.40)
-------- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE END
OF YEAR ............... $ 18.43 $ 19.56 $ 15.54 $ 17.11 $ 15.84 $ 17.68 $ 13.37 $ 16.03 $ 13.66 $ 12.08 $ 13.44
======== ======== ======== ======== ======== ======== ======== ======== ======= ======== ========
TOTAL RETURN (A) ...... 3.24% 36.94% (5.66%) 19.33% 4.00% 54.49% (2.38%) 33.05% 14.05% 8.27% 12.07%

RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses ...... 1.43%(c)(e) 1.38%(e) 1.41% 1.51% 1.52% 1.57% 1.73% 1.84% 1.78% 1.99% 1.47%
Net investment
income (loss) ..... (0.34%) 0.00% 0.27% (0.48%) (0.01%) (0.31%) 0.70% 1.03% 2.22% 0.13% 1.60%
Portfolio turnover
rate ................ 112% 159% 137% 162% 176% 115% 108% 77% 84% 106% 178%
Average commission
rate paid ........... $ 0.0631 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Net assets end of
year (thousands) .... $152,744 $135,079 $99,569 $90,404 $73,144 $58,671 $38,531 $39,682 $33,951 $30,246 $31,812

- ----------
(a) Excluding applicable sales charges.
(b) Calculated on average shares outstanding.
(c) "Ratio of total expenses to average net assets" for the six months ended June 30, 1996 and the year
ended December 31, 1995 includes indirectly paid expenses. Excluding indirectly paid expenses, the
expense ratio would have been 1.42% and 1.37%, respectively.
(d) Includes $0.17 per share relating to a special non-recurring distribution from Inco Limited.
(e) Annualized.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS

KEYSTONE OMEGA FUND
CLASS B SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

The following table contains important financial information relating to
the Fund. The financial information for the periods through December 31, 1995
has been audited by KPMG Peat Marwick LLP, the Fund's independent auditors.
The financial highlights for the six months ended June 30, 1996 is unaudited.
The audited portion of the table appears in the Fund's 1995 Annual Report and
should be read in conjunction with the Fund's financial statements and related
notes, which also appear, together with the independent auditors' report, in
the Fund's Annual Report. The Fund's 1995 financial statements, related notes
and independent auditors' report as well as the Fund's unaudited Semi-Annual
Report for the six months ended June 30, 1996 have been incorporated by
reference into the statement of additional information. Additional information
about the Fund's performance is contained in its Annual and Semi-Annual
Reports, which will be made available upon request and without charge.

<TABLE>
<CAPTION>
SIX MONTHS AUGUST 2, 1993
ENDED YEAR ENDED DECEMBER 31, (DATE OF INITIAL
JUNE 30, 1996 ------------------------- PUBLIC OFFERING) TO
(UNAUDITED) 1995 1994 DECEMBER 31, 1993
----------- ---- ---- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR ... $19.10 $15.34 $ 17.06 $ 17.29
------ ------ ------- -------
Income from investment operations:
Net investment loss ................. (0.08) (0.09) (0.06) (0.05)
Net realized and unrealized gains
(losses) on investment ............. 0.63 5.41 (1.05) 1.55
------ ------ ------- -------
Total from investment operations ... 0.55 5.32 (1.11) 1.50
------ ------ ------- -------
Less distributions from:
Capital gains ....................... (1.78) (1.56) (0.61) (1.73)
------ ------ ------- -------
Total distributions ............... (1.78) (1.56) (0.61) (1.73)
------ ------ ------- -------
NET ASSET VALUE END OF YEAR ......... $17.87 $19.10 $ 15.34 $ 17.06
====== ====== ======= =======
TOTAL RETURN (B) .................... 2.78% 35.70% (6.57%) 9.02%

RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses ................... 2.30%(a)(c) 2.29%(c) 2.30% 2.57%(a)
Net investment loss (1.20%)(a) (0.94%) (0.58%) (1.73%)(a)
Portfolio turnover rate ............. 112% 159% 137% 162%
Average commission rate paid ........ $0.0631 N/A N/A N/A
Net assets end of year (thousands) .. $82,651 $ 71,636 $32,266 $ 7,423
- ----------
(a) Annualized.
(b) Excluding applicable sales charges.
(c) "Ratio of total expenses to average net assets" for the six months ended June 30, 1996 and the
year ended December 31, 1995 includes indirectly paid expenses. Excluding indirectly paid
expenses, the expense ratio would have been 2.28% and 2.27%, respectively.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS

KEYSTONE OMEGA FUND
CLASS C SHARES

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS AUGUST 2, 1993
ENDED YEAR ENDED DECEMBER 31, (DATE OF INITIAL
JUNE 30, 1996 ------------------------- PUBLIC OFFERING) TO
(UNAUDITED) 1995 1994 DECEMBER 31, 1993
----------- ---- ---- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR ... $ 19.13 $ 15.37 $ 17.09 $ 17.29
------- ------- ------- -------
Income from investment operations:
Net investment loss ................. (0.05) (0.13) (0.07) (0.06)
Net realized and unrealized
gains (losses) on investments ..... 0.60 5.45 (1.04) 1.59
------- ------- ------- -------
Total from investment operations .. 0.55 5.32 (1.11) 1.53
------- ------- ------- -------
Less distributions from:
Capital gains ....................... (1.78) (1.56) (0.61) (1.73)
------- ------- ------- -------
Total distributions ............... (1.78) (1.56) (0.61) (1.73)
------- ------- ------- -------
NET ASSET VALUE END OF YEAR ......... $ 17.90 $ 19.13 $ 15.37 $ 17.09
======= ======= ======= =======

TOTAL RETURN (B) .................... 2.77% 35.62% (6.56%) 9.20%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses .................... 2.30%(a)(c) 2.30%(c) 2.30% 2.48%(a)
Net investment loss (1.20%)(a) (0.91%) (0.63%) (1.64%)(a)
Portfolio turnover rate ............. 112% 159% 137% 162%
Average commission rate paid $0.0631 N/A N/A N/A
Net assets end of year
(thousands) ........................ $18,008 $13,963 $ 9,900 $ 3,620
- ----------
(a) Annualized.
(b) Excluding applicable sales charges.
(c) "Ratio of total expenses to average net assets" for the six months ended June 30, 1996 and the
year ended December 31, 1995 includes indirectly paid expenses. Excluding indirectly paid
expenses, the expense ratio would have been 2.28% and 2.29%, respectively.
</TABLE>
<PAGE>

THE FUND
The Fund is an open-end, diversified management investment company,
commonly known as a mutual fund. The Fund was formed as a Massachusetts business
trust. Originally the Fund had been incorporated in Massachusetts on February 8,
1968. The Fund is one of more than thirty funds advised and managed by Keystone
Investment Management Company ("Keystone"), the Fund's investment adviser.

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE
The Fund seeks maximum capital growth by investing in a varied portfolio
consisting primarily of common stocks and securities convertible into common
stocks.

The investment objective of the Fund is nonfundamental and may be changed
without the vote of a majority (as defined in the Investment Company Act of 1940
("1940 Act")) of the Fund's outstanding shares.

Any investment involves risk, and there is no assurance that the Fund will
achieve its investment objective.

PRINCIPAL INVESTMENTS
The Fund pursues its objective by employing the techniques of the fully-
managed investment concept, meaning that Keystone will continuously review both
individual securities and relevant general conditions. Whenever, in the opinion
of Keystone, a security no longer seems to have the required characteristics, an
anticipated level of performance has been achieved, or other securities present
relatively greater opportunities for realizing the Fund's objective, appropriate
changes will be made in the Fund's portfolio. The Fund's equity position will be
changed as Keystone changes its evaluation of trends in general securities price
levels. Portfolio turnover rate will not be considered a limiting factor in the
execution of investment decisions.

Although the Fund invests predominantly in equity securities of United
States ("U.S.") corporations, in pursuing its objective, the Fund may also
invest up to 25% of its assets in foreign securities issued by issuers located
in developed countries as well as emerging markets countries, including certain
formerly communist countries. For this purpose, countries with emerging markets
are generally those where the per capita income is in the low to middle ranges,
as determined by the International Bank for Reconstruction and Development.

OTHER ELIGIBLE INVESTMENTS
When Keystone deems it advisable, the Fund may, for temporary defensive
purposes, invest without limit in investment grade bonds or debentures rated by
Moody's Investors Service ("Moody's") as BAA or better or by Standard & Poor's
Corporation ("S&P") as BBB or better or those having at least similar quality in
Keystone's judgment. Bonds that are rated BAA by Moody's are considered to be
medium grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and have speculative characteristics as
well. Debt rated BBB by S&P is regarded as having an adequate capacity to pay
interest and repay principal. While it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories. Under circumstances where
the Fund is investing for defensive purposes, it will not be pursuing its
investment objective.

The Fund also may invest in non-convertible preferred stocks of companies
considered creditworthy and able to sustain dividend payments and in short- term
money market instruments maturing in one year or less. Such money market
instruments may be U.S. government securities; certificates of deposit in banks
considered creditworthy; or commercial paper of companies, the bonds or
debentures of which are investment grade. While these securities are not without
risk of price fluctuation or default, they are generally less volatile than
common stock.

The Fund intends to follow policies of the Securities and Exchange
Commission as they are adopted from time to time with respect to illiquid
securities, including, at this time, (1) treating as illiquid, securities that
may not be sold or disposed of in the ordinary course of business within seven
days at approximately the value at which the Fund has valued such securities on
its books and (2) limiting its holdings of such securities to 15% of net assets.

The Fund may invest in restricted securities, including securities eligible
for resale pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "1933 Act"). Generally, Rule 144A establishes a safe harbor from the
registration requirements of the 1933 Act for resales by large institutional
investors of securities not publicly traded in the U.S. The Fund intends to
purchase Rule 144A securities when such securities present an attractive
investment opportunity and otherwise meet the Fund's selection criteria. The
Board of Trustees has adopted guidelines and procedures pursuant to which the
liquidity of the Fund's Rule 144A securities is determined by Keystone and the
Board of Trustees monitors Keystone's implementation of such guidelines and
procedures.

At the present time, the Fund cannot accurately predict exactly how the
market for Rule 144A securities will develop. A Rule 144A security that was
readily marketable upon purchase may subsequently become illiquid. In such an
event, the Board of Trustees will consider what action, if any, is appropriate.

The Fund may enter into repurchase and reverse repurchase agreements,
invest in master demand notes, lend portfolio securities, purchase and sell
securities and currencies on a when-issued and delayed-delivery basis and
purchase or sell securities on a forward commitment basis, write covered call
and put options and purchase call and put options to close out existing
positions and may employ new investment techniques with respect to such options.
The Fund may also enter into currency and other financial futures contracts and
related options transactions for hedging purposes and not for speculation. The
Fund may employ new investment techniques with respect to such futures contracts
and related options.

For further information about the types of investments and investment
techniques available to the Fund, including the associated risks, see the
sections of this prospectus entitled "Risk Factors" and "Additional Investment
Information" and the statement of additional information.

INVESTMENT RESTRICTIONS
The Fund has adopted the fundamental investment restrictions summarized
below, which may not be changed without the vote of a majority of the Fund's
outstanding shares (as defined in the 1940 Act), which means the lesser of (1)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the outstanding
shares (a "1940 Act Majority"). These restrictions and certain other fundamental
and nonfundamental restrictions are set forth in detail in the statement of
additional information. Unless otherwise stated, all references to the Fund's
assets are in terms of current market value.

Generally, the Fund may not: (1) invest more than 10% of its total assets
in the securities of any one issuer (except U.S. government securities); and (2)
borrow, unless, immediately after any such borrowing, such borrowing and all
other such borrowings and other liabilities do not exceed one-third of the value
of the Fund's total assets.

As a diversified investment company, the Fund has undertaken not to
purchase a security if, as a result, more than 10% of the outstanding voting
securities of any single issuer would be held by the Fund or more than 5% of its
total assets would be invested in securities of any one issuer.

RISK FACTORS
Like any investment, your investment in the Fund involves an element of
risk. Before you buy shares of the Fund, you should carefully evaluate your
ability to assume the risks your investment in the Fund poses. YOU CAN LOSE
MONEY BY INVESTING IN THE FUND. YOUR INVESTMENT IS NOT GUARANTEED. A DECREASE IN
THE VALUE OF THE FUND'S PORTFOLIO SECURITIES CAN RESULT IN A DECREASE IN THE
VALUE OF YOUR INVESTMENT.

By itself, the Fund does not constitute a balanced investment program. The
Fund is best suited for investors who can afford to maintain their investment
over a relatively long period of time, and who are seeking a fund which is
relatively aggressive and has the potential for significant returns. The Fund
involves a high degree of risk and is not an appropriate investment for
conservative investors who are seeking preservation of capital and/or income.
You should take into account your own investment objectives as well as your
other investments when considering an investment in the Fund.

Certain risks related to the Fund are discussed below. In addition to the
risks not discussed in this section, specific risks relating to individual
securities or investment practices are discussed in "Additional Investment
Information" and the statement of additional information.

FUND RISKS. Investing in common stocks, particularly those having growth
characteristics, frequently involves greater risks (and possibly greater
rewards) than investing in other types of securities. Common stock prices tend
to be more volatile and companies having growth characteristics may sometimes be
unproven.

A need for cash due to large liquidations from the Fund when prices of
common stocks are declining could result in losses to the Fund.

Investing in the Fund involves the risk common to investing in any
security, that is the value of the securities held by the Fund will fluctuate in
response to changes in economic conditions or public expectations about those
securities. The net asset value of the Funds' shares will change accordingly.

FOREIGN RISK. Investing in securities of foreign issuers generally involves
more risk than investing in a portfolio consisting solely of securities of
domestic issuers for the following reasons: publicly available information on
issuers and securities may be scarce; many foreign countries do not follow the
same accounting, auditing, and financial reporting standards as are used in the
U.S.; market trading volumes may be smaller, resulting in less liquidity and
more price volatility compared to U.S. securities of comparable quality; there
may be less regulation of securities trading and its participants; the
possibility may exist for expropriation, confiscatory taxation, nationalization,
establishment of exchange controls, political or social instability or negative
diplomatic developments; and dividend or interest withholding may be imposed at
the source.

Investing in securities of issuers in emerging market countries involves
exposure to economic systems that are generally less mature and political
systems that are generally less stable than those of developed countries. In
addition, investing in companies in emerging market countries may also involve
exposure to national policies that may restrict investment by foreigners and
undeveloped legal systems governing private and foreign investments and private
property. The typically small size of the markets for securities issued by
companies in emerging markets countries and the possibility of a low or
nonexistent volume of trading in those securities may also result in a lack of
liquidity and in price volatility of those securities. Furthermore, investing in
securities of companies in the formerly communist countries of Eastern Europe
and the People's Republic of China involves additional risks to those associated
with investments in companies in non-formerly communist emerging markets
countries. Specifically, those countries could convert back to a single economic
system, and the claims of property owners prior to the expropriation by the
communist regime could be settled in favor of the former property owners, in
which case the Fund could lose its entire investment in those countries.

Fluctuations in foreign exchange rates impose an additional level of risk,
possibly affecting the value of the Fund's foreign investments and earnings, as
well as gains and losses realized through trades, and the unrealized
appreciation or depreciation of investments. The Fund may also incur costs when
it shifts assets from one country to another.

PRICING SHARES
The Fund computes its net asset value as of the close of trading (currently
4:00 p.m. eastern time) on each day that the New York Stock Exchange (the
"Exchange") is open. However, the Fund does not compute its net asset value on
days when changes in the value of the Fund's portfolio securities do not affect
the current net asset value of its shares. The Exchange is currently closed on
weekends, New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of the Fund is arrived at by determining the value of the Fund's
assets, subtracting its liabilities and dividing the result by the number of its
shares outstanding.

For purposes of calculating the net asset value of a Fund share on any
given day, securities traded on national securities exchanges or reported on the
National Association of Securities Dealers' Automated Quotation System
("NASDAQ") National Market are valued at the last sale price. If there were no
transactions on that day, securities will be valued at the mean of the closing
bid and asked prices or at such other value as shall be determined in good
faith, by or under the direction of the Fund's Board of Trustees, to be the fair
market value of such securities. Commercial paper is generally valued at cost,
which approximates market.

Other securities, including unlisted securities, are valued at the last
reported bid price if such prices are available. Prices for such securities are
considered to be unavailable if, for example, the securities are restricted
securities, or if there exists a "thin market" in the securities. In such
situations, the value is determined in good faith by or under the direction of
the Fund's Board of Trustees.

DIVIDENDS AND TAXES
The Fund has qualified and intends to continue to qualify as a regulated
investment company (a "RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"). The Fund qualifies if, among other things, it distributes to its
shareholders at least 90% of its net investment income for its fiscal year. The
Fund also intends to make timely distributions, if necessary, sufficient in
amount to avoid the nondeductible 4% excise tax imposed on a RIC to the extent
that it fails to distribute, with respect to each calendar year, at least 98% of
its ordinary income for such calendar year and 98% of its net capital gains for
the one-year period ending October 31 of such calendar year.

Any taxable dividend declared in October, November or December to
shareholders of record in such month and paid by the following January 31 will
be includable in the taxable income of the shareholder as if paid on December 31
of the year in which the dividend was declared.

If the Fund qualifies as a RIC and if it distributes substantially all of
its net investment income and net capital gains, if any, to shareholders, it
will be relieved of any federal income tax liability.

The Fund will make distributions from its net investment income and net
capital gains, if any, at least annually.

Shareholders receive Fund distributions in the form of additional shares of
that class of shares upon which the distribution is based or, at the
shareholder's option, in cash. Fund distributions in the form of additional
Class Y shares are made at net asset value.

Dividends and distributions are taxable whether they are received in cash
or in shares. Income dividends and net short-term gains dividends are taxable as
ordinary income. Net long-term gains dividends are taxable as capital gains
regardless of how long the Fund's shares are held. If Fund shares held for less
than six months are sold at a loss, however, such loss will be treated for tax
purposes as a long-term capital loss to the extent of any long-term capital
gains dividends received.

The Fund advises its shareholders annually as to the federal tax status of
all distributions made during the year.

FUND MANAGEMENT AND EXPENSES

BOARD OF TRUSTEES
Under Massachusetts law, the Fund's Board of Trustees has absolute and
exclusive control over the management and disposition of all assets of the Fund.
Subject to the general supervision of the Fund's Board of Trustees, Keystone
provides investment advice, management and administrative services to the Fund.

INVESTMENT ADVISER
Keystone has provided investment advisory and management services to
investment companies and private accounts since 1932. Keystone is a wholly-
owned subsidiary of Keystone Investments, Inc. ("Keystone Investments").
Keystone Investments provides accounting, bookkeeping, legal, personnel and
general corporate services to Keystone, its affiliates, and the Keystone
Investments Families of Funds. Both Keystone and Keystone Investments are
located at 200 Berkeley Street, Boston, Massachusetts 02116-5034.

On December 11, 1996, Keystone Investments succeeded to the business of a
corporation with the same name, but under different ownership. Keystone
Investments is a wholly-owned subsidiary of First Union National Bank of North
Carolina ("FUNB"). FUNB is a subsidiary of First Union Corporation ("First
Union"), the sixth largest bank holding company in the U.S. based on total
assets as of September 30, 1996.

First Union is headquartered in Charlotte, North Carolina, and had $133.9
billion in consolidated assets as of September 30, 1996. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the U.S. The Capital Management Group of FUNB ("CMG"),
together with Lieber & Company and Evergreen Asset Management Corp. ("Evergreen
Asset"), wholly-owned subsidiaries of FUNB, manage or otherwise oversee the
investment of over $50 billion in assets belonging to a wide range of clients,
including the Evergreen Family of Funds.

Pursuant to its Investment Advisory and Management Agreement with the Fund
(the "Advisory Agreement"), Keystone manages the investment and reinvestment of
the Fund's assets, supervises the operation of the Fund and provides all
necessary office space, facilities and equipment.

The Fund currently pays Keystone Management a fee for its services at the
annual rate set forth below:

Aggregate Net Asset
Management Value of the Shares
Fee of the Fund
- ------------------------------------------------------------------------------
0.75% of the first $ 250,000,000, plus
0.675% of the next $ 250,000,000, plus
0.60% of the next $ 500,000,000, plus
0.50% of amounts over $1,000,000,000

Keystone's fee is computed as of the close of business on each business day
and payable daily.

The Advisory Agreement continues in effect for two years from its effective
date and, thereafter, from year to year only so long as such continuance is
specifically approved at least annually by the Fund's Board of Trustees or by
vote of shareholders of the Fund. In either case, the terms of the Advisory
Agreement and continuance thereof must be approved by the vote of a majority of
the Fund's Independent Trustees (Trustees who are not "interested persons" of
the Fund, as defined in the 1940 Act, and who have no direct or indirect
financial interest in the Fund's Distribution Plans or any agreement related
thereto), cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be terminated, without penalty, on 60 days'
written notice by the Fund or Keystone, or by a vote of shareholders of the
Fund. The Advisory Agreement will terminate automatically upon its assignment.

PRINCIPAL UNDERWRITER
Evergreen Keystone Distributor, Inc. (formerly Evergreen Funds Distributor,
Inc.) ("EKD"), a wholly-owned subsidiary of Furman Selz LLC ("Furman Selz"),
which is not affiliated with First Union, is the Fund's principal underwriter
(the "Principal Underwriter"). EKD replaces Evergreen Keystone Investment
Services, Inc. (formerly Keystone Investment Distributors Company) ("EKIS") as
the Fund's principal underwriter. EKIS may no longer act as principal
underwriter of the Fund due to regulatory restrictions imposed by the
Glass-Steagall Act upon national banks, such as FUNB and their affiliates, that
prohibit such entities from acting as the underwriters or distributors of mutual
fund shares. While EKIS may no longer act as principal underwriter of the Fund
as discussed above, EKIS may continue to receive compensation from the Fund or
the Principal Underwriter in respect of underwriting and distribution services
performed prior to the termination of EKIS as principal underwriter. In
addition, EKIS may also be compensated by the Principal Underwriter for the
provision of certain marketing support services to the Principal Underwriter at
an annual rate of up to .75% of the average daily net assets of the Fund,
subject to certain restrictions. Both EKD and Furman Selz are located at 230
Park Avenue, New York, New York 10169.

SUB-ADMINISTRATOR
Furman Selz provides officers and certain administrative services to the
Fund pursuant to a sub-administration agreement. For its services under that
agreement, Furman Selz receives a fee from Keystone at the maximum annual rate
of .01% of the average daily net assets of the Fund.

It is expected that on or about January 2, 1997, Furman Selz will transfer
EKD, and its related mutual fund distribution and administration business, to
BISYS Group, Inc. ("BISYS"). At that time, BISYS will succeed as sub-
administrator of the Fund. It is not expected that the acquisition of the mutual
fund distribution and administration business by BISYS will affect the services
currently provided by EKD or Furman Selz.

PORTFOLIO MANAGER
Maureen E. Cullinane has been the Fund's Portfolio Manager since 1989. Ms.
Cullinane is a Keystone Senior Vice President and Senior Portfolio Manager and
has more than 20 years of investment experience.

FUND EXPENSES
The Fund pays all of its expenses. In addition to the investment advisory
fees discussed above, the principal expenses that the Fund is expected to pay
include, but are not limited to: expenses of its Independent Trustees; transfer,
dividend disbursing and shareholder servicing agent expenses; custodian
expenses; fees of its independent auditors and legal counsel to the Fund and its
Independent Trustees; fees payable to government agencies, including
registration and qualification fees of the Fund and its shares under federal and
state securities laws; and certain extraordinary expenses. In addition, each
class will pay all of the expenses attributable to it. Such expenses are
currently limited to Distribution Plan expenses for the Class A, B and C shares.
The Fund also pays its brokerage commissions, interest charges and taxes.

For the fiscal year ended December 31, 1995, the Fund paid or accrued to
Keystone Management, Inc., the Fund's former investment manager, investment
management and administrative services fees of $1,280,436 (0.75% of the Fund's
average daily net asset value on an annualized basis). Of such amount,
$1,088,371 was paid to Keystone for its services to the Fund.

To the extent the Fund's advisory fee equals 0.75% of the Fund's average
net assets, the fee would be higher than that paid by most mutual funds, but
would not necessarily be higher than that paid by funds with similar objectives.

For the fiscal year ended December 31, 1995, the Fund paid or accrued
$565,768 to Evergreen Keystone Service Company (formerly Keystone Investor
Resource Center, Inc.) ("EKSC") for services rendered as the Fund's transfer
agent and dividend disbursing agent and $39,461 to Keystone Investments for
certain accounting and printing expenses. EKSC, located at 200 Berkeley Street,
Boston, Massachusetts 02116-5034, is a wholly-owned subsidiary of Keystone.

SECURITIES TRANSACTIONS
Under policies established by the Fund's Board of Trustees, Keystone
selects broker-dealers to execute transactions subject to the receipt of best
execution. When selecting broker-dealers to execute portfolio transactions for
the Fund, Keystone may consider the number of shares of the Fund sold by the
broker-dealer. In addition, broker-dealers executing portfolio transactions may,
from time to time, be affiliated with the Fund, Keystone, the Principal
Underwriter or their affiliates. The Fund may pay higher commissions to
broker-dealers that provide research services. Keystone may use these services
in advising the Fund as well as in advising its other clients.

PORTFOLIO TURNOVER
The Fund's portfolio turnover rates for the fiscal years ended December 31,
1994 and 1995 were 137% and 159%, respectively. High portfolio turnover may
involve correspondingly greater brokerage commissions and other transaction
costs, which will be borne directly by the Fund, as well as additional realized
gains and/or losses to shareholders.

For further information about brokerage and distributions, see the
statement of additional information.

CODE OF ETHICS
The Fund has adopted a Code of Ethics incorporating policies on personal
securities trading as recommended by the Investment Company Institute.

ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS
The Principal Underwriter may, from time to time, provide promotional
incentives to certain broker-dealers whose representatives have sold or are
expected to sell significant amounts of Fund shares. In addition, broker-
dealers may, from time to time, receive additional cash payments. The Principal
Underwriter may also provide written information to those broker- dealers with
whom it has dealer agreements that relates to sales incentive campaigns
conducted by such broker-dealers for their representatives as well as financial
assistance in connection with pre-approved seminars, conferences and
advertising. No such programs or additional compensation will be offered to the
extent they are prohibited by the laws of any state or any self- regulatory
agency such as the NASD.

The Principal Underwriter may, at its own expense, pay concessions in
addition to those described above to broker-dealers including, from time to
time, First Union Brokerage Services, Inc., an affiliate of Keystone, that
satisfy certain criteria established from time to time by the Principal
Underwriter. These conditions relate to increasing sales of shares of the
Keystone funds over specified periods and certain other factors. Such payments
may, depending on the dealer's satisfaction of the required conditions, be
periodic and may be up to 1.00% of the value of shares sold by such broker-
dealer.

State securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as broker-dealers pursuant to state law.

EFFECTS OF BANKING LAWS
The Glass-Steagall Act currently limits the ability of depository
institutions (such as a commercial bank or a savings and loan association) to
become an underwriter or distributor of securities. In the event the Glass-
Steagall Act is deemed to prohibit depository institutions from accepting
payments under the arrangement described above, or should Congress relax current
restrictions on depository institutions, the Board of Trustees will consider
what action, if any, is appropriate.

The Glass-Steagall Act and other banking laws and regulations also
presently prohibit member banks of the Federal Reserve System ("Member Banks")
or their non-bank affiliates from sponsoring, organizing, controlling, or
distributing the shares of registered open-end investment companies such as the
Fund. Such laws and regulations also prohibit banks from issuing, underwriting
or distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of its customer. Keystone
and its affiliates, since they are direct or indirect subsidiaries of FUNB, are
subject to and in compliance with the aforementioned laws and regulations.

Changes to applicable laws and regulations or future judicial or
administrative decisions could prevent Keystone Investments or its affiliates
from performing the services required under the Advisory Agreement or
from acting as agent in connection with the purchase of shares of a fund by its
customers. In such event, it is expected that the Trustees would identify, and
call upon each Fund's shareholders to approve, a new investment adviser. If this
were to occur, it is not anticipated that the shareholders of any Fund would
suffer any adverse financial consequences.

HOW TO BUY SHARES
Class Y shares are offered at net asset value, without a front-end or back-
end sales load. Class Y shares are not offered to the general public and are
available only to (1) persons who at or prior to December 31, 1994 owned shares
in a mutual fund advised by Evergreen Asset of Purchase, New York, (2) certain
institutional investors and (3) investment advisory clients of CMG, Evergreen
Asset or their affiliates.

You may purchase shares of the Fund from any broker-dealer that has a
selling agreement with the Principal Underwriter. In addition, you may purchase
shares of the Fund by mailing to the Fund, c/o Evergreen Keystone Service
Company, P.O. Box 2121, Boston, Massachusetts 02106-2121, a completed account
application and a check payable to the Fund. You may also telephone
1-800-343-2898 to obtain the number of an account to which you can wire or
electronically transfer funds and then send in a completed account application.
Subsequent investments in any amount may be made by check, by wiring federal
funds, by direct deposit or by an electronic funds transfer ("EFT").

Orders for the purchase of Class Y shares of the Fund will be confirmed at
the public offering price which is equal to the net asset value per share next
determined after receipt of the order in proper form by the Principal
Underwriter (generally as of the close of the Exchange on that day). Orders
received by broker-dealers or other firms prior to the close of the Exchange and
received by the Principal Underwriter prior to the close of its business day
will be confirmed at the offering price effective as of the close of the
Exchange on that day. Broker-dealers and other financial services firms are
obligated to transmit orders promptly.

Orders for Class Y shares received other than as stated above will receive
the public offering price, which is equal to the net asset value per share next
determined (generally, the next business day's offering price).

The Fund reserves the right to determine the net asset value more
frequently than once a day if deemed desirable.

The initial purchase amount must be at least $1,000, which may be waived in
certain circumstances. There is no minimum amount for subsequent purchases.

The Fund reserves the right to withdraw all or any part of the offering
made by this prospectus and to reject purchase orders.

Shareholder inquiries should be directed to EKSC by calling toll free
1-800-343-2898 or writing to EKSC or to the firm from which you received this
prospectus.

HOW TO REDEEM SHARES
You may redeem Class Y shares of the Fund for cash at their net redemption
value by writing to the Fund, c/o EKSC, and presenting a properly endorsed share
certificate (if certificates have been issued) to the Fund. Your signature(s) on
the written order and certificates must be guaranteed as described below. In
order to redeem by telephone or to engage in telephone transactions generally,
you must complete the authorization in your account application. Proceeds for
shares redeemed on telephone order will be deposited by wire or EFT only to the
bank account designated in your account application.

You may also redeem your shares through your broker-dealer. The Principal
Underwriter, acting as agent for the Fund, stands ready to repurchase Fund
shares upon orders from broker-dealers and will calculate the net asset value on
the same terms as those orders for the purchase of shares received from
broker-dealers and described under "How to Buy Shares." If the Principal
Underwriter has received proper documentation, it will pay the redemption
proceeds to the broker-dealer placing the order within seven days thereafter.
The Principal Underwriter charges no fee for this service. Your broker-dealer,
however, may charge a service fee.

The redemption value equals the net asset value per share adjusted for
fractions of a cent and may be more or less than your cost depending upon
changes in the value of the Fund's portfolio securities between purchase and
redemption.

REDEMPTION OF SHARES IN GENERAL
At various times, the Fund may be requested to redeem shares for which it
has not yet received good payment. In such a case, the Fund will mail the
redemption proceeds upon clearance of the purchase check, which may take up to
15 days or more. Any delay may be avoided by purchasing shares either with a
certified check, by Federal Reserve or bank wire of funds, by direct deposit or
by EFT. Although the mailing of a redemption check or the wiring or EFT of
redemption proceeds may be delayed, the redemption value will be determined and
the redemption processed in the ordinary course of business upon receipt of
proper documentation. In such a case, after the redemption and prior to the
release of the proceeds, no appreciation or depreciation will occur in the value
of the redeemed shares, and no interest will be paid on the redemption proceeds.
If the payment of a redemption has been delayed, the check will be mailed or the
proceeds wired or sent EFT promptly after good payment has been collected.

The Fund computes the amount due you at the close of the Exchange at the
end of the day on which it has received all proper documentation from you.
Payment of the amount due on redemption will be made within seven days
thereafter except as discussed herein.

For your protection, SIGNATURES ON CERTIFICATES, STOCK POWERS AND ALL
WRITTEN ORDERS OR AUTHORIZATIONS MUST BE GUARANTEED BY A U.S. STOCK EXCHANGE
MEMBER, A BANK OR OTHER PERSONS ELIGIBLE TO GUARANTEE SIGNATURES UNDER THE
SECURITIES EXCHANGE ACT OF 1934 AND EKSC'S POLICIES. The Fund or EKSC may waive
this requirement or may require additional documents in certain cases.
Currently, the requirement for a signature guarantee has been waived on
redemptions of $50,000 or less when the account address of record has been the
same for a minimum period of 30 days. The Fund and EKSC reserve the right to
withdraw this waiver at any time.

If the Fund receives a redemption order, but you have not clearly indicated
the amount of money or number of shares involved, the Fund cannot execute the
order. In such cases, the Fund will request the missing information from you and
process the order on the day such information is received.

TELEPHONE REDEMPTIONS

Under ordinary circumstances, you may redeem up to $50,000 from your
account by telephone by calling toll free 1-800-343-2898. As mentioned above, to
engage in telephone transactions generally, you must complete the appropriate
sections of the Fund's application.

In order to insure that instructions received by EKSC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation of
your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if the
address and bank account of record have been the same for a minimum period of 30
days.

If you cannot reach the Fund by telephone, you should follow the procedures
for redeeming by mail or through a broker-dealer as set forth herein.

SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem your account if its value has fallen below $1,000, the current
minimum investment level, as a result of your redemptions (but not as a result
of market action). You will be notified in writing and allowed 60 days to
increase the value of your account to the minimum investment level.

GENERAL
The Fund reserves the right at any time to terminate, suspend or change the
terms of any redemption method described in this prospectus, except redemption
by mail, and to impose fees.

Except as otherwise noted, neither the Fund, EKSC, nor the Principal
Underwriter assumes responsibility for the authenticity of any instructions
received by any of them from a shareholder in writing, over the Keystone
Automated Response Line ("KARL"), or by telephone. EKSC will employ reasonable
procedures to confirm that instructions received over KARL or by telephone are
genuine. Neither the Fund, EKSC, nor the Principal Underwriter will be liable
when following instructions received over KARL or by telephone that EKSC
reasonably believes to be genuine.

The Fund may temporarily suspend the right to redeem its shares when (1)
the Exchange is closed, other than customary weekend and holiday closings; (2)
trading on the Exchange is restricted; (3) an emergency exists and the Fund
cannot dispose of its investments or fairly determine their value; or (4) the
Securities and Exchange Commission so orders.

SHAREHOLDER SERVICES
Details on all shareholder services may be obtained from EKSC by writing or
by calling toll free 1-800-343-2898.

KEYSTONE AUTOMATED RESPONSE LINE
KARL offers you specific fund account information and price and yield
quotations as well as the ability to do account transactions, including
investments, exchanges and redemptions. You may access KARL by dialing toll free
1-800-346-3858 on any touch-tone telephone, 24 hours a day, seven days a week.

EXCHANGES
If you have obtained the appropriate prospectus, you may exchange Class Y
shares of the Fund for Class Y shares of certain other Keystone America Funds at
net asset value by calling or writing to EKSC or by using KARL.

Orders for exchanges received by the Fund prior to 4:00 p.m. eastern time
on any day the funds are open for business will be executed at the respective
net asset values of each fund's Class Y shares determined as of the close of
business that day. Orders for exchanges received after 4:00 p.m. eastern time on
any business day will be executed at the respective net asset values determined
at the close of the next business day.

An excessive number of exchanges may be disadvantageous to the Fund.
Therefore, the Fund, in addition to its right to reject any exchange, reserves
the right to terminate the exchange privilege of any shareholder who makes more
than five exchanges of shares of the funds in a year or three in a calendar
quarter.

An exchange order must comply with the requirements for a redemption or
repurchase order and must specify the dollar value or number of shares to be
exchanged. An exchange constitutes a sale for federal income tax purposes.

The exchange privilege is available only in states where shares of the fund
being acquired may legally be sold.

AUTOMATIC INVESTMENT PLAN
With a Keystone Automatic Investment Plan, you can automatically transfer
as little as $25 per month or $75 per quarter from your bank account or Keystone
Liquid Trust to the Keystone fund of your choice. Your bank account will be
debited for each transfer. You will receive confirmation with your next account
statement.

To establish or terminate an Automatic Investment Plan or to change the
amount or schedule of your automatic investments, you may write to or call EKSC.
Please include your account numbers. Termination may take up to 30 days.

RETIREMENT PLANS
The Fund has various retirement plans available to you, including
Individual Retirement Accounts (IRAs); Rollover IRAs; Simplified Employee
Pension Plans (SEPs); Salary-Reduction Plans (SARSEPs); Tax Sheltered Annuity
Plans (TSAs), 403(b)(7) Plans; 401(k) Plans; Keogh Plans; Corporate
Profit-Sharing Plans; and Money Purchase Plans. For details, including fees and
application forms, call toll free 1-800-247-4075 or write to EKSC.

SYSTEMATIC INCOME PLAN
Under a Systematic Income Plan, if your account has a value of at least
$10,000, you may arrange for regular monthly or quarterly fixed withdrawal
payments. Each payment must be at least $75 and may be as much as 1.0% per month
or 3.0% per quarter of the total net asset value of the Fund shares in your
account when the Systematic Income Plan was opened. Excessive withdrawals may
decrease or deplete the value of your account.

DOLLAR COST AVERAGING
Through dollar cost averaging you can invest a fixed dollar amount each
month or each quarter in any Keystone America Fund. This results in more shares
being purchased when the selected fund's net asset value is relatively low and
fewer shares being purchased when the fund's net asset value is relatively high
and may result in a lower average cost per share than a less systematic
investment approach.

Prior to participating in dollar cost averaging, you must establish an
account in a Keystone America Fund or a money market fund managed or advised by
Keystone. You should designate on the application (1) the dollar amount of each
monthly or quarterly investment you wish to make and (2) the fund in which
the investment is to be made. Thereafter, on the first day of the designated
month, an amount equal to the specified monthly or quarterly investment will
automatically be redeemed from your initial account and invested in shares of
the designated fund.

TWO DIMENSIONAL INVESTING
You may elect to have income and capital gains distributions from any Class
Y Keystone America Fund shares you may own automatically invested to purchase
the same class of shares of certain other Keystone America Funds. You may select
this service on your application and indicate the Keystone America Fund (s) into
which distributions are to be invested.

OTHER SERVICES
Under certain circumstances, you may, within 30 days after a redemption,
reinstate your account in the same class of shares that you redeemed at current
net asset value.

PERFORMANCE DATA
From time to time the Fund may advertise "total return" and "current
yield". ALL DATA IS BASED ON HISTORICAL RESULTS. PAST PERFORMANCE SHOULD NOT BE
CONSIDERED REPRESENTATIVE OF RESULTS FOR ANY FUTURE PERIOD OF TIME. Total return
and current yield are computed separately for each class of shares of the Fund.

Total return refers to average annual compounded rates of return over
specified periods determined by comparing the initial amount invested in a
particular class to the ending redeemable value of that amount. The resulting
equation assumes reinvestment of all dividends and distributions and deduction
of the maximum sales charge or applicable contingent deferred sales charge and
all recurring charges, if any, applicable to all shareholder accounts. The
exchange fee is not included in the calculation.

Current yield quotations represent the yield on an investment for a stated
30-day period computed by dividing net investment income earned per share during
the base period by the maximum offering price per share on the last day of the
base period.

The Fund may also include comparative performance data for each class of
shares in advertising or marketing the Fund's shares, such as data from Lipper
Analytical Services, Inc., Morningstar, Inc., Standard & Poor's Corporation,
Ibbotson Associates or other industry publications.

FUND SHARES
The Fund issues Class A, B, C and Y shares, which participate
proportionately based on their relative net asset values in dividends and
distributions and have equal voting, liquidation and other rights except that
(1) expenses related to the distribution of Class A, B and C shares, or other
expenses that the Board of Trustees may designate as class expenses from time to
time, are borne solely by the relevant class; (2) each class of shares having a
Distribution Plan has exclusive voting rights with respect to its Distribution
Plan; (3) each class has different exchange privileges; and (4) each class
generally has a different designation. When issued and paid for, the shares will
be fully paid and non-assessable by the Fund.

Class A shares bear most of the costs of distribution of such shares
through payment of a front-end sales load while Class B and Class C shares bear
such expenses through a higher annual distribution fee. As a result, expenses
attributable to Class B shares and Class C shares will generally be higher, and
income distributions paid by the Fund with respect to Class A shares will
generally be greater than those paid with respect to Class B and Class C shares.

Class Y shares are not subject to a front-end sales load or a contingent
deferred sales charge and pay no distribution or shareholder servicing expenses.
Therefore, income distributions paid by the Fund on Class Y shares will be
greater than those paid with respect to Class A, B and C shares.

Class Y shares may be exchanged as explained under "Shareholder Services,"
but will have no other preference, conversion, exchange or preemptive rights.
Shares are redeemable, transferable and freely assignable as collateral. The
Fund is authorized to issue additional series or classes of shares.

Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares. Shares of the Fund vote together except
when required by law to vote separately by series or class. The Fund does not
have annual meetings. The Fund will have special meetings, from time to time, as
required under its Declaration of Trust and under the 1940 Act. As provided in
the Fund's Declaration of Trust, shareholders have the right to remove Trustees
by an affirmative vote of two-thirds of the outstanding shares. A special
meeting of the shareholders will be held when holders of 10% of the outstanding
shares request a meeting for the purpose of removing a Trustee. The Fund is
prepared to assist shareholders in communications with one another for the
purpose of convening such a meeting, as presecribed by Section 16(c) of the 1940
Act.

Under Massachusetts law, it is possible that a Fund shareholder may be held
personally liable for the Fund's obligations. The Fund's Declaration of Trust
provides, however, that shareholders shall not be subject to any personal
liability for the Fund's obligations and provides indemnification from Fund
assets for any shareholder held personally liable for the Fund's obligations.
Disclaimers of such liability are included in each Fund agreement.

ADDITIONAL INFORMATION
When the Fund determines from its records that more than one account in the
Fund is registered in the name of a shareholder or shareholders having the same
address, upon notice to those shareholders, the Fund intends, when an annual
report or a semi-annual report of the Fund is required to be furnished, to mail
one copy of such report to that address.

Except as otherwise stated in this prospectus or required by law, the Fund
reserves the right to change the terms of the offer stated in this prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
<PAGE>

ADDITIONAL INVESTMENT INFORMATION

The Fund may engage in the following investment practices to the extent
described in the prospectus and the statement of additional information.

OBLIGATIONS OF FOREIGN BRANCHES OF UNITED STATES BANKS
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by government regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as sovereign risk). In addition, evidences of ownership of such securities
may be held outside the U.S. and the Fund may be subject to the risks associated
with the holding of such property overseas. Various provisions of federal law
governing domestic branches do not apply to foreign branches of domestic banks.

OBLIGATIONS OF UNITED STATES BRANCHES OF FOREIGN BANKS
Obligations of U.S. branches of foreign banks may be general obligations of
the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by federal and state regulation as well as by
governmental action in the country in which the foreign bank has its head
office. In addition, there may be less publicly available information about a
U.S. branch of a foreign bank than about a domestic bank.

MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the investment of
fluctuating amounts by the Fund at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the issuer as borrower. The Fund
has the right to increase the amount under the note at any time up to the full
amount provided by the note agreement, or to decrease the amount. The borrower
may repay up to the full amount of the note without penalty. Notes acquired by
the Fund permit the Fund to demand payment of principal and accrued interest at
any time (on not more than seven days' notice). Notes acquired by the Fund may
have maturities of more than one year, provided that (1) the Fund is entitled to
payment of principal and accrued interest upon not more than seven days notice,
and (2) the rate of interest on such notes is adjusted automatically at periodic
intervals which normally will not exceed 31 days but may extend up to one year.
The notes will be deemed to have a maturity equal to the longer of the period
remaining to the next interest rate adjustment or the demand notice period.
Because these types of notes are direct lending arrangements between the lender
and borrower, such instruments are not normally traded and there is no secondary
market for these notes, although they are redeemable and thus repayable by the
borrower at face value plus accrued interest at any time. Accordingly, the
Fund's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. In connection with master demand note
arrangements, Keystone considers, under standards established by the Board of
Trustees, earning power, cash flow and other liquidity ratios of the borrower
and will monitor the ability of the borrower to pay principal and interest on
demand. These notes are not typically rated by credit rating agencies. Unless
rated, the Fund may invest in them only if at the time of an investment the
issuer meets the criteria established for commercial paper.

REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements; i.e., the Fund purchases a
security subject to its obligation to resell and the seller's obligation to
repurchase that security at an agreed upon price and date, such date usually
being not more than seven days from the date of purchase. The resale price is
based on the purchase price plus an agreed upon market rate of interest that is
unrelated to the coupon rate or maturity of the purchased security. A repurchase
agreement imposes an obligation on the seller to pay the agreed upon price,
which obligation is in effect secured by the value of the underlying security.
The value of the underlying security is at least equal to the amount of the
agreed upon resale price and marked to market daily. The Fund may enter into
such agreements only with respect to U.S. government securities. Whether a
repurchase agreement is the purchase and sale of a security or a collateralized
loan has not been definitively established. This might become an issue in the
event of the bankruptcy of the other party to the transaction. It does not
presently appear possible to eliminate all risks involved in repurchase
agreements. These risks include the possibility of a decline in the market value
of the underlying securities, as well as delay and costs to the Fund in
connection with bankruptcy proceedings. Therefore, it is the policy of the Fund
to enter into repurchase agreements only with large, well-capitalized banks that
are members of the Federal Reserve System and with primary dealers in U.S.
government securities (as designated by the Federal Reserve Board) whose
creditworthiness has been reviewed and found satisfactory by Keystone.

REVERSE REPURCHASE AGREEMENTS
Under a reverse repurchase agreement, the Fund would sell securities and
agree to repurchase them at a mutually agreed upon date and price. The Fund
intends to enter into reverse repurchase agreements to avoid otherwise having to
sell securities during unfavorable market conditions in order to meet
redemptions. At the time the Fund enters into a reverse repurchase agreement, it
will establish a segregated account with the Fund's custodian containing liquid
assets such as U.S. government securities or other high grade debt securities
having a value not less than the repurchase price (including accrued interest)
and will subsequently monitor the account to ensure such value is maintained.
Reverse repurchase agreements involve the risk that the market value of the
securities that the Fund is obligated to repurchase may decline below the
repurchase price.

FOREIGN SECURITIES
The Fund may invest up to 25% of its assets in securities principally
traded in securities markets outside the United States. While investment in
foreign securities is intended to reduce risk by providing further
diversification, such investments involve sovereign risk in addition to the
credit and market risks normally associated with domestic securities. Foreign
investments may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations. There may be less publicly available
information about a foreign company than about a U.S. company, and foreign
companies may not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions and custodian
fees are generally higher than in the United States. Investments in foreign
securities may also be subject to other risks different from those affecting
U.S. investments, including local political or economic developments,
expropriation or nationalization of assets, imposition of withholding taxes on
dividend or interest payments and currency blockage (which would prevent cash
from being brought back to the United States). These risks are carefully
considered by Keystone prior to the purchase of these securities.

"WHEN ISSUED" SECURITIES
The Fund may also purchase and sell securities and currencies on a when
issued and delayed delivery basis. When issued or delayed delivery transactions
arise when securities or currencies are purchased or sold by the Fund with
payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. When the Fund engages in when issued and delayed
delivery transactions, the Fund relies on the buyer or seller, as the case may
be, to consummate the sale. Failure to do so may result in the Fund missing the
opportunity to obtain a price or yield considered to be advantageous. When
issued and delayed delivery transactions may be expected to occur a month or
more before delivery is due. However, no payment or delivery is made by the Fund
until it receives payment or delivery from the other party to the transaction. A
separate account of liquid assets equal to the value of such purchase
commitments will be maintained until payment is made.

When issued and delayed delivery agreements are subject to risks from
changes in value based upon changes in the level of interest rates, currency
rates and other market factors, both before and after delivery. The Fund does
not accrue any income on such securities or currencies prior to their delivery.
To the extent the Fund engages in when issued and delayed delivery transactions,
it will do so consistent with its investment objective and policies and not for
the purpose of investment leverage.

SHORT SALES
The Fund may make short sales of securities "against the box." A short sale
involves the borrowing of a security, which must eventually be returned to the
lender. A short sale is "against the box" if, at all times when the short
position is open, the Fund owns the securities sold short or owns an equal
amount of securities convertible into, or exchangeable without further
consideration for, securities identical to the securities sold short. Short
sales against the box are used to defer recognition of gains or losses or in
order to receive a portion of the interest earned by the executing broker from
the proceeds of such sale. The proceeds of a short sale are held by the broker
until the settlement date when the Fund delivers the security or convertible
security to close out its short position. Although prior to such delivery the
Fund will have to pay an amount equal to any dividends paid on the securities
sold short, the Fund will receive the dividends from the securities convertible
into the securities sold short plus a portion of the interest earned from the
proceeds of the short sale. The Fund will not make short sales of securities
subject to outstanding call options written by it. The Fund will segregate the
securities sold short or appropriate convertible securities in a special account
with the Fund's custodian in connection with its short sales "against the box."

CONVERTIBLE SECURITIES
The Fund may invest in convertible securities. These securities, which
include bonds, debentures, corporate notes, preferred stocks and other
securities, are securities that the holder can convert into common stock.
Convertible securities rank senior to common stock in a corporation's capital
structure and, therefore, entail less risk than a corporation's common stock.
The value of a convertible security is a function of its investment value (its
market worth without a conversion privilege) and its conversion value (its
market worth if exchanged). If a convertible security's investment value is
greater than its conversion value, its price primarily will reflect its
investment value and will tend to vary inversely with interest rates (the
issuer's creditworthiness and other factors also may affect its value). If a
convertible security's conversion value is greater than its investment value,
its price will tend to be higher than its conversion value and it will tend to
fluctuate directly with the price of the underlying equity security.

DERIVATIVES
The Fund may use derivatives in furtherance of its investment objective.
Derivatives are financial contracts whose value depends on, or is derived from,
the value of an underlying asset, reference rate or index. These assets, rates,
and indices may include bonds, stocks, mortgages, commodities, interest rates,
currency exchange rates, bond indices and stock indices. Derivatives can be used
to earn income or protect against risk, or both. For example, one party with
unwanted risk may agree to pass that risk to another party who is willing to
accept the risk, the second party being motivated, for example, by the desire
either to earn income in the form of a fee or premium from the first party, or
to reduce its own unwanted risk by attempting to pass all or part of that risk
to the first party.

Derivatives can be used by investors such as the Fund to earn income and
enhance returns, to hedge or adjust the risk profile of the portfolio, and
either in place of more traditional direct investments or to obtain exposure to
otherwise inaccessible markets. The Fund is permitted to use derivatives for one
or more of these purposes, although the Fund generally uses derivatives
primarily as direct investments in order to enhance yields and broaden portfolio
diversification. Each of these uses entails greater risk than if derivatives
were used solely for hedging purposes. The Fund uses futures contracts and
related options for hedging purposes. Derivatives are a valuable tool which,
when used properly, can provide significant benefit to Fund shareholders.
Keystone is not an aggressive user of derivatives with respect to the Fund.
However, the Fund may take positions in those derivatives that are within its
investment policies if, in Keystone's judgement, this represents an effective
response to current or anticipated market conditions. Keystone's use of
derivatives is subject to continuous risk assessment and control from the
standpoint of the Fund's investment objective and policies.

Derivatives may be (1) standardized, exchange-traded contracts or (2)
customized, privately negotiated contracts. Exchange-traded derivatives tend to
be more liquid and subject to less credit risk than those that are privately
negotiated.

There are four principal types of derivative instruments -- options,
futures, forwards and swaps -- from which virtually any type of derivative
transaction can be created. Further information regarding options and futures,
is provided later in this section and is provided in the Fund's statement of
additional information. The Fund does not presently engage in the use of swaps.

While the judicious use of derivatives by experienced investment managers
such as Keystone can be beneficial, derivatives also involve risks different
from, and, in certain cases, greater than, the risks presented by more
traditional investments. Following is a general discussion of important risk
factors and issues concerning the use of derivatives that investors should
understand before investing in the Fund.

* Market Risk -- This is the general risk attendant to all investments that
the value of a particular investment will decline or otherwise change in a
way detrimental to the Fund's interest.

* Management Risk -- Derivative products are highly specialized instruments
that require investment techniques and risk analyses different from those
associated with stocks and bonds. The use of a derivative requires an
understanding not only of the underlying instrument, but also of the
derivative itself, without the benefit of observing the performance of the
derivative under all possible market conditions. In particular, the use and
complexity of derivatives require the maintenance of adequate controls to
monitor the transactions entered into, the ability to assess the risk that a
derivative adds to the Fund's portfolio and the ability to forecast price,
interest rate or currency exchange rate movements correctly.

* Credit Risk -- This is the risk that a loss may be sustained by the Fund as
a result of the failure of another party to a derivative (usually referred
to as a "counterparty") to comply with the terms of the derivative contract.
The credit risk for exchange traded derivatives is generally less than for
privately negotiated derivatives, since the clearing house, which is the
issuer or counterparty to each exchange-traded derivative, provides a
guarantee of performance. This guarantee is supported by a daily payment
system (i.e., margin requirements) operated by the clearing house in order
to reduce overall credit risk. For privately negotiated derivatives, there
is no similar clearing agency guarantee. Therefore, the Fund considers the
creditworthiness of each counterparty to a privately negotiated derivative
in evaluating potential credit risk.

* Liquidity Risk -- Liquidity risk exists when a particular instrument is
difficult to purchase or sell. If a derivative transaction is particularly
large or if the relevant market is illiquid (as is the case with many
privately negotiated derivatives), it may not be possible to initiate a
transaction or liquidate a position at an advantageous price.

OPTIONS TRANSACTIONS
WRITING COVERED OPTIONS. The Fund may write (i.e., sell) covered call and
put options. No more than 25% of its net assets will be subject to covered
options. By writing a call option, the Fund becomes obligated during the term
of the option to deliver the securities underlying the option upon payment of
the exercise price. By writing a put option, the Fund becomes obligated
during the term of the option to purchase the securities underlying the option
at the exercise price if the option is exercised.

The Fund may only write "covered" options. This means that so long as the
Fund is obligated as the writer of a call option, it will own the underlying
securities subject to the option or, in the case of call options on U.S.
Treasury bills, the Fund might own substantially similar U.S. Treasury bills. If
the Fund has written options against all of its securities eligible for writing
options, the Fund may be unable to write additional options unless it sells a
portion of its portfolio holdings to obtain new securities against which it can
write options. If this were to occur, higher portfolio turnover and,
correspondingly, greater brokerage commissions and other transaction costs may
result. The Fund does not expect, however, that this will occur.

The Fund will be considered "covered" with respect to a put option it
writes if, so long as it is obligated as the writer of the put option, it
deposits and maintains liquid assets having a value equal to or greater than the
exercise price of the option with its custodian in a segregated account.

The principal reason for writing call or put options is to obtain, through
a receipt of premiums, a greater current return than would be realized on the
underlying securities alone. The Fund receives a premium from writing a call or
put option, which it retains whether or not the option is exercised. By writing
a call option, the Fund might lose the potential for gain on the underlying
security while the option is open. By writing a put option, the Fund might
become obligated to purchase the underlying security for more than its current
market price upon exercise.

PURCHASING OPTIONS. The Fund may purchase call and put options.

The Fund would normally purchase call options to hedge against an increase
in the market value of its securities. The Fund will not engage in such
transactions for speculation. The purchase of a call option would entitle the
Fund, in return for the premium paid, to purchase specified securities at a
specified price upon exercise of the option during the option period. The Fund
would ordinarily realize a gain if, during the option period, the value of such
securities exceeds the sum of the exercise price, the premium paid and
transaction costs. Otherwise, the Fund would realize a loss on the purchase of
the call option.

The Fund may purchase put or call options, including purchasing put or call
options for the purpose of offsetting previously written put or call options of
the same series. If the Fund is unable to effect a closing purchase transaction
with respect to covered options it has written, the Fund will not be able to
sell the underlying securities until the options expire or are exercised.

The Fund would normally purchase put options to hedge against a decline in
the market value of securities in its portfolio (protective puts) or securities
of the type in which it is permitted to invest. The purchase of a put option
would entitle the Fund, in exchange for the premium paid, to sell specified
securities at a specified price during the option period. The purchase of
protective puts is designed to offset or hedge against a decline in the market
value of the Fund's securities. Gains and losses on the purchase of protective
put options would tend to be offset by countervailing changes in the value of
underlying portfolio securities. Put options may also be purchased by the Fund
for the purpose of affirmatively benefitting from a decline in the price of
securities that the Fund does not own. The Fund would ordinarily realize a gain
if, during the option period, the value of the underlying securities declined
below the exercise price sufficiently to cover the premium and transaction
costs. Otherwise, the Fund would realize a loss on the purchase of the put
option.

The Fund may purchase put and call options on securities indices for the
same purposes as the purchase of options on securities. Options on securities
indices are similar to options on securities, except that the exercise of
securities index options requires cash payments and does not involve the actual
purchase or sale of securities. In addition, securities index options are
designed to reflect price fluctuations in a group of securities or segment of
the securities market rather than price fluctuations in a single security.

Options on some securities are relatively new, and it is impossible to
predict the amount of trading interest that will exist in such options. There
can be no assurance that viable markets will develop or continue. The failure of
such markets to develop or continue could significantly impair the Fund's
ability to use such options to achieve its investment objective.

OPTIONS TRADING MARKETS. Options which the Fund will trade are generally
listed on national securities exchanges. Exchanges on which such options
currently are traded are the Chicago Board Options Exchange and the New York,
American, Pacific and Philadelphia Stock Exchanges.

FUTURES TRANSACTIONS
The Fund may enter into futures contracts for the purchase or sale of
securities or currency or futures contracts based on stock indices and write
options on such contracts. The Fund intends to enter into such contracts and
related options for hedging purposes. The Fund may enter into other types of
futures contracts that may become available and relate to the securities held by
the Fund. The Fund will enter into futures contracts in order to hedge against
changes in securities prices. A futures contract is an agreement to buy or sell
securities or currencies at a specified price during a designated month. The
Fund does not make payment or deliver securities upon entering into a futures
contract. Instead, it puts down a margin deposit, which is adjusted to reflect
changes in the value of the contract and continues until the contract is
terminated.

The Fund may sell or purchase futures contracts. When a futures contract is
sold by the Fund, the value of the contract will tend to rise when the value of
the underlying securities or currencies declines and to fall when the value of
such securities or currencies increases. Thus, the Fund would sell futures
contracts in order to offset a possible decline in the value of its securities
or currencies. If a futures contract were purchased by the Fund, the value of
the contract would tend to rise when the value of the underlying securities
increased and to fall when the value of such securities declined. The Fund
intends to purchase futures contracts in order to fix what is believed by
Keystone to be a favorable price and rate of return for securities or favorable
exchange rate for currencies the Fund intends to purchase.

The Fund may also purchase put and call options on securities and currency
futures contracts for hedging purposes. A put option purchased by the Fund would
give it the right to assume a position as the seller of a futures contract. A
call option purchased by the Fund would give it the right to assume a position
as the purchaser of a futures contract. The purchase of an option on a futures
contract requires the Fund to pay a premium. In exchange for the premium, the
Fund becomes entitled to exercise the benefits, if any, provided by the futures
contract, but is not required to take any action under the contract. If the
option cannot be exercised profitably before it expires, the Fund's loss will be
limited to the amount of the premium and any transaction costs.

The Fund may write (sell) put and call options on futures contracts for
hedging purposes. The writing of a put option on a futures contract generates a
premium, which may partially offset an increase in the price of securities that
the Fund intends to purchase. However, the Fund becomes obligated to purchase a
futures contract, which may have a value lower than the exercise price.
Conversely, the writing of a call option on a futures contract generates a
premium which may partially offset a decline in the value of the Fund's assets.
By writing a call option, the Fund becomes obligated, in exchange for the
premium, to sell a futures contract, which may have a value higher than the
exercise price.

The Fund may enter into closing purchase and sale transactions in order to
terminate a futures contract and may sell put and call options for the purpose
of closing out its options positions. The Fund's ability to enter into closing
transactions depends on the development and maintenance of a liquid secondary
market. There is no assurance that a liquid secondary market will exist for any
particular contract or at any particular time. As a result, there can be no
assurance that the Fund will be able to enter into an offsetting transaction
with respect to a particular contract at a particular time. If the Fund is not
able to enter into an offsetting transaction, the Fund will continue to be
required to maintain the margin deposits on the contract and to complete the
contract according to its terms, in which case it would continue to bear market
risk on the transaction.

Although futures and options transactions are intended to enable the Fund
to manage market risk, unanticipated changes in market prices could result in
poorer performance than if it had not entered into these transactions. Even if
Keystone correctly predicts market price movements, a hedge could be
unsuccessful if changes in the value of the Fund's futures position did not
correspond to changes in the value of its investments. This lack of correlation
between the Fund's futures and securities positions may be caused by differences
between the futures and securities markets or by differences between the
securities underlying the Fund's futures position and the securities held by or
to be purchased for the Fund. Keystone will attempt to minimize these risks
through careful selection and monitoring of the Fund's futures and options
positions.

The Fund does not intend to use futures transactions for speculation. The
Fund may not purchase or sell futures contracts or options on futures, except
for closing purchase or sale transactions, if immediately thereafter the sum of
margin deposits on the Fund's outstanding futures and options positions and
premiums paid for outstanding options on futures would exceed 5% of the market
value of the Fund's total assets. These transactions involve brokerage costs,
require margin deposits and, in the case of contracts and options obligating the
Fund to purchase securities, require the Fund to segregate assets to cover such
contracts and options. In addition, the Fund's activities in futures contracts
may be limited by the requirements of the Internal Revenue Code for
qualification as a regulated investment company.

FOREIGN CURRENCY TRANSACTIONS
As discussed above, the Fund may invest in securities of foreign issuers.
When the Fund invests in foreign securities they usually will be denominated in
foreign currencies, and the Fund temporarily may hold funds in foreign
currencies. Thus, the value of Fund shares will be affected by changes in
exchange rates.

As one way of managing exchange rate risk, in addition to entering into
currency futures contracts, the Fund may enter into forward currency exchange
contracts (agreements to purchase or sell currencies at a specified price and
date). The exchange rate for the transaction (the amount of currency the Fund
will deliver or receive when the contract is completed) is fixed when the Fund
enters into the contract. The Fund usually will enter into these contracts to
stabilize the U.S. dollar value of a security it has agreed to buy or sell. The
Fund intends to use these contracts to hedge the U.S. dollar value of a security
it already owns, particularly if the Fund expects a decrease in the value of the
currency in which the foreign security is denominated. Although the Fund will
attempt to benefit from using forward contracts, the success of its hedging
strategy will depend on Keystone's ability to predict accurately the future
exchange rates between foreign currencies and the U.S. dollar. The value of the
Fund's investments denominated in foreign currencies will depend on the relative
strength of those currencies and the U.S. dollar, and the Fund may be affected
favorably or unfavorably by changes in the exchange rates or exchange control
regulations between foreign currencies and the U.S. dollar. Changes in foreign
currency exchange rates also may affect the value of dividends and interest
earned, gains and losses realized on the sale of securities and net investment
income and gains, if any, to be distributed to shareholders by the Fund. The
Fund may also purchase and sell options related to foreign currencies in
connection with hedging strategies.

ZERO COUPON BONDS
A zero coupon (interest) "stripped" bond represents ownership in serially
maturing interest or principal payments on specific underlying notes and bonds,
including coupons relating to such notes and bonds. The interest and principal
payments are direct obligations of the issuer. These bonds mature on the payment
dates of the interest on principal which they represent. Each zero coupon bond
entitles the holder to receive a single payment at maturity. There are no
periodic interest payments on a zero coupon bond. Zero coupon bonds are offered
at discounts from their face amounts.

In general, owners of zero coupon bonds have substantially all the rights
and privileges of owners of the underlying coupon obligations or principal
obligations. Owners of zero coupon bonds have the right upon default on the
underlying coupon obligations or principal obligations to proceed directly and
individually against the issuer and are not required to act in concert with
other holders of zero coupon bonds.

For federal income tax purposes, a purchaser of principal zero coupon bonds
or coupon zero coupon bond (either initially or in the secondary market) is
treated as if the buyer had purchased a corporate obligation issued on the
purchase date with an original issue discount equal to the excess of the amount
payable at maturity over the purchase price. The purchaser is required to take
into income each year as ordinary income an allocable portion of such discounts
determined on a "constant yield" method. Any such income increases the holder's
tax basis for the zero coupon bond, and any gain or loss on a sale of the zero
coupon bonds relative to the holder's basis, as so adjusted, is a capital gain
or loss. If the holder owns coupon bonds and coupon zero bonds representing
separate interests in the coupon (interest) payments and the principal payments
from the same underlying issue of securities, a special basis allocation rule
(requiring the aggregate basis to be allocated among the items sold and retained
based on their relative fair market value at the time of sale) may apply to
determine the gain or loss on a sale of any such zero coupon bonds.

If and when the Fund invests in zero coupon bonds, the Fund does not expect
to have enough zero coupon bonds to have a material effect on dividends. The
Fund has undertaken to a state securities authority to disclose that zero coupon
securities pay no interest to holders prior to maturity, and the interest on
these securities is reported as income to the Fund and distributed to its
shareholders. These distributions must be made from the Fund's cash assets or,
if necessary, from the proceeds of sales of portfolio securities. The Fund will
not be able to purchase additional income producing securities with cash used to
make such distributions and its current income ultimately may be reduced as a
result.

LOANS OF SECURITIES
The Fund may lend its securities to brokers and dealers or other
institutional borrowers for use in connection with their short sales, arbitrages
or other securities transactions. Such loan transactions afford the Fund an
opportunity to continue to earn income on the securities loaned and at the same
time to earn income on the collateral held by it to secure the loan. Loans of
portfolio securities will be made (if at all) in strict conformity with
applicable federal and state rules and regulations. There may be delays in
recovery of loaned securities or even a loss of rights in collateral should the
borrower fail financially. Therefore, loans will be made only to firms deemed by
Keystone to be of good standing and will not be made unless, in the judgment of
Keystone, the consideration to be earned from such loans justifies the risk.

The Fund understands that it is the current view of the staff of the
Securities and Exchange Commission that it is permitted to engage in loan
transactions only if it meets the following conditions: (1) the Fund must
receive 100% collateral in the form of cash or cash equivalents, e.g., U.S.
Treasury bills or notes, from the borrower; (2) the borrower must increase the
collateral whenever the market value of the securities (determined on a daily
basis) exceeds the value of the collateral; (3) the Fund must be able to
terminate the loan, after notice, at any time; (4) the Fund must receive
reasonable interest on the loan or a flat fee from the borrower, as well as
amounts equivalent to any dividends, interest or other distributions on the
securities loaned and any increase in the securities' market values; (5) the
Fund may pay only reasonable custodian fees in connection with the loan; and (6)
voting rights on the securities loaned may pass to the borrower; however, if a
material event affecting the securities occurs, the Fund must be able to
terminate the loan and vote proxies or enter into an alternative arrangement
with the borrower to enable the Fund to vote proxies. Excluding Items (1) and
(2), these procedures may be amended from time to time, as regulatory policies
may permit, by the Fund's Board of Trustees without shareholder approval. Such
loans may not exceed 25% of the Fund's total assets.
<PAGE>
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KEYSTONE AMERICA
FUND FAMILY

()

Balanced Fund II
Capital Preservation and Income Fund
Government Securities Fund
Intermediate Term Bond Fund
Strategic Income Fund
World Bond Fund
Tax Free Income Fund
California Tax Free Fund
Florida Tax Free Fund
Massachusetts Tax Free Fund
Missouri Tax Free Fund
New York Tax Free Fund
Pennsylvania Tax Free Fund
Fund for Total Return
Global Opportunities Fund
Hartwell Emerging Growth Fund, Inc.
Omega Fund
Fund of the Americas
Global Resources and Development Fund
Small Company Growth Fund II
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Evergreen Keystone
[logo] FUNDS [logo]
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Evergreen Keystone Distributor, Inc.
230 Park Avenue
New York, New York 10169

10M [recycle logo]
530236

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KEYSTONE

[graphic omitted]

OMEGA
FUND

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Evergreen Keystone
[logo] FUNDS [logo]
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PROSPECTUS AND
APPLICATION
Class Y Shares