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008 C000001 801-8327
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008 D030001 02116
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010 C010001 BOSTON
010 C020001 MA
010 C030001 02072
011 A000001 KEYSTONE INVESTMENT DISTRIBUTORS COMPANY
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<PAGE> PAGE 2
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020 A000001 NATIONAL FINANCIAL SERVICES CO
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020 A000002 WOOD GUNDY CORP
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020 A000003 NEWBRIDGE SECURITIES, INC
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022 A000003 PRUDENTIAL SECUKRITIES
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022 C000004 63415
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<PAGE> PAGE 3
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SIGNATURE KEVIN MORRISSEY
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> KEYSTONE STATEGIC INCOME FUND CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 280,141,383
<INVESTMENTS-AT-VALUE> 277,027,585
<RECEIVABLES> 46,002,030
<ASSETS-OTHER> 224,650
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 323,254,265
<PAYABLE-FOR-SECURITIES> (750,000)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (41,222,125)
<TOTAL-LIABILITIES> (41,972,125)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 126,931,646
<SHARES-COMMON-STOCK> 12,482,994
<SHARES-COMMON-PRIOR> 14,309,230
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (646,352)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (39,719,660)
<ACCUM-APPREC-OR-DEPREC> (595,766)
<NET-ASSETS> 85,969,868
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,746,370
<OTHER-INCOME> 44,042
<EXPENSES-NET> (1,225,464)
<NET-INVESTMENT-INCOME> 8,564,948
<REALIZED-GAINS-CURRENT> (11,941,931)
<APPREC-INCREASE-CURRENT> 5,418,200
<NET-CHANGE-FROM-OPS> 2,041,217
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,400,945)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (199,090)
<NUMBER-OF-SHARES-SOLD> 1,476,748
<NUMBER-OF-SHARES-REDEEMED> (3,933,229)
<SHARES-REINVESTED> 630,245
<NET-CHANGE-IN-ASSETS> (19,211,609)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (598,736)
<OVERDIST-NET-GAINS-PRIOR> (27,976,811)
<GROSS-ADVISORY-FEES> (611,983)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,225,464)
<AVERAGE-NET-ASSETS> 92,304,894
<PER-SHARE-NAV-BEGIN> 7.35
<PER-SHARE-NII> 0.64
<PER-SHARE-GAIN-APPREC> (0.45)
<PER-SHARE-DIVIDEND> (0.63)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> KEYSTONE STATEGIC INCOME FUND CLASS B
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 280,141,383
<INVESTMENTS-AT-VALUE> 277,027,585
<RECEIVABLES> 46,002,030
<ASSETS-OTHER> 224,650
<OTHER-ITEMS-ASSETS> 0
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<PAYABLE-FOR-SECURITIES> (750,000)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (41,222,125)
<TOTAL-LIABILITIES> (41,972,125)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,715,133
<SHARES-COMMON-STOCK> 21,533,256
<SHARES-COMMON-PRIOR> 22,068,513
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (231,627)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (20,407,520)
<ACCUM-APPREC-OR-DEPREC> (1,985,037)
<NET-ASSETS> 149,090,949
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,029,131
<OTHER-INCOME> 72,617
<EXPENSES-NET> (3,130,740)
<NET-INVESTMENT-INCOME> 12,971,008
<REALIZED-GAINS-CURRENT> (19,579,026)
<APPREC-INCREASE-CURRENT> 8,980,082
<NET-CHANGE-FROM-OPS> 2,372,064
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,577,403)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (298,065)
<NUMBER-OF-SHARES-SOLD> 4,868,980
<NUMBER-OF-SHARES-REDEEMED> (6,393,919)
<SHARES-REINVESTED> 989,682
<NET-CHANGE-IN-ASSETS> (13,774,439)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (306,613)
<OVERDIST-NET-GAINS-PRIOR> (1,156,055)
<GROSS-ADVISORY-FEES> (1,006,609)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (3,130,740)
<AVERAGE-NET-ASSETS> 151,749,575
<PER-SHARE-NAV-BEGIN> 7.38
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> (0.47)
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> (0.01)
<PER-SHARE-NAV-END> 6.92
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> KEYSTONE STATEGIC INCOME FUND CLASS C
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 280,141,383
<INVESTMENTS-AT-VALUE> 277,027,585
<RECEIVABLES> 46,002,030
<ASSETS-OTHER> 224,650
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 323,254,265
<PAYABLE-FOR-SECURITIES> (750,000)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (41,222,125)
<TOTAL-LIABILITIES> (41,972,125)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,169,796
<SHARES-COMMON-STOCK> 6,683,142
<SHARES-COMMON-PRIOR> 8,032,568
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (145,324)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (6,785,455)
<ACCUM-APPREC-OR-DEPREC> (1,017,694)
<NET-ASSETS> 46,221,323
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,349,848
<OTHER-INCOME> 23,884
<EXPENSES-NET> (1,053,438)
<NET-INVESTMENT-INCOME> 4,320,294
<REALIZED-GAINS-CURRENT> (6,501,039)
<APPREC-INCREASE-CURRENT> 2,805,410
<NET-CHANGE-FROM-OPS> 624,665
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,175,244)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (98,947)
<NUMBER-OF-SHARES-SOLD> 1,847,558
<NUMBER-OF-SHARES-REDEEMED> (3,594,976)
<SHARES-REINVESTED> 397,992
<NET-CHANGE-IN-ASSETS> (13,006,610)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (184,578)
<OVERDIST-NET-GAINS-PRIOR> (394,264)
<GROSS-ADVISORY-FEES> (335,820)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,053,438)
<AVERAGE-NET-ASSETS> 50,671,137
<PER-SHARE-NAV-BEGIN> 7.37
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> (0.45)
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> (0.01)
<PER-SHARE-NAV-END> 6.92
<EXPENSE-RATIO> 2.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
The Trustees and Shareholders
Keystone Strategic Income Fund
(Formerly Keystone America Strategic Income Fund)
In planning and performing our audit of the financial statements of Keystone
Strategic Income Fund for the year ended July 31, 1995 we considered
its internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of Keystone Strategic Income Fund is responsible for
establishing and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
July 31, 1995.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
KPMG Peat Marwick LLP
September 1, 1995
