PAGE 1
---------------------------------
Keystone Global Opportunities Fund
Seeks capital growth by investing in small company stocks around the world.
Dear Shareholder:
We are writing to report on activities of Keystone Global Opportunities Fund
for the six-month period which ended March 31, l996.
Performance
For the periods which ended March 31, 1996, your Fund produced the following
total returns.
Class A shares returned 3.63% for the six-month period and 26.66% for the
twelve-month period.
Class B shares returned 3.22% for the six-month period and 25.74% for the
twelve-month period.
Class C shares returned 3.21% for the six-month period and 25.62% for the
twelve-month period.
Your Fund continued to generate returns that were consistent with its
impressive long term performance record.
The Morgan Stanley Capital International World Index, representing the
performance of stocks from more than 20 countries including the U.S.,
returned 9.01% and 22.01% respectively for the six- and twelve-month periods.
Among its peers, Keystone Global Opportunities Fund was rated ****
(four-stars) by Morningstar for its risk-adjusted performance in the equity
category as of March 31, 1996. There were 3087 funds in this category.1
And finally, Lipper Analytical Services, Inc. awarded your Fund the 1995
Performance Achievement Certificate for its #1 performance among 8 Global
Small Company Funds for the five-year period which ended December 31, 1995.
The Fund was ranked 8 out of 22 funds for the one year period.2
We are proud of your Fund's achievements especially considering the wide
selection of investment choices today and the constantly challenging
investment environment. While it would be easy for us to take comfort from
these results, we realize that consistent, long term performance must be
earned every day. As an investor, you should note that the nature of
investing in small company stocks in the U.S. and abroad involves special
risks, including price volatility, currency fluctuations and a lack of
liquidity. We attempt to limit these risks by diversifying and carefully
selecting the markets and companies in which we invest.
The market environment
In the U.S., low interest rates, controlled inflation and moderate economic
growth created a generally positive environment for small company stocks
during most of the period. Some U.S. technology stocks experienced a
correction during the period, but at the same time, the overseas markets
began to show signs of improvement.
The foreign markets continued to recover from the weak environment of
1995: lower interest rates abroad helped to provide economic stimulus;
several countries appeared to be showing signs of economic strength; and
trading liquidity returned to the foreign, especially emerging markets. All
of these factors provided for a more favorable environment for foreign small
company stocks.
--continued--
----------------
1Source: Morningstar, Inc. Morningstar's proprietary ratings reflect the
Fund's historical risk-adjusted performance as of March 31, 1996. Ratings
are subject to change monthly. They are calculated based on the Fund's 3-,
5- and 10-year average annual return in excess or below the 90-day Treasury
bill return. Ratings are not adjusted for sales charges, but are adjusted
for other fees. The top 10% of the funds in an investment category receive 5
stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the
next 22.5% receive 2 stars and the bottom 10% receive 1 star. In the equity
category, the Fund received a 4-star rating for the 3-year and 4-star rating
for the 5-year period. There were 1469 funds in the 3-year category and 970
funds in the 5-year category. The Fund was not rated for the ten year period
because it does not have a ten year performance record. Past performance is
no guarantee of future results.
2Source: Lipper Analytical Services, Inc. Lipper is an independent mutual
fund rating organization. The Fund was not rated for the ten year period
because it does not have a ten year performance record.
<PAGE>
PAGE 2
---------------------------------
Keystone Global Opportunities Fund
Greater growth opportunities
We believe stocks of small companies in U.S. and foreign markets offer
attractive growth opportunities for long term investors. Foreign small
company stocks also add much-needed diversification for investors with core
holdings in large American companies. Prices of small company stocks tend to
fluctuate more than those of more seasoned companies because small companies
often have more limited operations and resources. To reduce risk and enhance
potential returns, we monitor each holding in your Fund's portfolio on a
regular basis, and are always ready to reallocate assets to take advantage of
opportunities around the world as market conditions change.
We are also pleased to report on another milestone for Keystone and your
Fund. Keystone Global Opportunities Fund was recently approved for sale in
Japan. This was the first U.S. mutual fund to be approved for sale in Japan
in 23 years. We are proud of this achievement and look forward to serving our
diverse investors around the world.
We appreciate your continued support of Keystone funds. If you have any
questions or comments, please feel free to write to us.
Sincerely,
/s/ Albert H. Elfner, III [PHOTOS]
---------------------------
Albert H. Elfner, III [Albert H. Elfner, III] [George S. Bissell]
Chairman and President
Keystone Investments, Inc.
/s/ George S. Bissell
---------------------------
George S. Bissell
Chairman of the Board
Keystone Funds
May 1996
-----------------------------------------------------------------------------
[KEYSTONE INSIGHT LINE -- Highlighted Text Box]
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 Keystone portfolio
managers discuss their latest strategies. 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
<PAGE>
PAGE 3
---------------------------------
A DISCUSSION WITH
YOUR FUND MANAGER
[PHOTO OF CHRISTOPHER R. ELY]
Christopher R. Ely is senior portfolio manager of your Fund and head of
Keystone's small-cap growth team. A Chartered Financial Analyst, Mr. Ely has
16 years of investment experience and is a member of the Boston Security
Analysts Society. He holds a BA in Mathematical Economics from Brown
University and an MBA from Babson College. His U.S. small-cap team is
comprised of Portfolio Managers David L. Smith and Philip Fine. They work
together with our French partner, Credit Lyonnais, who manages the European
and Far East components of the portfolio.
Q: What types of stocks do you seek for the Fund?
A: We seek to invest in small companies around the world that we believe have
superior growth rates and accelerating earnings. We look for companies with
projected earnings growth rates of 20% or more each year. Generally our U.S.
holdings have market capitalizations (stock price multiplied by total shares
outstanding) of about $1 billion or less when we purchase them. We focus on
companies with a high level of profitability and an attractive stock price.
These are typically companies that have distinctive products or services that
will set them apart in an increasingly competitive global economy.
Q: Credit Lyonnais International Asset Management manages the European and
Far East sectors of the Fund. How do you work with them?
A: We are in constant communication with each other through telephone calls
and faxes, and we have monthly conference calls and portfolio review meetings
either at Keystone or at Credit Lyonnais. Their small company stock selection
approach is based on company-by-company research. Credit Lyonnais is one of
the world's largest banks with $250 billion in assets and offices in 76
countries worldwide. The investment management partnership with Credit
Lyonnais works very well.
Q: Please describe the market environment during the period.
A: This six-month period demonstrated the value of international
diversification in small stock investing. The fundamentals in the U.S. stock
market remained strong, with controlled inflation, moderate interest rates
and moderate growth. However, the Dow Jones Industrial Average set new
records, with small stocks trailing the Dow's rise. Selected technology
stocks, which comprised a significant share of the small company stock
indexes, declined in price as some companies did not live up to earnings
expectations. Nevertheless, toward the end of the period there were
indications that the U.S. economy might be stronger than originally expected.
This lead to increased price volatility as investors attempted to ascertain
the level of economic growth.
-----------------------------------------------------------------------------
Fund Profile
Objective: Seeks capital growth by investing in small company
stocks around the world.
Commencement of investment operations: March 16, 1988
Countries: 25
Net assets: $675 million
-----------------------------------------------------------------------------
<PAGE>
PAGE 4
---------------------------------
Keystone Global Opportunities Fund
--------------------------------------------------------------------
Your Fund Invests In . . .
(bullet) small company stocks in the U.S. and abroad
(bullet) stocks with market capitalizations of less than $1 billion
(bullet) companies with earnings growth rates of 20% or more
--------------------------------------------------------------------
Q: What about the foreign markets?
A: In contrast, the foreign markets began to show signs of life after several
difficult years. The market environment improved during the period as better
liquidity and strong cash flows into the foreign markets resulted in very
good performance in selected markets. Some of the strongest results
year-to-date have come from the emerging markets of Eastern Europe, Asia and
Latin America.
As we review recent foreign market performance, we have seen mixed results
in the industrialized countries of the world. In Europe, Sweden, France and
Germany have turned in strong performance in U.S. dollars year-to-date
through March 27. However, Italy and the U.K. have reported negative total
returns. In the emerging markets, bright spots included Venezuela, Brazil,
several Eastern European countries, and Indonesia and Malaysia.
Q: The Fund's emphasis in Japan was increased. Why?
A: We believed the environment in Japan was beginning to improve during the
six-month period. On March 31, Japanese stocks comprised 18.5% of net assets,
representing the majority of our holdings in Asia and the Pacific region.
Economic progress has been slow in Japan, but a stronger U.S. dollar versus
the Japanese yen has contributed to a more favorable environment for many
Japanese companies.
We tended to emphasize export-oriented and finance companies. We expected
Japanese export-oriented companies to benefit from the stronger U.S. dollar
and good trading liquidity. Because Japanese export companies earn much of
their revenues in U.S. dollars, a stronger U.S. dollar means that revenues
are worth more when converted into yen.
The Japanese government's efforts to stimulate business have helped to
provide an improved environment. We think they have made progress addressing
the banking problems. Nevertheless, the performance of the Japanese equity
market in the first quarter of 1996 had been modest compared with other stock
markets around the world. Despite this, we believe the accelerating earnings
growth of small companies will eventually be recognized as investors search
the globe for companies with growth.
Q: What about Europe and Latin America?
A: In Europe, Germany continues to struggle with a recession and high
manufacturing costs. As a leading economic force, we think economic progress
in Europe will continue to be dependent on Germany's ability to deal with
these issues. We expect interest rates to decline further in Europe as
countries attempt to stimulate growth.
In the emerging markets of Asia and Latin America, we continue to see some
of the highest growth rates in the world. The cloud of concern over the
devaluation of the Mexican peso in early 1995 has finally lifted and has
opened up possibilities for investment.
Q: What types of foreign companies did you like?
A: In Japan, we thought finance companies would offer good opportunities as
the economy rebuilds. Finance companies haven't been burdened with the same
problems as the big Japanese banks, but may still benefit from low interest
rates. Shokoh Fund, your Fund's largest holding, performed very well during
the period. The company specializes in short-term loans to small and medium
scale businesses. Its plans for growth include doubling its number of outlets
to 200 in the next two years, with a target of 300 in five to six years.
<PAGE>
PAGE 5
---------------------------------
[GRAPHIC OF MAP DEPICTING REGIONAL DIVERSIFICATION AS OF MARCH 31, 1996]
In Europe, we held shares of Berkeley, a U.K. home builder primarily
focused on the upscale market. It has been successful in the very difficult
U.K. housing market. Indeed, Berkeley has grown its earnings per share by an
average of 172% annually over the last five years while the housing market
has suffered significantly. We think it has a strong balance sheet with high
margins, and should benefit from an upturn in the U.K. house building market
that we expect.
We also held shares of Grandoptical Photo, a French specialty retailer. In
a depressed consumer market, the company appears to be one of the most
successful and innovative retailers in France. Its products include one-hour
photo developing and prescription eye glasses. We believe the company's
strengths are in its service and marketing. This has been important to its
success because in France there is a strong service oriented culture.
Customers often make regular visits to a store to test the staff and service.
Earnings growth has been strong and regular, and we expect the company to
continue to grow faster than the industry averages.
-----------------------
3Includes short-term investments, foreign currency holdings, and other assets
and liabilities.
<PAGE>
PAGE 6
---------------------------------
KEYSTONE GLOBAL OPPORTUNITIES FUND
Top 10 Holdings
as of March 31, 1996
<TABLE>
<CAPTION>
Percentage of
Foreign stocks (Country) Industry net assets
<S> <C> <C>
Shokoh Fund (Japan) Finance 1.9
Nichiei (Japan) Finance 1.4
Amway Japan (Japan) Consumer Goods 1.2
Tsutsumi Jewelry (Japan) Retail 1.1
Maruko (Japan) Consumer Goods 1.1
US stocks
AGCO Capital Goods 1.1
Office Max Retail 1.1
INSO Software Service 1.0
Petsmart Retail 1.0
Cascade Communications Telecommunications 1.0
</TABLE>
Q: North American stocks represented 42.7% of the portfolio. Please describe
some of these holdings.
A: We continued to emphasize technology stocks, although we shifted our
emphasis from hardware manufacturers to software and service companies.
Demand for new computer equipment slowed during the period, but demand for
software remained strong and offered greater growth opportunities.
We held shares of Cognex, the leading machine vision system company, which
recently had a growth rate of 35%. One of their products helps manufacturing
companies improve quality control and product yields by making sure that each
item on a production line is correctly calibrated to exacting standards.
Desktop Data was another holding. They provide customized real-time news and
information over a company's local area network. Desktop Data marked its 24th
consecutive quarter of revenue increases in the fourth quarter of 1995 and
revenue was up 61% for the year.
We also saw good opportunities in biotechnology stocks, such as Agouron
Pharmaceuticals and Gilead Sciences. We believe these companies are in the
forefront of developing treatments for cancer, AIDS and other major diseases.
Q: What is your outlook?
A: We believe the recent correction in the U.S. small cap market was
consistent with the business cycle and created some good buying opportunities
for investors. We expect a continuation of the generally positive investment
environment in the U.S., and we believe it will contribute to improved
economic conditions around the world. As world economies improve, we expect
to allocate an increasing percentage of the Fund's assets abroad. We believe
that under these conditions, a greater portion of your Fund's total return
will come from its foreign investments.
Q: What advantages does the Fund offer investors?
A: Keystone Global Opportunities Fund seeks to provide investors with access
to some of the fastest growing companies around the world. It is a good
choice for long-term investors seeking to diversify their holdings with an
international component. The Fund's ability to allocate its assets
geographically helps increase its potential for higher returns and its broad
diversification helps reduce the impact of poor market conditions in a
particular country or region.
--------------------------------------------------
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 Company
Attn: Shareholder Communications
200 Berkeley Street, 22nd Floor,
Boston, Massachusetts 02116-5034.
<PAGE>
PAGE 7
---------------------------------
GROWTH OF AN INVESTMENT
[GRAPH]
[Graph depicting growth of an investment in
Keystone Global Opportunities Fund Class A]
Six-Month Performance as of March 31, 1996
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Total returns* 3.63% 3.22% 3.21%
Net asset value 9/30/95 $23.43 $23.00 $23.04
3/31/96 $24.28 $23.74 $23.78
Dividends None None None
Capital gains None None None
</TABLE>
* Before deducting front-end or contingent deferred sales charge (CDSC) if
applicable.
Historical Record as of March 31, 1996
<TABLE>
<CAPTION>
Cumulative total returns Class A Class B Class C
<S> <C> <C> <C>
1-year w/o sales charge 26.66% 25.74% 25.62%
1-year 19.37% 21.74% 25.62%
5-year 129.74% 67.61% 70.90%
Life of Class 178.58% 67.61% 70.90%
Average Annual Returns
1-year w/o sales charge 26.66% 25.74% 25.62%
1-year 19.37% 21.74% 25.62%
5-year 18.10% 17.72% 18.44%
Life of Class 13.59% 17.72% 18.44%
</TABLE>
Class A shares were introduced on March 16, 1988. Performance is reported
at the current maximum front-end sales charge of 5.75%.
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 shares were introduced on February 1, 1993. Performance reflects
the return you would have received after holding shares for one year or more
and redeeming after the end of that 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 for another Keystone fund by phone or in
writing for a $10 fee. 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 8
---------------------------------
Keystone Global Opportunities
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 9
---------------------------------
SCHEDULE OF INVESTMENTS--March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
UNITED STATES (41.5%)
<S> <C> <C>
Advertising & Publishing (0.6%)
Clear Channel Communications (a) 70,000 $ 3,955,000
--------------------------------------------------------------- -------- ---------
Amusements (0.6%)
Hollywood Casino Corp. (a) 88,250 300,602
La Quinta Inns, Inc. 75,000 2,203,125
Players International, Inc. (a) 150,000 1,434,375
--------------------------------------------------------------- -------- ---------
3,938,102
--------------------------------------------------------------- -------- ---------
Automotive (0.7%)
Lear Seating Corp. (a) 150,000 4,893,750
--------------------------------------------------------------- -------- ---------
Building Materials (0.7%)
Centex Construction Products, Inc. 62,000 844,750
Oakwood Homes Corp. 40,000 1,985,000
Southern Energy Homes, Inc. (a) 150,000 2,184,375
--------------------------------------------------------------- -------- ---------
5,014,125
--------------------------------------------------------------- -------- ---------
Business Services (1.4%)
Alternative Resources, Inc. (a) 4,700 153,925
American List Corp. 110,000 3,465,000
Equity Corp., International (a) 50,000 1,487,500
Thermedics, Inc. (a) 100,000 2,825,000
U. S. Filter Cop. (a) 55,600 1,556,800
--------------------------------------------------------------- -------- ---------
9,488,225
--------------------------------------------------------------- -------- ---------
Capital Goods (1.4%)
AGCO Corp. 315,000 7,599,375
Airgas, Inc. (a) 50,000 1,987,500
--------------------------------------------------------------- -------- ---------
9,586,875
--------------------------------------------------------------- -------- ---------
Consumer Goods (0.7%)
Blyth Industries, Inc. (a) 143,400 4,768,050
--------------------------------------------------------------- -------- ---------
Chemicals (0.6%)
OM Group, Inc. 100,000 3,693,750
--------------------------------------------------------------- -------- ---------
Drugs (4.1%)
Advanced Tissue Sciences (a) 125,000 1,781,250
Agouron Pharmaceuticals, Inc. (a) 66,900 2,600,737
Amylin Pharmaceutical (a) 100,000 1,000,000
Autoimmune, Inc. (a) 150,000 1,209,375
Drugs--continued
Cephalon, Inc. (a) 75,000 $ 1,940,625
Exogen, Inc. (a) 89,200 1,181,900
Gilead Sciences, Inc. (a) 150,000 4,293,750
Health Management Associates, Inc. (a) 149,625 5,236,875
Magainin Pharmaceutical (a) 175,000 1,815,625
Neurogen Corp. (a) 125,000 4,312,500
Sequus Pharmaceuticals, Inc. (a) 149,100 2,059,443
--------------------------------------------------------------- -------- ---------
27,432,080
--------------------------------------------------------------- -------- ---------
Electronics Products (2.1%)
KLA Instruments Corp. (a) 75,000 1,692,188
Microchip Technology, Inc. (a) 1,250,000 3,406,250
Solectron Corp. (a) 100,000 4,400,000
Thermoquest Corp. (a) 80,600 1,370,200
Xilinx, Inc. (a) 100,000 3,187,500
--------------------------------------------------------------- -------- ---------
14,056,138
--------------------------------------------------------------- -------- ---------
Finance (1.3%)
Investors Financial Services Corp. (a) 200,000 4,350,000
RAC Financial Group, Inc. (a) 56,900 1,258,913
TCF Financial Corp. 87,300 3,164,625
--------------------------------------------------------------- -------- ---------
8,773,538
--------------------------------------------------------------- -------- ---------
Health Care Services (3.2%)
Chad Therapeutics, Inc. (a) 135,000 1,873,125
Emeritus Corp. (a) 200,000 4,075,000
Idexx Labs, Inc. (a) 65,000 2,730,000
NCS Healthcare (a) 4,300 106,963
Norland Medical Systems (a) 200,000 5,750,000
Optical Sensors, Inc. (a) 50,000 621,875
Perclose, Inc. (a) 50,000 1,150,000
Phamis, Inc. (a) 135,000 2,269,688
Phymatrix Corp. (a) 141,600 3,256,800
--------------------------------------------------------------- -------- ---------
21,833,451
--------------------------------------------------------------- -------- ---------
Insurance (1.8%)
Amerin Corp. (a) 52,000 1,413,750
CMAC Investment Corp. 17,900 1,011,350
Capital Re Corp. 54,500 1,962,000
HCC Insurance Holdings, Inc. (a) 72,400 3,972,950
(continued on next page)
</TABLE>
<PAGE>
PAGE 10
---------------------------------
Keystone Global Opportunities Fund
SCHEDULE OF INVESTMENTS--March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------------------------------------------------------------- --------- -----------
<S> <C> <C>
Insurance--continued
Integon Corp. 200,000 $ 4,075,000
--------------------------------------------------------------- -------- ---------
12,435,050
--------------------------------------------------------------- -------- ---------
Office & Business Equipment (1.9%)
Centigram Communications (a) 150,000 3,309,375
Cyberoptics Corp. (a) 60,000 1,702,500
Cylink Corp. (a) 50,000 868,750
EMC Corp. (a) 300,000 6,562,500
--------------------------------------------------------------- -------- ---------
12,443,125
--------------------------------------------------------------- -------- ---------
Oil Services (1.1%)
BJ Services Co. (a) 117,200 3,926,200
ENSCO International, Inc. (a) 125,000 3,484,375
--------------------------------------------------------------- -------- ---------
7,410,575
--------------------------------------------------------------- -------- ---------
Restaurants (1.1%)
Applebee's International, Inc. 153,600 3,840,000
Outback Steakhouse, Inc. (a) 100,000 3,768,751
--------------------------------------------------------------- -------- ---------
7,608,751
--------------------------------------------------------------- -------- ---------
Retail (4.9%)
Corporate Express, Inc. (a) 200,000 6,587,500
Discount Auto Parts, Inc. (a) 150,000 4,181,250
Office Max, Inc. (a) 300,000 7,275,000
O'Reilly Automotive, Inc. 53,000 1,861,625
Petsmart, Inc. (a) 187,500 6,843,750
Sunglass Hut International, Inc. (a) 200,000 6,612,500
--------------------------------------------------------------- -------- ---------
33,361,625
--------------------------------------------------------------- -------- ---------
Software Services (7.9%)
America Online Inc. (a) 50,000 2,809,375
BDM International, Inc. (a) 150,000 5,700,000
Desktop Data, Inc. (a) 175,000 6,365,625
Geoworks (a) 200,000 6,000,000
INSO Corp. (a) 150,000 6,946,750
Intuit, Inc. (a) 48,800 2,196,000
Maxis, Inc. (a) 100,000 2,487,500
Natural Microsystems (a) 65,000 1,998,750
Orcad, Inc. (a) 100,000 1,175,000
Parametric Technology Corp. (a) 150,000 5,859,375
Project Software & Development, Inc. (a) 150,000 5,793,750
Red Brick Systems, Inc. (a) 20,000 855,000
Software Services--continued
SQA Inc. (a) 67,600 $ 1,859,000
Synopsys, Inc. (a) 100,000 3,200,000
--------------------------------------------------------------- -------- ---------
53,246,125
--------------------------------------------------------------- -------- ---------
Telecommunications (3.9%)
Cascade Communications Corp. (a) 75,000 6,740,625
Cidco Group, Inc. (a) 100,000 3,225,000
Cognex Corp. (a) 123,600 3,198,150
Colonial Data Technologies (a) 100,000 2,212,500
Microwave Power Devices (a) 200,000 1,600,000
Netmanage, Inc. (a) 200,000 2,200,000
Spectrian Corp. (a) 7,700 173,250
Winstar Communications, Inc. (a) 200,000 3,200,000
Wireless One, Inc. (a) 235,000 3,848,125
--------------------------------------------------------------- -------- ---------
26,397,650
--------------------------------------------------------------- -------- ---------
Textiles (0.9%)
Authentic Fitness Corp. 150,000 3,881,250
Nautica Enterprises, Inc. (a) 50,000 2,381,250
--------------------------------------------------------------- -------- ---------
6,262,500
--------------------------------------------------------------- -------- ---------
Transportation (0.6%)
Landstar Systems, Inc. (a) 100,000 2,487,500
Swift Transportation, Inc. (a) 85,500 1,517,625
--------------------------------------------------------------- -------- ---------
4,005,125
--------------------------------------------------------------- -------- ---------
TOTAL UNITED STATES
(Cost--$212,795,091) 280,603,610
--------------------------------------------------------------- -------- ---------
FOREIGN (50.7%)
AUSTRALIA (2.7%)
Advertising & Publishing (0.2%)
West Australia Newspaper Holdings Ltd. 450,000 1,550,754
--------------------------------------------------------------- -------- ---------
Building Materials (0.3%)
Leighton Holdings 510,000 1,594,124
--------------------------------------------------------------- -------- ---------
Finance (0.6%)
Gio Australian Holdings 1,400,000 3,117,918
David Jones Ltd. (a) 650,000 1,005,704
--------------------------------------------------------------- -------- ---------
4,123,622
-------- ---------
</TABLE>
<PAGE>
PAGE 11
---------------------------------
SCHEDULE OF INVESTMENTS--March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------------------------------------------------------------- --------- -----------
<S> <C> <C>
Metals & Mining (0.9%)
Capral Aluminum 830,000 $ 2,360,866
Delta Gold NL (a) 450,000 1,118,230
QNI Ltd. 1,100,000 2,492,772
--------------------------------------------------------------- -------- ---------
5,971,868
Oil (0.2%)
--------------------------------------------------------------- -------- ---------
Oil Search Ltd. 1,500,000 1,488,630
--------------------------------------------------------------- -------- ---------
Paper & Packaging (0.5%)
Amcor Ltd. 500,000 3,250,762
--------------------------------------------------------------- -------- ---------
TOTAL AUSTRALIA 17,979,760
---------------------------------------------------------------------------- ---------
AUSTRIA (0.5%)
Business Services (0.5%)
Bohler Uddeholm (a) 42,000 3,262,726
--------------------------------------------------------------- -------- ---------
BRAZIL (0.7%)
Finance (0.4%)
Banco Itau (a) 6,974,900 2,478,176
--------------------------------------------------------------- -------- ---------
Telecommunications (0.3%)
Telesponsora Telefonos Sao Paulo (a) 13,600,000 2,312,785
--------------------------------------------------------------- -------- ---------
TOTAL BRAZIL 4,790,961
---------------------------------------------------------------------------- ---------
CANADA (1.2%)
Consumer Goods (0.4%)
Scott Paper Ltd. 124,000 2,591,859
--------------------------------------------------------------- -------- ---------
Software Services (0.8%)
Fulcrum Technologies, Inc. (ADR) (a) 150,000 5,625,000
--------------------------------------------------------------- -------- ---------
TOTAL CANADA 8,216,859
--------------------------------------------------------------- -------- ---------
CHILE (0.5%)
Business Services (0.4%)
A.F.P. Provida S.A. (ADR) 100,000 2,350,000
A.F.P. Provida S.A. 10,582 236,558
--------------------------------------------------------------- -------- ---------
2,586,558
--------------------------------------------------------------- -------- ---------
Finance (0.1%)
Banco de Credito 38,393 354,964
--------------------------------------------------------------- -------- ---------
Paper & Packaging (0.0%)
Companhia de Manufactuers de Papeles Y Cartones 17,201 $ 181,393
--------------------------------------------------------------- -------- ---------
TOTAL CHILE 3,122,915
--------------------------------------------------------------- -------- ---------
DENMARK (0.5%)
Automotive (0.1%)
Scandinavian Mobility (a) 40,000 778,879
--------------------------------------------------------------- -------- ---------
Capital Goods (0.4)
Crisplant Industries (a) 31,520 2,267,029
--------------------------------------------------------------- -------- ---------
TOTAL DENMARK 3,045,908
--------------------------------------------------------------- -------- ---------
FINLAND (0.2%)
Capital Goods (0.2%)
Benefon Oyvappa S.I. (a) 91,400 1,430,098
--------------------------------------------------------------- -------- ---------
Electronics (0.0%)
Suuno Oy (a) 19,000 194,773
--------------------------------------------------------------- -------- ---------
TOTAL FINLAND 1,624,871
--------------------------------------------------------------- -------- ---------
FRANCE (5.8%)
Advertising & Publishing (0.2%)
Filipacchi Medias (a) 7,354 1,334,595
--------------------------------------------------------------- -------- ---------
Amusements (0.2%)
Infogrames Entertainment (a) 4,500 994,460
--------------------------------------------------------------- -------- ---------
Automotive (0.5%)
Sylea 37,023 3,484,414
--------------------------------------------------------------- -------- ---------
Capital Goods (1.9%)
GFI Industries 17,000 2,153,522
Norbert Destressangle 24,260 3,853,546
Technip 11,000 961,004
Zodiac (a) 27,655 6,095,038
--------------------------------------------------------------- -------- ---------
13,063,110
--------------------------------------------------------------- -------- ---------
Drugs (0.2%)
Stedim (a) 18,000 1,456,397
--------------------------------------------------------------- -------- ---------
Electronics Products (0.1%)
Radiall SA (a) 5,400 722,659
--------------------------------------------------------------- -------- ---------
(continued on next page)
</TABLE>
<PAGE>
PAGE 12
---------------------------------
Keystone Global Opportunities Fund
SCHEDULE OF INVESTMENTS--March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------------------------------------------------------------- --------- -----------
<S> <C> <C>
Health Care Services (0.2%)
Bioblock Scientific 17,100 $ 1,222,302
--------------------------------------------------------------- -------- ---------
Insurance (0.5%)
Cardif (a) 18,040 2,937,177
Union Assurance Federal 2,097 263,978
--------------------------------------------------------------- -------- ---------
3,201,155
--------------------------------------------------------------- -------- ---------
Miscellaneous (0.1%)
Europ Extincteurs (a) 7,200 384,560
--------------------------------------------------------------- -------- ---------
Retail (0.4%)
Grandoptical Photo 25,479 2,964,556
--------------------------------------------------------------- -------- ---------
Software Services (1.4%)
Axime (a) 42,100 5,349,853
Business Objects SA (ADR) (a) 44,000 3,762,000
Infonie (a) 4,800 614,725
--------------------------------------------------------------- -------- ---------
9,726,578
--------------------------------------------------------------- -------- ---------
Textiles & Apparel (0.1%)
ICBT Groupe 14,793 734,304
--------------------------------------------------------------- -------- ---------
TOTAL FRANCE 39,289,090
--------------------------------------------------------------- -------- ---------
GERMANY (0.5%)
Building Materials (0.1%)
Tarkett AG (a) 34,400 778,270
--------------------------------------------------------------- -------- ---------
Miscellaneous (0.4%)
Fielmann AG 60,000 2,853,079
--------------------------------------------------------------- -------- ---------
TOTAL GERMANY 3,631,349
--------------------------------------------------------------- -------- ---------
HONG KONG (0.9%)
Amusements (0.2%)
Cdl Hotels International (a) 2,500,000 1,422,291
--------------------------------------------------------------- -------- ---------
Electronics (0.3%)
HKR International, Ltd. 1,844,800 2,003,662
--------------------------------------------------------------- -------- ---------
Finance (0.1%)
Wing Hang Bank Ltd. 100,000 396,949
--------------------------------------------------------------- -------- ---------
Insurance (0.3%)
National Mutual Asia 1,904,000 1,723,300
--------------------------------------------------------------- -------- ---------
Retail (0.0%)
Dickson Concepts International Ltd. 300,000 $ 327,773
--------------------------------------------------------------- -------- ---------
TOTAL HONG KONG 5,873,975
--------------------------------------------------------------- -------- ---------
INDONESIA (0.2%)
Automotive (0.2%)
Astra International 750,000 1,074,636
--------------------------------------------------------------- -------- ---------
ITALY (1.3%)
Automotive (0.2%)
De Rigo Sp. A. (ADR) (a) 200,000 $ 5,625,000
--------------------------------------------------------------- -------- ---------
Consumer Products (0.8%)
Brembo SPA (a) 86,000 1,084,413
--------------------------------------------------------------- -------- ---------
Health Care Services (0.2%)
Safilo (a) 72,000 1,513,135
--------------------------------------------------------------- -------- ---------
Miscellaneous (0.1)
C.A.L.P. (a) 150,000 816,271
--------------------------------------------------------------- -------- ---------
TOTAL ITALY 9,038,819
--------------------------------------------------------------- -------- ---------
JAPAN (18.5%)
Advertising & Publishing (0.2%)
Takuma Co. 100,000 1,411,545
--------------------------------------------------------------- -------- ---------
Automotive (0.8%)
Royal Ltd. 176,000 5,511,568
--------------------------------------------------------------- -------- ---------
Building Materials (2.3%)
Hibiya Engineering, Ltd. 200,000 2,093,947
Nitto Kohki 176,000 6,548,072
THK Co. 120,000 3,073,615
Tadano 430,000 3,818,649
--------------------------------------------------------------- -------- ---------
15,534,283
--------------------------------------------------------------- -------- ---------
Capital Goods (1.3%)
Disco Corporation 110,000 3,681,234
Kanamoto Co., Ltd. 165,000 2,082,262
Max Co. 150,000 2,944,613
--------------------------------------------------------------- -------- ---------
8,708,109
--------------------------------------------------------------- -------- ---------
Consumer Goods (2.9%)
Amway Japan Ltd. 155,000 7,824,258
</TABLE>
<PAGE>
PAGE 13
---------------------------------
SCHEDULE OF INVESTMENTS--March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------------------------------------------------------------- --------- -----------
<S> <C> <C>
Consumer Goods--continued
Daiwa Industries Ltd. 460,000 $ 4,601,075
Maruko Co. 100,000 7,384,903
--------------------------------------------------------------- -------- ---------
19,810,236
--------------------------------------------------------------- -------- ---------
Electronics Products (1.0%)
Aucnet, Inc. 88,000 3,784,062
Daiichi Kosho Co. 25,000 3,014,723
--------------------------------------------------------------- -------- ---------
6,798,785
--------------------------------------------------------------- -------- ---------
Finance (4.2%)
Nichiei Co., Ltd. 140,000 9,357,327
Promise Co. 140,000 6,216,405
Shokoh Fund 54,000 12,619,771
--------------------------------------------------------------- -------- ---------
28,193,503
--------------------------------------------------------------- -------- ---------
Foods (0.7%)
Izumi Co. 250,000 4,744,099
--------------------------------------------------------------- -------- ---------
Health Care Services (0.8%)
Nichii Gakkan Co. 99,000 5,247,301
--------------------------------------------------------------- -------- ---------
Machinery (0.6%)
Fuji Machine Manufacturing 130,000 3,524,188
Nippon Denwa 114,000 921,804
--------------------------------------------------------------- -------- ---------
4,445,992
--------------------------------------------------------------- -------- ---------
Office & Business Equipment (0.9%)
Riso Kagaku Corp. 70,000 5,987,380
--------------------------------------------------------------- -------- ---------
Restaurants (0.4%)
Ohsho Food Service Corp. 140,000 2,486,564
--------------------------------------------------------------- -------- ---------
Retail (2.4%)
Fast Retailing Co. 45,000 1,892,966
Ministop Co., Ltd. 186,000 4,868,427
Nissen Co. 115,000 1,967,282
Tsutsumi Jewelry 153,500 7,447,207
--------------------------------------------------------------- -------- ---------
16,175,882
--------------------------------------------------------------- -------- ---------
TOTAL JAPAN 125,055,247
--------------------------------------------------------------- -------- ---------
MALAYSIA (1.2%)
Air Transportation (0.0%)
Malaysian Helicopter Services Bhd 96,000 147,225
--------------------------------------------------------------- -------- ---------
Building Materials (0.4%)
Ho Hup Construction Co. Bhd 140,000 $ 467,589
Hume Industries (Malaysia) Bhd 208,000 1,052,332
IJM Corp. Bhd 100,000 173,913
Leader Universal Holdings Bhd 229,333 652,647
Road Builder (M) Hldgs. Bhd 60,000 230,040
--------------------------------------------------------------- -------- ---------
2,576,521
--------------------------------------------------------------- -------- ---------
Chemicals (0.3%)
Nylex (Malaysia) SDN Bhd 580,000 2,132,016
--------------------------------------------------------------- -------- ---------
Finance (0.5%)
Affin Holdings Bhd 800,000 1,802,372
MBF Capital Bhd 1,000,000 1,320,158
--------------------------------------------------------------- -------- ---------
3,122,530
--------------------------------------------------------------- -------- ---------
TOTAL MALAYSIA 7,978,292
--------------------------------------------------------------- -------- ---------
MEXICO (0.4%)
Drugs (0.0%)
Far Beneficial S.A. de C.V. (a) 141,000 194,238
--------------------------------------------------------------- -------- ---------
Food, Beverage & Tobacco (0.4)
Panamerican Beverage, Inc. 65,000 2,624,375
--------------------------------------------------------------- -------- ---------
TOTAL MEXICO 2,818,613
--------------------------------------------------------------- -------- ---------
NETHERLANDS (1.3%)
Finance (0.2%)
Wegener N.V. (a) 10,000 1,165,184
--------------------------------------------------------------- -------- ---------
Retail (0.6%)
Ceteco Holding N.V. (a) 15,000 621,936
Hagemeyer N.V. (a) 54,000 3,683,675
--------------------------------------------------------------- -------- ---------
4,305,611
--------------------------------------------------------------- -------- ---------
Software Services (0.5%)
Baan Co. N.V. (ADR) (a) 59,500 3,446,613
--------------------------------------------------------------- -------- ---------
TOTAL NETHERLANDS 8,917,408
--------------------------------------------------------------- -------- ---------
NORWAY (0.3%)
Advertising & Publishing (0.1%)
Schibsted AS 40,000 548,877
--------------------------------------------------------------- -------- ---------
(continued on next page)
</TABLE>
<PAGE>
PAGE 14
---------------------------------
Keystone Global Opportunities Fund
SCHEDULE OF INVESTMENTS--March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------------------------------------------------------------- --------- -----------
<S> <C> <C>
Retail (0.2%)
Elkjop Norge AS 77,000 $1,500,834
--------------------------------------------------------------- -------- ---------
TOTAL NORWAY 2,049,711
--------------------------------------------------------------- -------- ---------
PERU (0.8%)
Finance (0.2%)
Credicorp, Ltd. (ADR) 77,101 1,387,818
--------------------------------------------------------------- -------- ---------
Foods (0.2%)
La Fabril S.A. (a) 1,024,457 1,398,175
--------------------------------------------------------------- -------- ---------
Telecommunications (0.3%)
Compania Peruana de Telefonos 815,487 1,681,595
--------------------------------------------------------------- -------- ---------
Telephone Utilities (0.1%)
Tele 2000 (a) 498,192 792,193
--------------------------------------------------------------- -------- ---------
TOTAL PERU 5,259,781
--------------------------------------------------------------- -------- ---------
SINGAPORE (0.0%)
Diversified Companies (0.0%)
Natsteel Ltd. 150,000 295,162
--------------------------------------------------------------- -------- ---------
SPAIN (0.8%)
Amusements (0.5%)
Azkoyen S.A. 50,650 3,297,360
--------------------------------------------------------------- -------- ---------
Building Materials (0.0%)
Tableros de Fibras S.A. 43,108 437,627
--------------------------------------------------------------- -------- ---------
Business Services (0.1%)
Estacionamientos Subterraneo S.A. 49,700 732,796
--------------------------------------------------------------- -------- ---------
Retail (0.2%)
Cortefiel S.A. 48,541 1,134,183
--------------------------------------------------------------- -------- ---------
TOTAL SPAIN 5,601,966
--------------------------------------------------------------- -------- ---------
SWEDEN (1.2%)
Capital Goods (0.3%)
Hoganas AB 72,000 2,194,464
--------------------------------------------------------------- -------- ---------
Finance (0.2%)
Finnveden Invest AB (a) 143,500 1,461,479
--------------------------------------------------------------- -------- ---------
Health Care Services (0.4%)
Gettinge 53,600 2,745,507
--------------------------------------------------------------- -------- ---------
Retail (0.3%)
Lindex AB (a) 148,000 $1,817,637
--------------------------------------------------------------- -------- ---------
TOTAL SWEDEN 8,219,087
--------------------------------------------------------------- -------- ---------
SWITZERLAND (1.0%)
Consumer Goods (0.4%)
Phoenix Meccano AG 4,225 2,379,982
--------------------------------------------------------------- -------- ---------
Electronics (0.0%)
Micronas Semiconductor AG (a) 90 64,469
--------------------------------------------------------------- -------- ---------
Food, Beverage & Tobacco (0.3%)
Lindt & Spruengli 1,350 2,167,900
--------------------------------------------------------------- -------- ---------
Health Care Services (0.1%)
Phonak 900 930,721
--------------------------------------------------------------- -------- ---------
Paper & Packaging (0.2%)
SIG Schweizerische Industrie AG (a) 510 1,170,591
--------------------------------------------------------------- -------- ---------
TOTAL SWITZERLAND 6,713,663
--------------------------------------------------------------- -------- ---------
TAIWAN, PROV. OF CHINA (0.1%)
Finance (0.1%)
Chronicle 2001 Mutual Fund (a) 1,653,374 634,794
--------------------------------------------------------------- -------- ---------
UNITED KINGDOM (10.1%)
Advertising & Publishing (1.1%)
Dorling Kindersley 487,500 4,099,702
Flextech (a) 80,000 608,059
HTV Group 490,000 2,699,786
--------------------------------------------------------------- -------- ---------
7,407,547
--------------------------------------------------------------- -------- ---------
Automotive (0.6%)
Brammer 490,000 3,881,410
--------------------------------------------------------------- -------- ---------
Building Materials (1.0%)
Berkeley Group (The) PLC 305,555 2,564,946
Halma PLC 928,776 2,601,196
Persimmon 540,000 1,747,253
--------------------------------------------------------------- -------- ---------
6,913,395
--------------------------------------------------------------- -------- ---------
Business Services (1.6%)
Capita Group 691,000 3,343,208
Compass Group PLC 647,368 5,216,886
</TABLE>
<PAGE>
PAGE 15
---------------------------------
SCHEDULE OF INVESTMENTS--March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------------------------------------------------------------- --------- -----------
<S> <C> <C>
Business Services--continued
Takare PLC 1,004,000 $ 2,306,197
--------------------------------------------------------------- -------- ---------
10,866,291
--------------------------------------------------------------- -------- ---------
Capital Goods (0.7%)
Critchley Group PLC 405,000 4,543,269
--------------------------------------------------------------- -------- ---------
Consumer Goods (0.2%)
Chamberlain Phipps Hldgs. PLC 1,000,000 1,343,101
--------------------------------------------------------------- -------- ---------
Drugs (0.3%)
ML Laboratories (a) 90,000 603,022
Shire Pharma Group (a) 350,000 1,052,350
--------------------------------------------------------------- -------- ---------
1,655,372
--------------------------------------------------------------- -------- ---------
Electrical Products (1.0%)
Blick PLC 108,888 742,871
Pressac Holdings 140,000 356,838
Renishaw 415,000 3,021,291
Vitec Group 242,500 2,809,180
--------------------------------------------------------------- -------- ---------
6,930,180
--------------------------------------------------------------- -------- ---------
Finance (0.6%)
3I Group PLC 335,000 2,201,122
Unionamerica Holdings PLC (ADR) 84,200 1,452,450
--------------------------------------------------------------- -------- ---------
3,653,572
--------------------------------------------------------------- -------- ---------
Foods (0.3%)
Devro International Ltd. 200,000 686,813
Geest 300,000 984,432
--------------------------------------------------------------- -------- ---------
1,671,245
--------------------------------------------------------------- -------- ---------
Health Care Services (0.3%)
Seton Healthcare 227,000 1,576,389
Westminster Healthcare Hldgs. PLC 120,000 545,787
--------------------------------------------------------------- -------- ---------
2,122,176
--------------------------------------------------------------- -------- ---------
Paper & Packaging (0.4%)
Jarvis Porter Group PLC 630,000 2,913,462
--------------------------------------------------------------- -------- ---------
Restaurants (0.4%)
My Kinda Town, Inc. 305,000 614,469
Restaurants--continued
Pelican Group 1,205,000 $ 2,335,699
--------------------------------------------------------------- -------- ---------
2,950,168
--------------------------------------------------------------- -------- ---------
Retail (0.9%)
Brown N Group PLC 180,000 804,945
Watson & Philip 675,000 5,264,425
--------------------------------------------------------------- -------- ---------
6,069,370
--------------------------------------------------------------- -------- ---------
Software Services (0.3%)
Sage Group 440,000 2,296,702
--------------------------------------------------------------- -------- ---------
Telecommunications (0.4%)
Capital Radio 107,000 1,030,479
1,085,000 1,747,062
2,777,541
--------------------------------------------------------------- -------- ---------
TOTAL UNITED KINGDOM 67,994,801
--------------------------------------------------------------- -------- ---------
TOTAL FOREIGN (Cost--$316,831,379) 342,490,394
---------------------------------------------------------------------------- ---------
</TABLE>
<TABLE>
<CAPTION>
Maturity Market
Value Value
--------------------------------------------------------------- --------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (9.3%)
Investments in repurchase agreements, in a joint trading
account, purchased 3/29/95, 6.39%, maturing 4/01/95
(Cost--$62,609,000) (b) $62,637,994 $ 62,609,000
--------------------------------------------------------------- -------- ---------
TOTAL INVESTMENTS
(Cost--$592,235,470) (101.5%) 685,703,004
---------------------------------------------------------------------------- ---------
FOREIGN CURRENCY HOLDINGS
(Cost--$215,407) (0.0%) 214,540
---------------------------------------------------------------------------- ---------
OTHER ASSETS AND LIABILITIES--
NET (-1.5%) (10,474,959)
---------------------------------------------------------------------------- ---------
NET ASSETS (100%) $675,442,585
---------------------------------------------------------------------------- ---------
</TABLE>
(a) Non-income-producing security.
(b) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at March 31, 1996.
See Notes to Schedule of Investments.
<PAGE>
PAGE 16
---------------------------------
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACT
<TABLE>
<CAPTION>
U.S. Value In
at Exchange Net Unrealized
Exchange March 31, for U.S. Appreciation/
Date 1996 $ Depreciation
--------- ---------- --------------------------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C>
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Receive
--------- -------- -------------------------- ---------
04/01/96 2,274,804 French Franc $ 451,673 $ 450,724 $ 949
04/01/96 3,685,284 Hong Kong Dollar 476,504 476,720 (216)
04/01/96 711,000,000 Italian Lira 452,794 455,477 (2,683)
04/01/96 84,674 Pound Sterling 129,233 128,978 256
04/02/96 3,461,344 Australian Dollar 2,704,809 2,674,711 30,098
04/02/96 1,949,832 French Franc 387,148 387,148 0
04/02/96 324,783 Pound Sterling 495,700 495,020 680
04/03/96 32,970,000 Austrian Schilling 3,181,665 3,178,904 2,761
04/03/96 1,317,654 Australian Dollar 1,029,658 1,018,201 11,457
04/03/96 346,102 Pound Sterling 528,239 525,592 2,647
04/03/96 54,000 Swiss Franc 45,401 45,291 110
04/04/96 1,290,454 Australian Dollar 1,008,403 1,010,435 (2,031)
04/04/96 509,098,728 Italian Lira 324,215 324,680 (465)
04/04/96 1,670,988 Pound Sterling 2,550,348 2,546,849 3,498
04/08/96 1,191,979 Malaysian Ringitt 471,138 470,023 1,115
--------------
Net Unrealized Appreciation on Forward Foreign Currency Exchange Contracts $48,176
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
PAGE 17
---------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended September 30,
March 31, --------------------------------------------------
1996 1995 1994 1993 1992 1991
---------------------------------------------------------- ----------- ------ ------ ------ ------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value beginning of period $23.43 $19.42 $18.02 $11.69 $12.89 $9.89
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
Income from investment operations:
Net investment income (loss) (0.03) (0.16) (0.04) (0.14) (0.08) 0.17
Net realized and unrealized gains (losses) on investment
and foreign currency related transactions 0.88 4.17 1.60 6.47 0.23 3.06
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
Total from investment operations 0.85 4.01 1.56 6.33 0.15 3.23
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
Less distributions from:
Net investment income 0.00 0 0 0 0 (0.23)
Net realized gains (losses) on investments 0.00 0 (0.16) 0 (1.35) 0
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
Total distributions 0.00 0 (0.16) 0 (1.35) (0.23)
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
Net asset value end of period $24.28 $23.43 $19.42 $18.02 $11.69 $12.89
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
Total return (b) 3.63% 20.65% 8.74% 54.15% 1.81% 32.71%
Ratios/supplemental data
Ratios to average net assets:
Total expenses (c) 1.74%(d) 1.83% 2.01% 2.84% 2.50%(a) 2.03%(a)
Net investment income (loss) (0.68%)(d) (0.83%) (0.86%) (1.72%) (0.69%) 1.49%
Portfolio turnover rate 32% 35% 32% 64% 75% 134%
Average commission rate paid $ 0.017 N/A N/A N/A N/A N/A
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
Net assets end of period (thousands) $237,435 $94,679 $71,122 $29,942 $10,859 $2,159
---------------------------------------------------------- ------ ------ ------ ------ ------ -------
</TABLE>
(a) Figures are net of expense reimbursement by Keystone in connection
with voluntary expense limitations. Before the expense reimbursement,
the "Ratio of total expenses to average net assets" would have been
3.67% and 7.77% for the years ended September 30, 1992 and 1991,
respectively.
(b) Excluding applicable sales charges.
(c) The annualized expense ratio includes indirectly paid expenses for the
six month period ended March 31, 1996 and the year ended September 30,
1995. Excluding indirectly paid expenses, the annualized expense ratio
would have been 1.72% and 1.81%, for the respective periods.
(d) Annualized
See Notes to Financial Statements.
17
<PAGE>
PAGE 18
---------------------------------
Keystone Global Opportunities Fund
FINANCIAL HIGHLIGHTS--CLASS B SHARES
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
February 1, 1993
(Date of Initial
Six Months Public Offering)
Ended Year Ended September 30, to
March 31, ---------------------------- September 30,
1996 1995 1994 1993
---------------------------------------------------------- ----------- ------- ----------- ----------------
<S> <C> <C> <C> <C>
(Unaudited)
Net asset value beginning of period $23.00 $19.20 $17.95 $14.04
---------------------------------------------------------- --------- ----- -------- -----------
Income from investment operations:
Net investment income (loss) (0.12) (0.25) (0.15) (0.04)
Net realized and unrealized gains (losses) on investment
and foreign currency related transactions 0.86 4.05 1.56 3.95
---------------------------------------------------------- --------- ----- -------- -----------
Total from investment operations 0.74 3.80 1.41 3.91
---------------------------------------------------------- --------- ----- -------- -----------
Less distributions from:
Net investment income 0 0 0 0
Net realized gains (losses) on investments 0 0 (0.16) 0
---------------------------------------------------------- --------- ----- -------- -----------
Total distributions 0 0 (0.16) 0
---------------------------------------------------------- --------- ----- -------- -----------
Net asset value end of period $23.74 $23.00 $19.20 $17.95
---------------------------------------------------------- --------- ----- -------- -----------
Total return (b) 3.22% 19.79% 7.93% 27.85%
Ratios/supplemental data
Ratios to average net assets:
Total expenses (c) 2.49%(d) 2.58% 2.83% 3.35%(a)
Net investment income (loss) (1.56%)(d) (1.59%) (1.61%) (1.86%)(a)
Portfolio turnover rate 32% 35% 32% 64%
Average commission rate paid $0.017 N/A N/A N/A
---------------------------------------------------------- --------- ----- -------- -----------
Net assets end of period (thousands) $326,950 $238,320 $131,695 $15,534
---------------------------------------------------------- --------- ----- -------- -----------
</TABLE>
(a) Annualized for the period February 1, 1993 (Date of Initial Public
Offering) to September 30, 1993.
(b) Excluding applicable sales charges.
(c) The annualized expense ratio includes indirectly paid expenses for the
six month period ended March 31, 1996 and the year ended September 30,
1995. Excluding indirectly paid expenses, the annualized expense ratio
would have been 2.47% and 2.56%, for the respective periods.
(d) Annualized
See Notes to Financial Statements.
<PAGE>
PAGE 19
---------------------------------
FINANCIAL HIGHLIGHTS--CLASS C SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
February 1, 1993
(Date of Initial
Six Months Year Ended Public Offering)
Ended September 30, to
March 31, ---------------- September 30,
1996 1995 1994 1993
---------------------------------------------------------- ----------- ------ ------ -----------------
<S> <C> <C> <C> <C>
(Unaudited)
Net asset value beginning of period $23.04 $19.26 $17.99 $14.04
---------------------------------------------------------- --------- ---- ---- ---------
Income from investment operations:
Net investment income (loss) (0.13) (0.27) (0.15) (0.04)
Net realized and unrealized gains (losses) on investment
and foreign currency related transactions 0.87 4.05 1.58 3.99
---------------------------------------------------------- --------- ---- ---- ---------
Total from investment operations 0.74 3.78 1.43 3.95
---------------------------------------------------------- --------- ---- ---- ---------
Less distributions from:
Investment income-net 0 0 0 0
Net realized gains (losses) on investments 0 0 (0.16) 0
---------------------------------------------------------- --------- ---- ---- ---------
Total distributions 0 0 (0.16) 0
---------------------------------------------------------- --------- ---- ---- ---------
Net asset value end of period $23.78 $23.04 $19.26 $17.99
---------------------------------------------------------- --------- ---- ---- ---------
Total return (b) 3.21% 19.63% 8.02% 28.13%
Ratios/supplemental data
Ratios to average net assets:
Total expenses (c) 2.49%(d) 2.58% 2.85% 3.04%(a)
Net investment income (loss) (1.58%)(d) (1.59%) (1.62%) (1.55%)(a)
Portfolio turnover rate 32% 35% 32% 64%
Average commission rate paid $0.017 N/A N/A N/A
---------------------------------------------------------- --------- ---- ---- ---------
Net assets end of period (thousands) $111,057 $86,339 $50,535 $6,217
---------------------------------------------------------- --------- ---- ---- ---------
</TABLE>
(a) Annualized for the period February 1, 1993 (Date of Initial Public
Offering) to September 30, 1993.
(b) Excluding applicable sales charges.
(c) The annualized expense ratio includes indirectly paid expenses for the
six month period ended March 31, 1996 and for the year ended September
30, 1995. Excluding indirectly paid expenses, the annualized expense
ratio would have been 2.47% and 2.56%, for the respective periods.
(d) Annualized
See Notes to Financial Statements.
<PAGE>
PAGE 20
---------------------------------
Keystone Global Opportunities Fund
STATEMENT OF ASSETS AND LIABILITIES--
March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments at market value
(identified cost--$592,235,470) (Note 1) $685,703,004
Foreign currency holdings
(identified cost--215,407) (Note 1) 214,540
----------------------------------------------------- -----------
Total investments and foreign currency holdings 685,917,544
----------------------------------------------------- -----------
Cash 859
Receivable for:
Investments sold 1,374,153
Fund shares sold 5,670,647
Foreign currency related contracts (Note 5) 56,254
Dividends and interest 924,825
Foreign tax reclaim 164,570
Prepaid expenses 16,524
----------------------------------------------------- -----------
Total assets 694,125,376
----------------------------------------------------- -----------
Liabilities:
Payable for:
Investments purchased 18,033,670
Fund shares redeemed 374,635
Foreign currency related transactions 8,078
Foreign taxes to be withheld 116,322
Other accrued expenses (Note 4) 150,086
----------------------------------------------------- -----------
Total liabilities 18,682,791
----------------------------------------------------- -----------
Net assets $675,442,585
----------------------------------------------------- -----------
Net assets represented by: (Note 1)
Paid-in capital $565,605,923
Accumulated distributions in excess of investment
income--net (6,186,164)
Accumulated realized gains (losses) on investment and
foreign currency related transactions--net 22,559,841
Net unrealized appreciation on investments and other
assets and liabilities 93,414,809
Net unrealized appreciation on foreign currency
exchange contracts 48,176
----------------------------------------------------- -----------
Total net assets $675,442,585
Net asset value and redemption price per share: (Note 2)
Class A Shares ($24.28 on 9,779,131 shares
outstanding) $237,435,412
Class B Shares ($23.74 on 13,772,412 shares
outstanding) 326,949,750
Class C Shares ($23.78 on 4,670,096 shares
outstanding) 111,057,423
----------------------------------------------------- -----------
$675,442,585
----------------------------------------------------- -----------
Offering price per share:
Class A Shares (including sales charge of 5.75%)
(Note 2) $25.76
----------------------------------------------------- -----------
Class B Shares $23.74
----------------------------------------------------- -----------
Class C Shares $23.78
----------------------------------------------------- -----------
See Notes to Financial Statements.
</TABLE>
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Investment income: (Note 1)
Dividends (net of foreign taxes of
$218,561) $ 1,430,754
Interest 780,316
----------------------------------------- ------- ----------
Total income 2,211,070
----------------------------------------- ------- ----------
Expenses: (Notes 2 and 4)
Management fee $2,255,361
Transfer agent fees 858,196
Accounting, audit and legal 37,018
Custodian fees 232,194
Printing 31,385
Trustees' fees and expenses 15,346
Distribution Plan expenses 1,949,456
Registration fees 92,016
Miscellaneous expenses 19,240
----------------------------------------- ------- ----------
Total expenses 5,490,212
Fees paid indirectly (Note 6) (53,919)
----------------------------------------- ------- ----------
Net Expenses 5,436,293
----------------------------------------- ------- ----------
Net investment loss (Note 1) (3,225,223)
----------------------------------------- ------- ----------
Net realized and unrealized gain (loss)
on investment and foreign currency
related transactions: (Notes 1 and 3)
Net realized gain on investment and
foreign currency related transactions 29,881,457
Net change in unrealized appreciation
(depreciation) on investments (5,534,891)
----------------------------------------- ------- ----------
Net realized and unrealized gain on
investment and foreign currency related
transactions 24,346,566
----------------------------------------- ------- ----------
Net increase in net assets resulting from
operations $21,121,343
----------------------------------------- ------- ----------
</TABLE>
<PAGE>
PAGE 21
---------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, September 30,
1996 1995
================================================================== ============ =================
(Unaudited)
<S> <C> <C>
Operations:
Net investment loss (Note 1) ($ 3,225,223) ($ 4,286,288)
Net realized gain (loss) on investments and foreign currency
related transactions (Note 3) 29,881,457 (7,000,011)
Net change in unrealized appreciation (depreciation) on
investments (5,534,891) 73,894,167
------------------------------------------------------------------ ---------- ---------------
Net increase in net assets resulting from operations 21,121,343 62,607,868
------------------------------------------------------------------ ---------- ---------------
Capital share transactions: (Note 2)
Proceeds from shares sold:
Class A Shares 145,902,391 35,039,374
Class B Shares 103,087,441 105,034,904
Class C Shares 28,833,831 38,024,895
Payments for shares redeemed:
Class A Shares (9,365,674) (26,560,885)
Class B Shares (25,568,787) (33,012,757)
Class C Shares (7,906,090) (15,147,033)
------------------------------------------------------------------ ---------- ---------------
Net increase in net assets resulting from capital share
transactions 234,983,112 103,378,498
------------------------------------------------------------------ ---------- ---------------
Total increase in net assets 256,104,455 165,986,366
------------------------------------------------------------------ ---------- ---------------
Net assets:
Beginning of period 419,338,130 253,351,764
------------------------------------------------------------------ ---------- ---------------
End of period [including accumulated distributions in excess of
net investment income as follows: 1996--($6,186,164) and 1995--
($2,960,939)] (Note 1) $675,442,585 $419,338,130
================================================================== ========== ===============
</TABLE>
See Notes to Financial Statements.
<PAGE>
PAGE 22
---------------------------------
Keystone Global Opportunities Fund
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1.) Significant Accounting Policies
Keystone Global Opportunities Fund (the "Fund") is a diversified open-end
investment company. The Fund was formed as a Massachusetts business trust on
June 17, 1987. Keystone Investment Management Company (formerly Keystone
Custodian Funds, Inc.) ("Keystone") is the Fund's Investment Adviser. The
Fund's investment objective is to provide shareholders with capital growth.
Keystone is a wholly-owned subsidiary of Keystone Investments, Inc.
("KII"), a Delaware corporation. KII is a private corporation predominately
owned by current and former members of management of Keystone and its
affiliates. Keystone has retained Credit Lyonnais International Asset
Management North America ("CLIAM"), an international portfolio management
firm, to provide the Fund with sub-advisory services, subject to the
supervision of the Fund's Board of Trustees and Keystone. Keystone Investor
Resource Center, Inc. ("KIRC"), a wholly-owned subsidiary of Keystone, is the
Fund's transfer agent.
The Fund currently issues three classes of shares. Class A shares are
offered at a public offering price which includes a maximum sales charge of
5.75% 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. Class C shares are available
only through dealers who have entered into special distribution agreements
with Keystone Investment Distributors Company ("KIDCO"), the Fund's principal
underwriter.
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. Investments, including American Depository Receipts ("ADRs"), are usually
valued at the closing sales price, or in the absence of sales and for
over-the-counter securities, the mean of bid and asked quotations. Management
values the following securities at prices it deems in good faith to be fair
by or under the direction of the Board of Trustees: (a) securities (including
restricted securities) for which complete quotations are not readily
available and (b) listed securities if, in the opinion of management, the
last sales price does not reflect a current value, or if no sale occurred.
ADRs, which are certificates representing shares of foreign securities
deposited in domestic and foreign banks, are traded and valued in United
States dollars.
Short-term investments purchased with maturities of sixty days or less,
are valued at amortized cost (original purchase price 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) which 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.
Investments denominated in foreign currencies are adjusted daily to
reflect changes in exchange rates. Those securities traded in foreign
currency amounts
<PAGE>
PAGE 23
---------------------------------
are translated into United States dollars as follows; market value of
investments, assets, and liabilities at the daily rate of exchange; and
purchases and sales of investments, income, and expenses at the rate of
exchange prevailing on the respective dates of such transactions. Market
quotations are not considered to be readily available for long-term corporate
bonds and notes; such investments are stated at fair value on the basis of
valuations furnished by a pricing service, approved by the Board of Trustees,
which determines valuations for normal, institutional-size trading units of
such securities using methods based on market transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders.
The Fund enters into currency and other financial futures contracts as a
hedge against changes in interest or currency exchange rates. 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. 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 which remain open at fiscal year-end
are marked-to-market and the resultant net gain or loss is included in federal
taxable income.
B. Securities transactions are accounted for on the day after trade date.
Realized gains and losses are computed on the identified cost basis. Interest
income is recorded on the accrual basis and dividend income is recorded on
the ex-dividend date. Distributions to the shareholders are recorded by the
Fund at the close of business on the ex-dividend date.
C. 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 is 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.
D. 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 the 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
<PAGE>
PAGE 25
----------------------------------
Keystone Global Opportunities Fund
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 collateralized by U.S.
Treasury and/or Federal Agency obligations.
E. In connection with portfolio purchases and sales of securities denominated
in a foreign currency, the Fund may enter into forward foreign currency
exchange contracts ("contracts"). Additionally, from time to time the Fund
may enter into contracts to hedge certain foreign currency assets. Contracts
are recorded at market value and marked-to-market daily. Realized gains and
losses arising from such transactions are included in net realized gain
(loss) on foreign currency related transactions. The Fund is subject to the
credit risk that the other party will not complete the obligations of the
contract.
F. The Fund distributes net income and net capital gains, if any, annually.
Distributions are determined in accordance with income tax regulations.
Distributions from taxable net investment income and net capital gains can
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 net operating losses generated by the fund.
(2.) Capital Share Transactions
The Trust Agreement authorizes the issuance of an unlimited number of
shares of beneficial interest with-out par value. Transactions in shares of
the Fund were as follows:
<TABLE>
<CAPTION>
Class A Shares
---------------------------------
Six Months
Ended Year Ended
March 31, September 30,
1996 1995
------------------------------- ------------ -----------------
<S> <C> <C>
Sales 6,144,664 1,705,057
Redemptions (406,491) (1,325,373)
Reinvestment of dividends and
distributions 0 0
------------------------------- ---------- ---------------
Net increase 5,738,173 379,684
------------------------------- ---------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
---------------------------------
Six Months
Ended Year Ended
March 31, September 30,
1996 1995
------------------------------- ------------ -----------------
<S> <C> <C>
Sales 4,550,638 5,208,875
Redemptions (1,141,516) (1,702,740)
Reinvestment of dividends and
distributions 0 0
------------------------------- ---------- ---------------
Net increase 3,409,122 3,506,135
------------------------------- ---------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
---------------------------------
Six Months
Ended Year Ended
March 31, September 30,
1996 1995
------------------------------- ------------ -----------------
<S> <C> <C>
Shares sold 1,271,939 1,900,476
Shares redeemed (349,749) (775,826)
Shares issued in reinvestment
of dividends and
distributions 0 0
------------------------------- ---------- ---------------
Net increase 922,190 1,124,650
------------------------------- ---------- ---------------
</TABLE>
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 Investment Company Act of
<PAGE>
PAGE 25
---------------------------------
1940 ("1940 Act"). Under its Distribution Plans, the Fund pays Keystone
Investment Distributors Company (formerly Keystone Distributors, Inc.)
("KIDCO"), the principal underwriter and a wholly-owned subsidiary of
Keystone, amounts which in total may not exceed each Distribution Plan's
maximum.
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 of the distribution of Class A shares. Amounts paid by
the Fund to KIDCO 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 daily net asset value of shares maintained by such recipients and
outstanding on the books of the Fund for specified periods.
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
of the distribution of Class B shares. Amounts paid by the Fund under the Class
B Distribution Plans are currently used to pay others (dealers) (i) a commission
at the time of purchase normally equal to 4.00% of the value of each Class B
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 a Class B share, the broker or other party will receive
service fees at an annual rate of 0.25% of the average net asset value of such
Class B shares maintained by such others and outstanding on the Fund's books for
specified periods. 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 5.00% of amounts redeemed during the first 12 months
following the date of purchase to 1.00% of amounts redeemed during the sixth
twelve- month period following the date of purchase. Class B shares purchased on
or after June 1, 1995 that have been outstanding for eight years following 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 of 0.75% of the price of each
Class C share sold, plus the first year's service fee in advance in the
amount of 0.25% of the price paid of each Class C share, and, beginning
approximately 15 months after purchase, a commission at an annual rate of
0.75% (subject to applicable limitations imposed by the rules of the National
Association of Securities Dealers, Inc.) ("NASD") and service fees at an
annual rate of 0.25%, respectively, of the average net asset value of each
Class C share maintained by such others and outstanding on the Fund's books
for specified periods.
Each of the Distribution Plans may be terminated at any time by vote of
the Independent Trustees or by vote of a majority of the outstanding voting
shares of the respective class. However, after the termination of any
Distribution Plan payments to KIDCO may, at the discretion of the Board of
Trustees, continue as compensation for its services which had been earned
while the Distribution Plan was in effect.
KIDCO intends, but is not obligated, to continue to pay or accrue
distribution costs and service fees which exceed annual maximum payments
permitted to be received by KIDCO from the Fund. KIDCO
<PAGE>
PAGE 26
---------------------------------
Keystone Global Opportunities Fund
intends to seek full payment of such amounts from the Fund (together with
annual interest thereon at the prime rate plus 1.0%) at such time in the
future as, and to the extent that, payment thereof by the Fund would be
within permitted limits. KIDCO currently intends to seek payment of interest
only on such amounts paid or accrued by KIDCO subsequent to January 1, 1992.
During the six months ended March 31, 1996, the Fund paid KIDCO $133,650
under its Class A Distribution Plan; $1,254,012 for Class B shares sold prior
to June 1, 1995 and $93,501 for Class B shares sold on or after June 1, 1995;
and $468,293 under its Class C Distribution Plan.
Under the NASD Rule, as of March 31, 1996, the maximum uncollected amounts
for which KIDCO may seek payment from the Fund under its Class B Distribution
Plans were $9,175,355 for Class B shares sold prior to June 1, 1995 and
$8,044,979 for Class B shares sold on or after June 1, 1995. The maximum
uncollected amount for the Class C Distribution Plan was $6,767,638 as of
March 31, 1996.
Presently, the Fund's class-specific expenses are limited to Distribution
Plan expenses incurred by a class of shares.
(3.) Securities Transactions
Cost of purchases and proceeds from sales of investment securities
excluding short-term securities during the six months ended March 31, 1996
were $342,795,670 and $150,078,552, respectively.
(4.) Investment Management Agreement and Other Transactions with
Affiliates
The Fund pays Keystone a fee calculated by applying percentage rates
starting at 1.00% and declining, as net assets increase, to 0.75% of the net
assets of the Fund. During the six months ended March 31, 1996, the Fund paid
to or accrued for Keystone investment management and administrative services
fees of $2,255,361, which represented 0.95% of the Fund's average daily net
assets. Of such amount, Keystone retained $1,327,871 for its services to the
Fund, and $927,490 was paid or accrued to CLIAM for its services to the Fund
as subadviser.
During the six months ended March 31, 1996, the Fund paid or accrued to
KII and KIRC $47,150 for certain accounting and printing services, and
$858,196 for shareholder services.
The Fund is subject to certain state annual expense limits, the most
restrictive of which is as follows: 2.5% of the first $30 million of Fund
assets, 2.0% of the next $70 million of Fund assets, and 1.5% of Fund assets
over $100 million.
Keystone has agreed to reimburse the Fund annually for certain operating
expenses incurred by the Fund in excess of the applicable state expense
limit. However, Keystone is not required to make such reimbursement to an
extent which would result in the Fund's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code.
The Fund has entered into an expense offset arrangement with its
custodian. For the six months ended March 31, 1996, the Fund paid custody
fees in the amount of $232,194 and received a credit of $53,919 pursuant to
the expense offset arrangement, resulting in a net custody expense of
$178,275. The assets deposited with SSB&T under the expense offset
arrangement could have been invested in an income- producing asset.
<PAGE>
PAGE 27
---------------------------------
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.
(5.) Foreign Currency Exchange Contracts
At March 31, 1996, the Fund had entered into currency exchange contracts
that obligate the Fund to deliver currencies at specified future dates. The
unrealized appreciation of $48,176 on these contracts is included in the
accompanying financial statements.
(6.) Distributions to Shareholders
The Fund intends to distribute to its shareholders dividends from net
investment income annually and all net realized long-term capital gains, if
any, annually.
<PAGE>
PAGE 28
---------------------------------
Keystone Global Opportunities Fund
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.
<PAGE>
KEYSTONE AMERICA
FAMILY OF FUNDS
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.
KEYSTONE INVESTMENTS [LOGO]
P.O. Box 2121
Boston, Massachusetts 02106-2121
GOF-SAR-5/96
50M [RECYCLE LOGO]
KEYSTONE
[Picture of American Flag and U. S. Currency]
GLOBAL
OPPORTUNITIES
FUND
SEMIANNUAL REPORT
MARCH 31, 1996
