[1 pg. cover]
[front]
KEYSTONE
[photo of woman and baby on porch]
GOVERNMENT
SECURITIES FUND
[keystone logo]
SEMIANNUAL REPORT
JANUARY 31, 1996
[back]
[boxed copy]
KEYSTONE AMERICA
FAMILY OF FUNDS
[diamond]
Capital Preservation and Income Fund
Government Securities Fund
Intermediate Term Bond Fund
Strategic Income Fund
World Bond Fund
Tax Free Income Fund
California Insured Tax Free Fund
Florida Tax Free Fund
Massachusetts Tax Free Fund
Missouri Tax Free Fund
New York Insured 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
Strategic Development Fund
This report was prepared primarily for the information of the Fund's
shareholders. It is authorized for distribution if preceded or accompanied by
the Fund's current prospectus. The prospectus contains important information
about the Fund including fees and expenses. Read it carefully before you invest
or send money. For a free prospectus on other Keystone funds, contact your
financial adviser or call Keystone.
[logo] KEYSTONE
INVESTMENTS
P.O. Box 2121
Boston, Massachusetts 02106-2121
GSF-SAR-3/96
5M [recycled symbol]
<PAGE>
PAGE 1
Keystone Government Securities Fund
Seeks generous income primarily from U.S. government and agency obligations.
Dear Shareholder:
We would like to take this opportunity to report on your Fund's performance
and review market events for the six-month period which ended January 31,
l996.
Performance
Class A shares returned 7.08% for the six-month and 15.29% for the
twelve-month periods.
Class B shares returned 6.69% for the six-month and 14.56% for the
twelve-month periods.
Class C shares returned 6.68% for the six-month and 14.55% for the
twelve-month periods.
During the six- and twelve-month periods, your Fund provided strong total
returns, which includes income and price changes. The Lehman Intermediate
Government Bond Index returned 5.20% for the six-month and 13.40% for the
twelve-month periods.
Investors enjoyed a healthy bond market during the six month period. Slower
economic growth and well contained inflation set the stage for the Federal
Reserve Board to lower short-term interest rates during the period. The
ongoing effort to reduce the federal budget deficit also supported market
strength. The main source of concern to investors was the federal budget
deadlock, but that has been overshadowed by the positive theme of deficit
reduction. Despite some interim volatility, interest rates declined and U.S.
government securities posted attractive returns.
Your Fund generated positive results by implementing two strategies. First,
we modestly lengthened average maturity from nine years to ten and a half
years. This enabled your Fund to take advantage of the higher yields
available in bonds with longer maturities, and capture greater price
increases. Second, we increased your Fund's position in U.S. Treasuries and
reduced holdings in mortgage-backed securities. This change added value to
the portfolio as U.S Treasuries outperformed mortgage-backed securities over
the past few months.
The outlook for government bonds appears to be favorable in the first half
of 1996. We expect to see slow but sustainable economic growth, with subdued
inflation. Also, a continued focus on reducing the federal budget deficit
should be a positive force for bonds. We believe Keystone Government
Securities Fund is well-positioned to capitalize on this interest rate
environment.
After the close of the fiscal period, your Fund's dividend was reduced,
reflecting lower market rates. While bond investors have benefited from very
good total returns (income + price changes), it has been a difficult period
for those who are income-oriented. We have structured the portfolio to
maximize current income by investing in securities whose anticipated
performance is consistent with your Fund's investment objective. We believe
the strategies recently put in place should help to lock-in yields and build
generous returns.
<PAGE>
PAGE 2
Keystone Government Securities fund
Thank you for your continued support of Keystone Government Securities
Fund. If you have questions or comments about your Keystone investment, we
encourage you to write to us.
Sincerely,
[signature] Albert H. Elfner, III
Albert H. Elfner, III
Chairman and President
Keystone Investments, Inc.
[signature] George S. Bissell
George S. Bissell
Chairman of the Board
Keystone Funds
March 1995
Keystone Introduces Investment Insight Line for Shareholders
Now you can keep up-to-date on your fund's current strategy and outlook by
calling Keystone Investment Insight Line. You can hear senior portfolio
manager Chris Conkey discuss his latest strategy for Keystone's high grade
bond funds. You can also listen to Keystone's overall market outlook from
James McCall, chief investment officer. The service is available 24 hours a
day, seven days a week and updated at least monthly.
Keystone Investment Insight Line 1-800-346-3858, Press 2
Keystone Fixed-Income Update Press 3
<PAGE>
PAGE 3
A Discussion With
Your Fund Manager
Christopher P. Conkey heads Keystone's high grade bond team and is portfolio
manager of your Fund. A Chartered Financial Analyst, Mr. Conkey has 11 years
of experience managing fixed-income investments. He holds a BA in economics
from Clark University and an MBA in finance from Boston University.
Together with senior portfolio manager Barbara McCue and analysts David J.
Bowers and Gary E. Pzegeo, the team evaluates the economic environment in
selecting high quality bonds for your Fund.
[Q] What influenced the bond market the most over the past six months?
[A] The bond market was influenced by the trend of declining interest rates
which continued from the first half of the year. Bond investors focused on
the economy, inflation and the federal budget negotiations. Most of this had
a favorable effect on the market. Economic growth slowed and inflation, as
measured by the Consumer Price Index, came in under 3% for the fifth year in
a row. This gave the Federal Reserve Board reason to lower interest rates
during the period.
[Q] What effect did the budget discussions have on the bond market?
[A] The federal budget negotiations were an important influence on the bond
market. A smaller deficit means the Treasury would need to borrow less,
resulting in potentially higher bond prices. Another way to measure progress
on the deficit is to look at it as a percentage of our country's total
economic output. This percentage has been declining, which should also be
good news for bonds.
Federal budget negotiations put some downward pressure on bond prices in the
short run because the outcome of those talks was unknown--and the market
dislikes uncertainty. However, we think there is a concerted effort to shrink
the deficit. So, we expect to see some price volatility while the budget
talks continue, but the issue of deficit reduction could have a positive
impact on bond prices over the longer term.
[Q] How was the Fund positioned to take advantage of this interest rate
environment?
[A] We implemented two strategies in the Fund. First, we increased holdings
in U.S. Treasuries from 48% to 61% of net assets and reduced the position in
mortgage-backed securities from 47% to 36% of net assets over the six-month
period. U.S. Treasuries outperformed mortgage-backed securities in this
period, since they cannot be redeemed prior to maturity. Oftentimes,
mortgages with high coupons will be refinanced, or "pre-paid" prior to
maturity and that can hurt a fund's performance. The Fund was well-protected
from this "prepayment risk," which added to its total return.
The change in strategy served two purposes. In addition to providing
insulation from prepayment risk, it lengthened the average maturity modestly
from nine years to ten and a half years. This enabled the Fund to benefit
from the higher yields available in longer maturities. Those securities also
experienced greater price improvement than bonds with shorter maturities.
[Q] How did declining interest rates affect the Fund's yield?
[A] After the close of the fiscal period, your Fund's dividend was reduced,
reflecting lower market interest rates. As you are aware, interest rates
change over time and this can affect a Fund's dividend payout. While bond
investors received good total returns, it has been a difficult market for
investors who are income-oriented. We will continue to seek attractive
current income by investing in securities whose anticipated performance is
consistent with your Fund's investment objective. We believe the strategies
recently put in
Fund Profile
Objective: Seeks generous income primarily from U.S. government
and agency obligations.
Commencement of investment operations: April 14, l987
Average maturity: 10.5 years
Net assets: $59 million
<PAGE>
PAGE 4
Keystone Government Securities Fund
place should help to preserve income and provide the potential for price
appreciation.
[Q] What is your outlook for government bonds over the next six months?
[A] We see a continuation of some of the positive trends that have driven the
market thus far. Most importantly, the economy appears on track to grow at a
slow-to-moderate pace. There is some talk among investors of a recession, but
we don't think it is likely. We do expect to see slow, non-inflationary
growth. We believe that 'real' interest rates--the rate one receives after
subtracting inflation--have been high by historical standards. In 1996, we
are looking for ongoing progress on reducing the federal budget deficit.
[Q] For what kind of investor is the Fund an attractive investment?
[A] Keystone Government Securities Fund is a good fit for the investor who
wants liquidity and income generated by the highest quality fixed income
securities. The Fund invests in obligations carrying the full faith and
credit of the U.S. government and in U.S. government agency securities. These
securities are among the highest quality. In a period of slow economic
growth, credit quality can be very important.
[diamond]
This column is intended to answer
questions about your Fund.
If you have a question you would like answered, please write to:
Keystone Investment Distributors, Inc.,
Attn: Shareholder Communications, 22nd Floor,
200 Berkeley Street, Boston, Massachusetts 02116-5034.
Securities in Which Your Fund Invests
U.S. Treasury notes, bills, or bonds--debt obligations issued by the U.S.
government. Interest and principal payments are guaranteed by the full faith
and credit of the federal government. Income from Treasuries is exempt from
state and local, but not federal taxes. Considered the safest, and highest
credit quality among all fixed-income investments.
Mortgage-backed securities--mortgage pools that provide financing for
homeowners. Credit quality better than high quality corporate bonds; more
attractive yields than U.S. Treasury securities. Several government chartered
agencies package and sell these securities to investors:
* Government National Mortgage Association (Ginnie Mae) and Federal Housing
Administration (FHA)--principal and interest payments guaranteed by the
U.S. government.
* Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National
Mortgage Association (Fannie Mae)--agencies backed by the U.S. government.
Repurchase agreements (repos)--an agreement between a seller and a buyer
whereby the seller agrees to repurchase securities at an agreed upon price
and, usually, at a stated time. Considered a low risk investment because it
often is collateralized by U.S. government securities, repos are very liquid
and have a short maturity--from 1 to 180 days.
<PAGE>
PAGE 5
Your Fund's Performance
****************************[mountain chart]***********************************
Growth of an investment in
Keystone Government Securities Fund
Class A
In Thousands
Initial Reinvested
Investment Distribution
4/87 9658 9658
1/88 9734 10218
9296 10537
1/90 9468 11600
9734 12872
1/92 10096 14352
9887 15981
1/94 9687 17302
8801 16821
1/96 9477 19394
Total Value: $19,394
A $10,000 investment in Keystone Government Securities Fund Class A made on
April 14, 1987 with all distributions reinvested was worth $19,394 on January
31, 1996. Past performance is no guarantee of future results.
*******************************************************************************
Six-Month Performance as of January 31, 1996
Class A Class B Class C
Total returns* 7.08% 6.69% 6.68%
Net asset value 7/31/95 $ 9.61 $ 9.61 $ 9.62
1/31/96 $ 9.95 $ 9.95 $ 9.96
Dividends $ 0.33 $ 0.29 $ 0.29
Capital gains None None None
* Before deduction of front-end or contingent deferred sales charge.
Historical Record as of January 31, 1996
Cumulative total returns Class A Class B Class C
1-year w/o sales charge 15.29% 14.56% 14.55%
1-year 9.81% 10.56% 14.55%
5-year 43.51% -- --
Life of Class 93.94% 15.78% 18.79%
Average Annual Returns
1-year w/o sales charge 15.29% 14.56% 14.55%
1-year 9.81% 10.56% 14.55%
5-year 7.49% -- --
Life of Class 7.82% 5.01% 5.91%
Class A shares were introduced April 14, 1987. Performance is reported at the
current maximum front-end sales charge of 4.75%.
Class B shares were introduced on February 1, 1993. Shares purchased after
June 1, 1995 are subject to a contingent deferred sales charge (CDSC) that
declines from 5% to 1% over six years from the month purchased. Performance
assumes that shares were redeemed after the end of a one-year holding period
and reflects the deduction of a 4% CDSC.
Class C share performance is reported from the commencement of investment
operations on February 1, 1993. Performance reflects the return you would
have received after holding shares for one year and redeeming at the end of
the period.
The investment return and principal value will fluctuate so that your
shares, when redeemed, may be worth more or less than the original cost.
Performance for each class will differ.
You may exchange your shares to another Keystone fund for a $10 fee by
contacting Keystone directly. The exchange fee is waived for individual
investors who make an exchange using Keystone's Automated Response Line
(KARL). The Fund reserves the right to change or terminate the exchange
offer.
<PAGE>
PAGE 6
Keystone Government Securities Fund
Glossary of
Mutual Fund Terms
MUTUAL FUND--A company which combines the investment money of many people
whose financial goals are similar, and invests that money in a variety of
securities. A mutual fund allows the smaller investor the benefits of
diversification, professional management and constant supervision usually
available only to large investors.
PORTFOLIO MANAGER--An investment professional who is responsible for
managing a portfolio's assets prudently and making appropriate investment
decisions, such as which securities to buy, hold and sell, based on the
investment objectives of the portfolio.
STOCK--Equity or ownership interest in a corporation, which represents a
claim on the corporation's assets and earnings.
BOND--Security issued by a government or corporation to those from whom it
has borrowed money. A bond usually promises to pay interest income to the
bondholder at regular intervals and to repay the entire amount borrowed at
maturity date.
CONVERTIBLE SECURITY--A corporate security (usually preferred stock or
bonds) that is exchangeable for a set number of another security type
(usually common stocks) at a pre-stated price.
MONEY MARKET FUND--A mutual fund whose assets are invested in a diversified
portfolio of short-term securities, including commercial paper, bankers'
acceptances, certificates of deposit and other short-term instruments. The
fund pays income which can fluctuate daily. Liquidity and safety of principal
are primary objectives.
NET ASSET VALUE (NAV) PER SHARE--The value of one share of a mutual fund.
The NAV per share is determined by subtracting a fund's total liabilities
from its total assets, and dividing that amount by the number of fund shares
outstanding.
DIVIDEND--A per share distribution of the income earned from the fund's
portfolio holdings. When a dividend distribution is made, the fund's net
asset value drops by the amount of the distribution because the distribution
is no longer considered part of the fund's assets.
CAPITAL GAIN--The profit from the sale of securities, less any losses.
Capital gains are paid to fund shareholders on a per share basis. When a
capital gain distribution is made, the fund's net asset value drops by the
amount of the distribution because the distribution is no longer considered
part of the fund's assets.
YIELD--The annualized rate of income as measured against the current net
asset value of fund shares.
TOTAL RETURN--The change in value of a fund investment over a specified
period of time, taking into account the change in a fund's market price and
the reinvestment of all fund distributions.
SHORT-TERM--An investment with a maturity of one year or less.
LONG-TERM--An investment with a maturity of greater than one year.
AVERAGE MATURITY--The average number of days until the notes, drafts,
acceptances, bonds or other debt instruments in a portfolio become due and
payable.
OFFERING PRICE--The offering price of a share of a mutual fund is the price
at which the share is sold to the public.
<PAGE>
PAGE 7
SCHEDULE OF INVESTMENTS--January 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Coupon Maturity Par Market
Rate Date Value Value
- ---------------------------------------------------------------- ------ ------ ---------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT ISSUES (61.4%)
U.S. Treasury Bonds 7.875% 2021 $12,420,000 $15,193,138
U.S. Treasury Notes 8.875 1998 2,000,000 2,195,320
U.S. Treasury Notes 7.750 1999 7,000,000 7,628,880
U.S. Treasury Notes 6.750 2000 7,100,000 7,507,114
U.S. Treasury Notes 7.750 2001 2,500,000 2,772,275
U.S. Treasury Notes 7.500 2002 1,000,000 1,112,970
- ---------------------------------------------------------------- ---- ---- -------- ----------
TOTAL U.S. GOVERNMENT ISSUES (COST--$35,467,286) 36,409,697
- ---------------------------------------------------------------- ---- ---- -------- ----------
FHA (10.5%)
FHA Pool #2343143 9.125 2034 3,385,345 3,554,613
FHA Pool #2343143 10.250 2034 2,506,741 2,632,078
- ---------------------------------------------------------------- ---- ---- -------- ----------
TOTAL FHA (COST--$6,236,246) 6,186,691
- ---------------------------------------------------------------- ---- ---- -------- ----------
FNMA (9.4%)
FNMA Pool #002497 11.000 2016 1,498,596 1,683,418
FNMA Pool #326635 6.500 2025 3,889,173 3,847,831
- ---------------------------------------------------------------- ---- ---- -------- ----------
TOTAL FNMA (COST--$5,390,017) 5,531,249
- ---------------------------------------------------------------- ---- ---- -------- ----------
GNMA (8.4%)
GNMA Pool #163934 9.000 2016 17,542 18,836
GNMA Pool #165633 9.000 2016 91,871 98,646
GNMA Pool #192803 9.500 2016 193,627 210,922
GNMA Pool #204238 9.500 2017 305,990 332,795
GNMA Pool #208850 9.500 2017 227,142 247,169
GNMA Pool #212897 9.500 2017 229,669 250,050
GNMA Pool #213635 9.500 2017 107,239 116,695
GNMA Pool #221645 9.500 2017 266,342 290,132
GNMA Pool #224848 9.500 2017 53,457 58,170
GNMA Pool #226032 9.500 2017 242,727 264,128
GNMA Pool #229824 9.500 2017 15,256 16,593
GNMA Pool #223682 9.500 2018 174,559 189,750
GNMA Pool #305224 9.500 2021 59,874 65,119
GNMA Pool #268164 10.250 2029 2,595,141 2,818,557
- ---------------------------------------------------------------- ---- ---- -------- ----------
TOTAL GNMA (COST--$4,692,064) 4,977,562
- ---------------------------------------------------------------- ---- ---- -------- ----------
COLLATERALIZED MORTGAGE OBLIGATIONS (4.2%)
FNMA Series 1995 Class A (Est. Mat. 2001) (b) 7.000 2035 1,000,000 991,875
Resolution Trust Corp. Series 1995 Class 2C (Est. Mat. 2000) (b) 7.500 2028 1,500,000 1,521,562
- ---------------------------------------------------------------- ---- ---- -------- ----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST--$2,462,108) 2,513,437
- ---------------------------------------------------------------- ---- ---- -------- ----------
<PAGE>
PAGE 8
Keystone Government Securities Fund
SCHEDULE OF INVESTMENTS--January 31, 1996
(Unaudited)
Coupon Maturity Par Market
Rate Date Value Value
- ---------------------------------------------------------------- ------ ------ ---------- ------------
FHLMC (3.5%)
FHLMC Pool #430438 10.500% 2009 $ 59,673 $ 64,891
FHLMC Pool #W00056 7.500 2010 1,941,600 2,018,662
- ---------------------------------------------------------------- ---- ---- -------- ----------
TOTAL FHLMC (COST--$2,062,114) 2,083,553
- ---------------------------------------------------------------- ---- ---- -------- ----------
Maturity
Value
- ---------------------------------------------------------------- ---- ---- -------- ----------
REPURCHASE AGREEMENT (1.1%)
Keystone Joint Repurchase Agreement (Investments in repurchase
agreements, in a joint trading account,
purchased 1/31/96) (a) (Cost--$670,000) 5.939 2/1/96 670,111 670,000
- ---------------------------------------------------------------- ---- ---- -------- ----------
TOTAL INVESTMENTS (COST--$56,979,835) 58,372,189
- ---------------------------------------------------------------- ---- ---- -------- ----------
OTHER ASSETS AND LIABILITIES--NET (1.5%) 913,244
- ---------------------------------------------------------------- ---- ---- -------- ----------
NET ASSETS--(100.0%) $59,285,433
- ---------------------------------------------------------------- ---- ---- -------- ----------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at January 31, 1996.
(b) The estimated maturity of a Collateralized Mortgage Obligation ("CMO") is
based on current and projected pre-payment rates. Changes in interest
rates can cause the estimated maturity to differ from the listed dates.
These estimated maturity dates are unaudited.
Legend of Portfolio Abbreviations
FHA--Federal Housing Association
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
See Notes to Financial Statements.
<PAGE>
PAGE 9
FINANCIAL HIGHLIGHTS--CLASS A SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
January 31, Year Ended July 31,
1996 1995 1994(c) 1993 1992 1991
- ---------------------------------------- ------------- ------ ------ ------ ------ -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.61 $ 9.48 $ 10.45 $ 10.58 $ 10.18 $ 10.01
- ---------------------------------------- ----------- ---- ---- ---- ---- -----
Income from investment operations
Net investment income 0.31 0.67 0.57 0.68 0.68 0.76
Net realized and unrealized gain (loss)
on investments 0.36 0.11 (0.63) 0.46 0.55 0.17
- ---------------------------------------- ----------- ---- ---- ---- ---- -----
Total from investment operations 0.67 0.78 (0.06) 1.14 1.23 0.93
- ---------------------------------------- ----------- ---- ---- ---- ---- -----
Less distributions from
Net investment income (0.33) (0.65) (0.57) (0.68) (0.69) (0.76)
In excess of net investment income 0 0 (0.02) (0.06) (0.04) 0
Tax basis return of capital 0 0 (0.06) 0 0 0
Net realized gain on investments 0 0 0 (0.53) (0.10) 0
In excess of net realized gain 0 0 (0.26) 0 0 0
- ---------------------------------------- ----------- ---- ---- ---- ---- -----
Total distributions (0.33) (0.65) (0.91) (1.27) (0.83) (0.76)
- ---------------------------------------- ----------- ---- ---- ---- ---- -----
Net asset value, end of period $ 9.95 $ 9.61 $ 9.48 $ 10.45 $ 10.58 $ 10.18
- ---------------------------------------- ----------- ---- ---- ---- ---- -----
Total return (a) 7.08% 8.64% (0.71%) 11.51% 12.45% 9.62%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.11%(b)(d) 1.00% 1.00% 1.41% 1.93% 1.92%
Total expenses excluding reimbursement 1.37%(d) 1.42% 1.35% 1.73% 1.93% 1.92%
Net investment income 6.24%(d) 7.11% 5.97% 6.49% 6.44% 7.46%
Portfolio turnover rate 80% 182% 230% 189% 93% 72%
Net assets, end of period (thousands) $28,936 $29,776 $38,541 $50,594 $47,892 $55,597
- ---------------------------------------- ----------- ---- ---- ---- ---- -----
</TABLE>
(a) Excluding applicable sales charges.
(b) "Ratio of total expenses to average net assets" for the six months ended
January 31, 1996 includes indirectly paid expenses. Excluding indirectly
paid expenses, the expense ratio would have been 1.10% (annualized) for
the six months ended January 31, 1996.
(c) Calculation based on average shares outstanding.
(d) Annualized.
See Notes to Financial Statements.
<PAGE>
PAGE 10
Keystone Government Securities Fund
FINANCIAL HIGHLIGHTS--CLASS B SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
February 1, 1993
Six Months (Date of Initial
Ended Public Offering)
January 31, Year Ended July 31, to
1996 1995 1994(c) July 31, 1993
- ---------------------------------------- ------------- -------- -------- ----------------
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.61 $ 9.48 $ 10.45 $10.32
- ---------------------------------------- ----------- ------ ------ --------------
Income from investment operations
Net investment income 0.27 0.59 0.50 0.26
Net realized and unrealized gain (loss)
on investments 0.36 0.12 (0.63) 0.22
- ---------------------------------------- ----------- ------ ------ --------------
Total from investment operations 0.63 0.71 (0.13) 0.48
- ---------------------------------------- ----------- ------ ------ --------------
Less distributions from
Net investment income (0.29) (0.58) (0.49) (0.26)
In excess of net investment income 0 0 (0.03) (0.09)
Tax basis return of capital 0 0 (0.06) 0
In excess of net realized gain 0 0 (0.26) 0
- ---------------------------------------- ----------- ------ ------ --------------
Total distributions (0.29) (0.58) (0.84) (0.35)
- ---------------------------------------- ----------- ------ ------ --------------
Net asset value, end of period $ 9.95 $ 9.61 $ 9.48 $10.45
- ---------------------------------------- ----------- ------ ------ --------------
Total return (a) 6.69% 7.81% (1.44%) 4.69%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.87%(b)(d) 1.75% 1.75% 1.72%(d)
Total expenses excluding reimbursement 2.13%(d) 2.09% 2.12% 2.28%(d)
Net investment income 5.47%(d) 6.40% 5.32% 5.46%(d)
Portfolio turnover rate 80% 182% 230% 189%
Net assets, end of period (thousands) $21,014 $18,064 $15,386 $9,223
- ---------------------------------------- ----------- ------ ------ --------------
</TABLE>
(a) Excluding applicable sales charges.
(b) "Ratio of total expenses to average net assets" for the six months ended
January 31, 1996 includes indirectly paid expenses. Excluding indirectly
paid expenses, the expense ratio would have been 1.86% (annualized) for
the six months ended January 31, 1996.
(c) Calculation based on average shares outstanding.
(d) Annualized.
See Notes to Financial Statements.
<PAGE>
PAGE 11
FINANCIAL HIGHLIGHTS--CLASS C SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
February 1, 1993
Six Months (Date of Initial
Ended Public Offering)
January 31, Year Ended July 31, to
1996 1995 1994(c) July 31, 1993
- ---------------------------------------- ------------- -------- -------- ----------------
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.62 $ 9.49 $ 10.46 $ 10.32
- ---------------------------------------- ----------- ------ ------ --------------
Income from investment operations
Net investment income 0.27 0.61 0.50 0.25
Net realized and unrealized gain (loss)
on investments 0.36 0.10 (0.63) 0.24
- ---------------------------------------- ----------- ------ ------ --------------
Total from investment operations 0.63 0.71 (0.13) 0.49
- ---------------------------------------- ----------- ------ ------ --------------
Less distributions from
Net investment income (0.29) (0.58) (0.50) (0.25)
In excess of net investment income 0 0 (0.02) (0.10)
Tax basis return of capital 0 0 (0.06) 0
In excess of net realized gain 0 0 (0.26) 0
- ---------------------------------------- ----------- ------ ------ --------------
Total distributions (0.29) (0.58) (0.84) (0.35)
- ---------------------------------------- ----------- ------ ------ --------------
Net asset value, end of period $ 9.96 $ 9.62 $ 9.49 $ 10.46
- ---------------------------------------- ----------- ------ ------ --------------
Total return (a) 6.68% 7.81% (1.44%) 4.79%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.87%(b)(d) 1.75% 1.75% 1.71%(d)
Total expenses excluding reimbursement 2.14%(d) 2.17% 2.12% 2.17%(d)
Net investment income 5.48%(d) 6.32% 5.32% 5.31%(d)
Portfolio turnover rate 80% 182% 230% 189%
Net assets, end of period (thousands) $9,335 $9,101 $17,505 $13,286
- ---------------------------------------- ----------- ------ ------ --------------
</TABLE>
(a) Excluding applicable sales charges.
(b) "Ratio of total expenses to average net assets" for the six months ended
January 31, 1996 includes indirectly paid expenses. Excluding indirectly
paid expenses, the expense ratio would have been 1.85% (annualized) for
the six months ended January 31, 1996.
(c) Calculation based on average shares outstanding.
(d) Annualized.
See Notes to Financial Statements.
<PAGE>
PAGE 12
Keystone Government Securities Fund
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1996 (Unaudited)
Assets (Notes 1 and 4)
Investments at market value
(identified cost--$56,979,835) $58,372,189
Cash 732
Receivable for:
Investments sold 389
Fund shares sold 111,850
Interest 919,187
Due from investment advisor 27,969
Prepaid expenses and other assets 7,132
- ------------------------------------------------ ----------
Total assets 59,439,448
- ------------------------------------------------ ----------
Liabilities (Notes 2 and 4)
Payable for:
Fund shares redeemed 5,482
Distributions to shareholders 122,446
Commissions payable to Principal Underwriter 1,771
Accrued reimbursable expenses 2,817
Other accrued expenses 21,499
- ------------------------------------------------ ----------
Total liabilities 154,015
- ------------------------------------------------ ----------
Net assets $59,285,433
- ------------------------------------------------ ----------
Net assets represented by (Note 1)
Paid-in capital $61,694,353
Accumulated distributions in excess of net
investment income (162,732)
Accumulated net realized loss on investments (3,638,542)
Net unrealized appreciation on investments 1,392,354
- ------------------------------------------------ ----------
Total net assets $59,285,433
- ------------------------------------------------ ----------
Net asset value per share (Notes 1 and 2)
Class A Shares
Net assets of $28,936,069 / 2,906,837 shares
outstanding $ 9.95
Offering price per share ($9.95 / 0.9525)
(based on a sales charge of 4.75% of the
offering price at January 31, 1996) $ 10.45
Class B Shares
Net assets of $21,014,131 / 2,111,526 shares
outstanding $ 9.95
Class C Shares
Net assets of $9,335,233 / 937,118 shares
outstanding $ 9.96
- ------------------------------------------------ ----------
STATEMENT OF OPERATIONS
Six Months Ended January 31, 1996 (Unaudited)
Investment income (Note 1)
Interest $2,168,327
- ---------------------------------- ------ ---------
Expenses (Notes 2 and 4)
Management fee $ 191,566
Transfer agent fees 60,625
Accounting, auditing and legal
fees 28,322
Custodian fees 25,321
Printing 3,855
Distribution Plan expenses 183,234
Registration fees 22,488
Miscellaneous 3,024
Reimbursement from investment
advisor (77,321)
- ---------------------------------- ------ ---------
Total expenses 441,114
- ---------------------------------- ------ ---------
Less: Expenses paid indirectly
(Note 4) (5,057)
- ---------------------------------- ------ ---------
Net expenses 436,057
- ---------------------------------- ------ ---------
Net investment income 1,732,270
- ---------------------------------- ------ ---------
Net realized and unrealized gain
on investments (Notes 1 and 3)
Net realized gain on investments 915,830
Net change in unrealized
appreciation on investments 1,273,173
- ---------------------------------- ------ ---------
Net realized and unrealized gain
on investments 2,189,003
- ---------------------------------- ------ ---------
Net increase in net assets
resulting from operations $3,921,273
- ---------------------------------- ------ ---------
See Notes to Financial Statements
<PAGE>
PAGE 13
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
January 31, Year Ended
1996 July 31, 1995
======================================================================== ============= ==============
(Unaudited)
<S> <C> <C>
Operations (Notes 1 and 3)
Net investment income $ 1,732,270 $ 4,123,800
Net realized gain (loss) on investments 915,830 (426,554)
Net change in unrealized appreciation on investments 1,273,173 684,236
- ------------------------------------------------------------------------ ----------- ------------
Net increase in net assets resulting from operations 3,921,273 4,381,482
- ------------------------------------------------------------------------ ----------- ------------
Distributions to shareholders from (Note 1)
Net investment income:
Class A Shares (987,389) (2,209,540)
Class B Shares (613,026) (956,018)
Class C Shares (268,818) (785,806)
In excess of net investment income:
Class A Shares 0 (14,410)
Class B Shares 0 (6,235)
Class C Shares 0 (5,125)
- ------------------------------------------------------------------------ ----------- ------------
Total distributions to shareholders (1,869,233) (3,977,134)
- ------------------------------------------------------------------------ ----------- ------------
Capital share transactions (Note 2)
Proceeds from shares sold:
Class A Shares 1,035,825 2,769,293
Class B Shares 4,597,085 7,568,772
Class C Shares 1,070,347 2,745,502
Payments for shares redeemed:
Class A Shares (3,531,937) (13,142,989)
Class B Shares (2,693,379) (5,680,735)
Class C Shares (1,290,050) (11,661,880)
Net asset value of shares issued in reinvestment of dividends and
distributions:
Class A Shares 623,552 1,398,434
Class B Shares 337,048 567,452
Class C Shares 144,078 537,320
- ------------------------------------------------------------------------ ----------- ------------
Net increase (decrease) in net assets resulting from capital share
transactions 292,569 (14,898,831)
- ------------------------------------------------------------------------ ----------- ------------
Total increase (decrease) in net assets 2,344,609 (14,494,483)
- ------------------------------------------------------------------------ ----------- ------------
Net assets
Beginning of period 56,940,824 71,435,307
- ------------------------------------------------------------------------ ----------- ------------
End of period {including accumulated distributions in excess of net
investment income as follows: 1996--($162,732) and 1995--($25,769)}
(Note 1) $59,285,433 $ 56,940,824
- ------------------------------------------------------------------------ ----------- ------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
PAGE 14
Keystone Government Securities Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1.) Significant Accounting Policies
Keystone Government Securities Fund (formerly Keystone America Government
Securities Fund) (the "Fund") is a Massachusetts business trust for which
Keystone Management, Inc. ("KMI") is the Investment Manager and Keystone
Investment Management Company (formerly Keystone Custodian Funds, Inc.)
("Keystone") is the Investment Adviser. The Fund was organized on October 24,
1986 and had no operations prior to February 13, 1987. It is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified open-end investment management company. The Fund seeks generous
income primarily from U.S. government and agency obligations.
The Fund currently offers three classes of shares. Class A shares are sold
subject to a maximum sales charge of 4.75% payable at the time of purchase.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption which varies depending on when shares were purchased and how
long they have been held. Class C shares are sold subject to a contingent
deferred sales charge payable upon redemption within one year of purchase,
and are available only through dealers who have entered into special
distribution agreements with Keystone Investment Distributors Company
(formerly Keystone Distributors, Inc.) ("KIDC"), the Fund's principal
underwriter.
Keystone is a wholly-owned subsidiary of Keystone Investments, Inc.
(formerly Keystone Group, Inc.) ("KII"), a Delaware corporation. KII is
privately owned by an investor group consisting predominantly of current and
former members of management of Keystone and its affiliates. KMI is a
wholly-owned subsidiary of Keystone.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
which requires management to make estimates and assumptions that affect
amounts reported herein. Although actual results could differ from these
estimates, any such differences are expected to be immaterial to the net
assets of the Fund.
A. The Fund values U.S. government securities other than Treasury bills on
the basis of valuations approved by the Fund's Board of Trustees, which uses
information with respect to transactions in bonds, quotations from bond
dealers, market transactions in comparable securities, various relationships
between securities and yield to maturity in determining value. Short-term
investments that are purchased with maturities of sixty days or less are
valued at amortized cost (original purchase cost as adjusted for amortization
of premium or accretion of discount), which, when combined with accrued
interest, approximates market. Short-term investments maturing in more than
sixty days for which market quotations are readily available are valued at
current market value. Short-term investments maturing in more than sixty days
when purchased that are held on the sixtieth day prior to maturity are valued
at amortized cost (market value on the sixtieth day adjusted for amortization
of premium or accretion of discount), which, when combined with accrued
interest approximates market. All other securities for which market
quotations are readily available are valued at current market value.
Management values the following securities at prices it deems in good faith
to be fair: (i) securities (including restricted securities) for which
complete quotations are not readily available and (ii) listed securities if,
in the opinion of management, the last sales price does not reflect a current
value, or if no sale occurred.
<PAGE>
PAGE 15
B. When the Fund enters into a repurchase agreement (a purchase of securities
whereby the seller agrees to repurchase the securities at a mutually agreed
upon date and price), the repurchase price of the securities will generally
equal the amount paid by the Fund plus a negotiated interest amount. The
seller under the repurchase agreement will be required to provide securities
(collateral) to the Fund whose value will be maintained at an amount not less
than the repurchase price, and which generally will be maintained at 101% of
the repurchase price. The Fund monitors the value of collateral on a daily
basis, and if the value of collateral falls below required levels, the Fund
intends to seek additional collateral from the seller or terminate the
repurchase agreement. If the seller defaults, the Fund would suffer a loss to
the extent that the proceeds from the sale of the underlying securities were
less than the repurchase price. Any such loss would be increased by any cost
incurred on disposing of such securities. If bankruptcy proceedings are
commenced against the seller under the repurchase agreement, the realization
on the collateral may be delayed or limited. Repurchase agreements entered
into by the Fund will be limited to transactions with dealers or domestic
banks believed to present minimal credit risks, and the Fund will take
constructive receipt of all securities underlying repurchase agreements until
such agreements expire.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with certain other Keystone funds, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are fully collateralized
by U.S. Treasury and/or Federal Agency obligations.
C. The Fund may enter into futures contracts. A futures contract is an
agreement between two parties to buy and sell a specific amount of a
commodity, security, financial instrument, or in the case of a stock index,
cash at a set price on a future date. The Fund enters into currency and other
financial futures contracts as a hedge against changes in interest or
currency exchange rates. Upon entering into a futures contract, the Fund is
required to deposit with a broker an amount (initial margin) equal to a
certain percentage of the purchase price indicated in the futures contract.
Subsequent payments (variation margin) are made or received by the Fund each
day, as the value of the underlying instrument or index fluctuates, and are
recorded for book purposes as unrealized gains or losses by the Fund. For
federal tax purposes, any futures contracts that remain open at fiscal
year-end are marked-to-market and the resultant net gain or loss is included
in federal taxable income. In addition to market risk, the Fund is subject to
the credit risk that the other party will not complete the obligations of the
contract.
D. Securities transactions are accounted for no later than one business day
after the trade date. Realized gains and losses are computed on the
identified cost basis. Interest income is recorded on the accrual basis. All
discounts are amortized for both financial reporting and federal income tax
purposes. Distributions to shareholders are recorded by the Fund on the close
of business on the ex-dividend date.
E. The Fund has qualified, and intends to qualify in the future, as a
regulated investment company under the Internal Revenue Code of 1986, as
amended ("Internal Revenue Code"). Thus, the Fund expects to
<PAGE>
PAGE 16
Keystone Government Securities Fund
be relieved of any federal income or excise tax liability by distributing all
of its net taxable investment income and net taxable capital gains, if any,
to its shareholders. The Fund intends to avoid any excise tax liability by
making the required distributions under the Internal Revenue Code.
F. The Fund distributes net investment income monthly and net capital gains,
if any, annually. Distributions from net investment income and net capital
gains are determined in accordance with income tax regulations. From time to
time, the Fund may distribute dividends and/or capital gains that exceed book
basis net investment income and net capital gains. The significant
differences between financial statement amounts available for distribution
and distributions made in accordance with income tax regulations are due to
the deferral of losses for income tax purposes that have been recognized for
financial statement purposes and differences in the treatment of paydown
gains and losses.
(2.) Capital Share Transactions
The Trust Agreement authorizes the issuance of an unlimited number of shares
of beneficial interest, without par value. Transactions in shares of the Fund
were as follows:
Six Months Ended Year Ended
Class A Shares January 31, 1996 July 31, 1995
- ------------------------ ----------------- --------------
Sales 105,230 291,673
Redemptions (359,436) (1,409,532)
Reinvestment of
dividends and
distributions 63,777 149,602
- ------------------------ --------------- ------------
Net decrease (190,429) (968,257)
- ------------------------ --------------- ------------
Six Months Ended Year Ended
Class B Shares January 31, 1996 July 31, 1995
- ------------------------ ----------------- --------------
Sales 471,839 804,244
Redemptions (274,097) (608,903)
Reinvestment of
dividends and
distributions 34,460 60,604
- ------------------------ --------------- ------------
Net increase 232,202 255,945
- ------------------------ --------------- ------------
Class C Shares
- ------------------------ --------------- ------------
Sales 108,591 295,567
Redemptions (132,033) (1,253,057)
Reinvestment of
dividends and
distributions 14,717 57,570
- ------------------------ --------------- ------------
Net decrease (8,725) (899,920)
- ------------------------ --------------- ------------
The Fund bears some of the costs of selling its shares under Distribution
Plans adopted with respect to its Class A, Class B and Class C shares
pursuant to Rule 12b-1 under the 1940 Act.
The Class A Distribution Plan provides for payments, which are currently
limited to 0.25% annually of the average daily net asset value of Class A
shares, to pay expenses for the distribution of Class A shares. Amounts paid
by the Fund to KIDC under the Class A Distribution Plan are currently used to
pay others, such as dealers, service fees at an annual rate of up to 0.25% of
the average net asset value of Class A shares maintained by such others.
The Class B Distribution Plans provide for payments at an annual rate of up
to 1.00% of the average daily net asset value of Class B shares to pay
expenses for the distribution of Class B shares. For Class B shares sold on
or after June 1, 1995, amounts paid by the Fund under the Class B
Distribution Plan are currently used to pay others (dealers) a commission at
the
<PAGE>
PAGE 17
time of purchase normally equal to 4.00% of the price paid for each share
sold plus the first year's service fee in advance in the amount of 0.25% of
the price paid for each Class B share sold. Beginning approximately 12 months
after the purchase of such Class B shares, the dealer or other party will
receive service fees at an annual rate of 0.25% of the average daily net
asset value of such Class B shares maintained by such others. A contingent
deferred sales charge will be imposed, if applicable, on Class B shares
purchased on or after June 1, 1995 at rates ranging from a maximum of 5% of
amounts redeemed during the first 12 month period from and including the
month of purchase to 1% of amounts redeemed during the sixth twelve month
period. Class B shares purchased on or after June 1, 1995 that have been
outstanding for eight years from and including the month of purchase will
automatically convert to Class A shares without a front-end sales charge or
exchange fee. Class B shares purchased prior to June 1, 1995 will retain
their existing conversion rights.
The Class C Distribution Plan provides for payments at an annual rate of up
to 1.00% of the average daily net asset value of Class C shares to pay
expenses for the distribution of Class C shares. Amounts paid by the Fund
under the Class C Distribution Plan are currently used to pay others
(dealers) a commission at the time of purchase in the amount of 0.75% of the
price paid for each Class C share sold, plus the first year's service fee in
advance in the amount of 0.25% of the price paid for each Class C share.
Beginning approximately 15 months after purchase date, the dealer or other
party will receive a commission at an annual rate of 0.75% of the net asset
value (subject to applicable limitations imposed by rules adopted by the
National Association of Securities Dealers, Inc.) plus service fees at the
annual rate of 0.25% of the average net asset value of each Class C share
maintained by such others on the Fund's books for specified periods.
Each of the Distribution Plans may be terminated at any time by a vote of
the Independent Trustees or by a vote of a majority of the outstanding voting
shares of the respective class. However, after the termination of any
Distribution Plan, at the discretion of the Board of Trustees, payments to
KIDC may continue as compensation for its services which had been earned
while the Distribution Plan was in effect.
During the six months ended January 31, 1996, the Fund paid or accrued to
KIDC $35,719 under its Class A Distribution Plan. During the six months ended
January 31, 1996, the Fund paid or accrued to KIDC $67,660 for Class B shares
sold prior to June 1, 1995 and $34,533 for Class B shares sold on or after
June 1, 1995. During the six months ended January 31, 1996, the Fund paid or
accrued $45,322 under its Class C Distribution Plan. These amounts represent
0.24%, 1.00% and 1.00%, respectively, of the average daily net assets of
Class A, B and C on an annualized basis.
Under applicable NASD rules, the maximum uncollected amounts for which KIDC
may seek payment from the Fund under its Distribution Plans as of January 31,
1996 were $1,142,450 for Class B shares purchased prior to June 1, 1995
(5.44% of Class B net assets at January 31, 1996) and $305,994 for Class B
shares purchased on or after June 1, 1995 (1.46% of Class B net assets at
January 31, 1996) and $1,454,329 for Class C shares (15.58% of Class C net
assets at January 31, 1996).
(3.) Securities Transactions
As of July 31, 1995, the Fund had a capital loss carryover for federal income
tax purposes of approximately $4,164,000 which will expire in 2003.
<PAGE>
PAGE 18
Keystone Government Securities Fund
For the six months ended January 31, 1996, cost of purchases and proceeds
from sales of U.S. government securities (excluding short-term securities)
were $46,646,440 and $44,921,504 respectively.
(4.) Investment Management Agreement and Other Transactions
Under the terms of the Investment Management Agreement between KMI and the
Fund, KMI provides investment management and administrative services to the
Fund. In return, KMI is paid a management fee computed and payable daily at a
rate of 2.0% of the Fund's gross investment income plus an amount determined
by applying percentage rates, which start at 0.50% and decline, as net assets
increase, to 0.25% to the net asset value of the Fund. KMI has entered into
an Investment Advisory Agreement with Keystone, under which Keystone provides
investment advisory and management services to the Fund and receives for its
services an annual fee representing 85% of the management fee received by
KMI.
During the six months ended January 31, 1996, the Fund paid or accrued to
KMI investment management and administrative services fees of $191,566, which
represented 0.65% of the Fund's average net assets on an annualized basis. Of
such amount paid to KMI, $162,831 was paid to Keystone for its services to
the Fund. During the six months ended January 31, 1996, the Fund paid or
accrued $11,153 to KII as reimbursement for certain accounting services
provided to the Fund.
Keystone Investor Resource Center, Inc. ("KIRC"), a wholly-owned subsidiary
of Keystone, is the Fund's transfer and dividend disbursing agent. For the
six months ended January 31, 1996, the Fund paid or accrued $60,625 to KIRC
for transfer agent fees.
Effective October 2, 1995, Keystone voluntarily agreed to limit expenses of
Class A shares to 1.15% of average net assets annually and each of Class B
and Class C shares to 1.90% of average net assets annually. Prior to October
2, 1995, Keystone voluntarily agreed to limit expenses of Class A shares to
1.00% annually and each of Class B and Class C shares to 1.75% annually.
Keystone would not be required to make such reimbursement to the extent it
would result in the Fund's inability to qualify as a regulated investment
company under the provisions of the Internal Revenue Code. In accordance with
voluntary expense limitations then in effect, Keystone reimbursed the Fund
$77,321 for the six month period ended January 31, 1996. Keystone does not
intend to seek repayment of these amounts.
The Fund has entered into an expense offset arrangement with its custodian.
For the six months ended January 31, 1996, the Fund paid custody fees in the
amount of $20,264 and received a credit of $5,057 pursuant to the expense
offset arrangement, resulting in a total expense of $25,321. The assets
deposited with the custodian under the expense offset arrangement could have
been invested in income-producing assets.
Certain officers and/or Directors of Keystone are also officers and/or
Trustees of the Fund. Officers of Keystone and affiliated Trustees receive no
compensation directly from the Fund. Currently, the Independent Trustees
receive no compensation for their services.
(5.) Distributions to Shareholders
A distribution of $0.050 for Class A, $0.044 for Class B, and $0.044 for
Class C per share from net investment income was declared payable by March 6,
1996 to shareholders of record February 23, 1996. This distribution is not
reflected in the accompanying financial statements.
<PAGE>
PAGE 19
Keystone's Services
for Shareholders
KEYSTONE AUTOMATED RESPONSE LINE (KARL)--Receive up-to-date account
information on your balance, last transaction and recent Fund distribution.
You may also process transactions such as investments, redemptions and
exchanges using a touch-tone telephone as well as receive quotes on price,
yield, and total return of your Keystone Fund. Call toll-free,
1-800-346-3858.
EASY ACCESS TO INFORMATION ON YOUR ACCOUNT--Information about your
Keystone account is available 24 hours a day through KARL. To speak with a
Shareholder Services representative about your account, call toll-free
1-800-343-2898 between 8:00 A.M. and 6:00 P.M. Eastern time. Retirement Plan
investors should call 1-800-247-4075.
ADDITIONS TO YOUR ACCOUNT--You can buy additional shares for your account
at any time, with no minimum additional investment.
REINVESTMENT OF DISTRIBUTIONS--You can compound the return on your
investment by automatically reinvesting your Fund's distributions at net
asset value with no sales charge.
EXCHANGE PRIVILEGE--You may move your money among funds in the same
Keystone family quickly and easily for a nominal service fee. KARL gives you
the added ability to move your money any time of day, any day of the week.
Keystone offers a variety of funds with different investment objectives for
your changing investment needs.
ELECTRONIC FUNDS TRANSFER (EFT)-- Referred to as the "paper-less
transaction," EFT allows you to take advantage of a variety of preauthorized
account transactions, including automatic monthly investments and systematic
monthly or quarterly withdrawals. EFT is a quick, safe and accurate way to
move money between your bank account and your Keystone account.
CHECK WRITING--Shareholders of Keystone Liquid Trust may exercise the
check writing privilege to draw from their accounts.
EASY REDEMPTION--KARL makes redemption services available to you 24 hours
a day, every day of the year. The amount you receive may be more or less than
your original account value depending on the value of fund shares at time of
redemption.
RETIREMENT PLANS--Keystone offers a full range of retirement plans,
including IRA, SEP-IRA, profit sharing, money purchase, and defined
contribution plans. For more information, please call Retirement Plan
Services, toll-free at 1-800-247-4075.
Keystone is committed to providing you with quality, responsive account
service. We will do our best to assist you and your financial adviser in
carrying out your investment plans.
