<PAGE> PAGE 1
000 B000000 03/31/95
000 C000000 0000868651
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000 F000000 Y
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002 A000000 200 BERKELEY STREET
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002 D020000 5034
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004 000000 N
005 000000 N
006 000000 N
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007 C010100 1
007 C020100 FLORIDA TAX FREE FUND
007 C030100 N
007 C010200 2
007 C020200 PENNSYLVANIA TAX FREE FUND
007 C030200 N
007 C010300 3
007 C020300 TEXAS TAX FREE FUND
007 C030300 N
007 C010400 4
007 C020400 MASSACHUSETTS TAX FREE FUND
007 C030400 N
007 C010500 5
007 C020500 NEW YORK INSURED TAX FREE FUND
007 C030500 N
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007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
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008 B00AA01 A
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008 D01AA01 BOSTON
008 D02AA01 MA
008 D03AA01 02110
010 A00AA01 KEYSTONE INVESTMENT, INC. (KII)
010 C01AA01 BOSTON
<PAGE> PAGE 2
010 C02AA01 MA
010 C03AA01 02116
010 C04AA01 5034
011 A00AA01 KEYSTONE INVESTMENT DISTRIBUTORS CO. (KIDC)
011 B00AA01 8-395
011 C01AA01 BOSTON
011 C02AA01 MA
011 C03AA01 02110
012 A00AA01 KEYSTONE INVESTOR RESOURCE CENTER
012 B00AA01 84-1571
012 C01AA01 CAMBRIDGE
012 C02AA01 MA
012 C03AA01 02192
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080 B00AA00 FREDERICK JAMES
080 C00AA00 35000
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083 A00AA00 N
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084 A00AA00 N
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<PAGE> PAGE 3
074 T000100 106152
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<PAGE> PAGE 4
071 D000300 58
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<PAGE> PAGE 5
071 A000500 23006
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SIGNATURE KEVIN J. MORRISSEY
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> KEYSTONE FLORIDA TAX FREE FUND CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 110,808,963
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> KEYSTONE FLORIDA TAX FREE FUND CLASS B
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 110,808,963
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</TABLE>
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> KEYSTONE FLORIDA TAX FREE FUND CLASS C
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 401
<NAME> KEYSTONE MASSACHUSETTS TAX FREE FUND CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 402
<NAME> KEYSTONE MASSACHUSETTS TAX FREE FUND CLASS B
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<FISCAL-YEAR-END> MAR-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
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<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 501
<NAME> KEYSTONE NEW YORK TAX FREE FUND CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 17,261,118
<INVESTMENTS-AT-VALUE> 17,818,520
<RECEIVABLES> 448,982
<ASSETS-OTHER> 7,512
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,275,014
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (154,812)
<TOTAL-LIABILITIES> (154,812)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,269,703
<SHARES-COMMON-STOCK> 352,186
<SHARES-COMMON-PRIOR> 72,967
<ACCUMULATED-NII-CURRENT> 14,057
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (70,407)
<ACCUM-APPREC-OR-DEPREC> 109,692
<NET-ASSETS> 3,323,045
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 122,439
<OTHER-INCOME> 0
<EXPENSES-NET> (10,144)
<NET-INVESTMENT-INCOME> 112,295
<REALIZED-GAINS-CURRENT> (68,270)
<APPREC-INCREASE-CURRENT> 139,585
<NET-CHANGE-FROM-OPS> 183,610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (110,893)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 315,837
<NUMBER-OF-SHARES-REDEEMED> (41,667)
<SHARES-REINVESTED> 5,049
<NET-CHANGE-IN-ASSETS> 2,642,810
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (49)
<OVERDIST-NET-GAINS-PRIOR> (2,078)
<GROSS-ADVISORY-FEES> (11,210)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (32,510)
<AVERAGE-NET-ASSETS> 2,053,172
<PER-SHARE-NAV-BEGIN> 9.32
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> 0.11
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.44
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 502
<NAME> KEYSTONE NEW YORK TAX FREE FUND CLASS B
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 17,261,118
<INVESTMENTS-AT-VALUE> 17,818,520
<RECEIVABLES> 448,982
<ASSETS-OTHER> 7,512
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,275,014
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (154,812)
<TOTAL-LIABILITIES> (154,812)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,816,572
<SHARES-COMMON-STOCK> 1,269,971
<SHARES-COMMON-PRIOR> 244,217
<ACCUMULATED-NII-CURRENT> 7,913
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (270,971)
<ACCUM-APPREC-OR-DEPREC> 353,161
<NET-ASSETS> 11,906,675
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 469,376
<OTHER-INCOME> 0
<EXPENSES-NET> (97,168)
<NET-INVESTMENT-INCOME> 372,208
<REALIZED-GAINS-CURRENT> (263,604)
<APPREC-INCREASE-CURRENT> 450,252
<NET-CHANGE-FROM-OPS> 558,856
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (411,226)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,155,373
<NUMBER-OF-SHARES-REDEEMED> (153,738)
<SHARES-REINVESTED> 24,119
<NET-CHANGE-IN-ASSETS> 9,630,665
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (1,382)
<OVERDIST-NET-GAINS-PRIOR> (7,145)
<GROSS-ADVISORY-FEES> (42,788)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (182,770)
<AVERAGE-NET-ASSETS> 7,809,213
<PER-SHARE-NAV-BEGIN> 9.32
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> (0.50)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.38
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 503
<NAME> KEYSTONE NEW YORK TAX FREE FUND CLASS C
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 17,261,118
<INVESTMENTS-AT-VALUE> 17,818,520
<RECEIVABLES> 448,982
<ASSETS-OTHER> 7,512
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,275,014
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (154,812)
<TOTAL-LIABILITIES> (154,812)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,854,959
<SHARES-COMMON-STOCK> 308,360
<SHARES-COMMON-PRIOR> 27,408
<ACCUMULATED-NII-CURRENT> 3,880
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (62,906)
<ACCUM-APPREC-OR-DEPREC> 94,549
<NET-ASSETS> 2,890,482
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 108,379
<OTHER-INCOME> 0
<EXPENSES-NET> (22,254)
<NET-INVESTMENT-INCOME> 86,125
<REALIZED-GAINS-CURRENT> (61,358)
<APPREC-INCREASE-CURRENT> 109,162
<NET-CHANGE-FROM-OPS> 133,929
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (92,874)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 288,523
<NUMBER-OF-SHARES-REDEEMED> (14,006)
<SHARES-REINVESTED> 6,435
<NET-CHANGE-IN-ASSETS> 2,635,313
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (328)
<OVERDIST-NET-GAINS-PRIOR> (1,498)
<GROSS-ADVISORY-FEES> (9,810)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (41,040)
<AVERAGE-NET-ASSETS> 1,771,003
<PER-SHARE-NAV-BEGIN> 9.31
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.07
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.37
<EXPENSE-RATIO> 1.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 201
<NAME> KEYSTONE PENNSYLVANIA TAX FREE FUND CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 67,261,556
<INVESTMENTS-AT-VALUE> 69,271,610
<RECEIVABLES> 1,767,559
<ASSETS-OTHER> 13,133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,052,302
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 386,075
<TOTAL-LIABILITIES> 386,075
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,762,475
<SHARES-COMMON-STOCK> 2,791,272
<SHARES-COMMON-PRIOR> 2,775,588
<ACCUMULATED-NII-CURRENT> 22,655
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,539,896)
<ACCUM-APPREC-OR-DEPREC> 2,205,164
<NET-ASSETS> 30,450,398
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,941,496
<OTHER-INCOME> 0
<EXPENSES-NET> (227,360)
<NET-INVESTMENT-INCOME> 1,714,136
<REALIZED-GAINS-CURRENT> (1,618,034)
<APPREC-INCREASE-CURRENT> 1,297,673
<NET-CHANGE-FROM-OPS> 1,393,775
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,737,253)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 422,375
<NUMBER-OF-SHARES-REDEEMED> (494,154)
<SHARES-REINVESTED> 87,463
<NET-CHANGE-IN-ASSETS> (109,611)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 113,028
<OVERDISTRIB-NII-PRIOR> (81,788)
<OVERDIST-NET-GAINS-PRIOR> (370,340)
<GROSS-ADVISORY-FEES> (163,280)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (318,849)
<AVERAGE-NET-ASSETS> 30,398,071
<PER-SHARE-NAV-BEGIN> 11.01
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> (0.09)
<PER-SHARE-DIVIDEND> (0.62)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.91
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 202
<NAME> KEYSTONE PENNSYLVANIA TAX FREE FUND CLASS B
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 67,261,556
<INVESTMENTS-AT-VALUE> 69,271,610
<RECEIVABLES> 1,767,559
<ASSETS-OTHER> 13,133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,052,302
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 386,075
<TOTAL-LIABILITIES> 386,075
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,277,313
<SHARES-COMMON-STOCK> 2,836,903
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<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (102,933)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,501,329)
<ACCUM-APPREC-OR-DEPREC> (15,836)
<NET-ASSETS> 30,657,215
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,737,194
<OTHER-INCOME> 0
<EXPENSES-NET> (407,674)
<NET-INVESTMENT-INCOME> 1,329,520
<REALIZED-GAINS-CURRENT> (1,444,350)
<APPREC-INCREASE-CURRENT> 1,244,522
<NET-CHANGE-FROM-OPS> 1,129,692
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,525,663)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,037,572
<NUMBER-OF-SHARES-REDEEMED> (282,691)
<SHARES-REINVESTED> 82,087
<NET-CHANGE-IN-ASSETS> 8,699,021
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (21,160)
<OVERDIST-NET-GAINS-PRIOR> (25,695)
<GROSS-ADVISORY-FEES> (145,680)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (489,089)
<AVERAGE-NET-ASSETS> 27,254,497
<PER-SHARE-NAV-BEGIN> 10.98
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> (0.10)
<PER-SHARE-DIVIDEND> (0.60)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 203
<NAME> KEYSTONE PENNSYLVANIA TAX FREE FUND CLASS C
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 67,261,556
<INVESTMENTS-AT-VALUE> 69,271,610
<RECEIVABLES> 1,767,559
<ASSETS-OTHER> 13,133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,052,302
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 386,075
<TOTAL-LIABILITIES> 386,075
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,270,824
<SHARES-COMMON-STOCK> 882,307
<SHARES-COMMON-PRIOR> 853,452
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (26,241)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (506,695)
<ACCUM-APPREC-OR-DEPREC> (179,274)
<NET-ASSETS> 9,558,614
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 581,714
<OTHER-INCOME> 0
<EXPENSES-NET> (136,346)
<NET-INVESTMENT-INCOME> 445,368
<REALIZED-GAINS-CURRENT> (480,118)
<APPREC-INCREASE-CURRENT> 376,551
<NET-CHANGE-FROM-OPS> 341,801
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (504,268)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 306,060
<NUMBER-OF-SHARES-REDEEMED> (312,198)
<SHARES-REINVESTED> 34,993
<NET-CHANGE-IN-ASSETS> 174,038
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (16,119)
<OVERDISTRIB-NII-PRIOR> (5,576)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (48,892)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (164,799)
<AVERAGE-NET-ASSETS> 9,111,652
<PER-SHARE-NAV-BEGIN> 11.00
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> (0.10)
<PER-SHARE-DIVIDEND> (0.59)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.83
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 301
<NAME> KEYSTONE TEXAS TAX FREE FUND CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 3,946,643
<INVESTMENTS-AT-VALUE> 3,993,044
<RECEIVABLES> 62,893
<ASSETS-OTHER> 5,974
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<TOTAL-ASSETS> 4,061,911
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,309
<TOTAL-LIABILITIES> 40,309
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,655,819
<SHARES-COMMON-STOCK> 161,045
<SHARES-COMMON-PRIOR> 189,122
<ACCUMULATED-NII-CURRENT> 21,475
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (124,292)
<ACCUM-APPREC-OR-DEPREC> 81,821
<NET-ASSETS> 1,634,823
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 123,205
<OTHER-INCOME> 0
<EXPENSES-NET> (14,633)
<NET-INVESTMENT-INCOME> 108,572
<REALIZED-GAINS-CURRENT> (130,610)
<APPREC-INCREASE-CURRENT> 99,186
<NET-CHANGE-FROM-OPS> 77,148
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (103,988)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,763
<NUMBER-OF-SHARES-REDEEMED> (60,316)
<SHARES-REINVESTED> 6,476
<NET-CHANGE-IN-ASSETS> (280,741)
<ACCUMULATED-NII-PRIOR> 1,834
<ACCUMULATED-GAINS-PRIOR> 6,318
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (10,749)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (50,149)
<AVERAGE-NET-ASSETS> 1,956,380
<PER-SHARE-NAV-BEGIN> 10.13
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 202
<NAME> KEYSTONE TEXAS TAX FREE FUND CLASS B
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 3,946,643
<INVESTMENTS-AT-VALUE> 3,993,044
<RECEIVABLES> 62,893
<ASSETS-OTHER> 5,974
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<TOTAL-ASSETS> 4,061,911
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,309
<TOTAL-LIABILITIES> 40,309
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,294,483
<SHARES-COMMON-STOCK> 215,314
<SHARES-COMMON-PRIOR> 187,404
<ACCUMULATED-NII-CURRENT> 2,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (172,486)
<ACCUM-APPREC-OR-DEPREC> 38,726
<NET-ASSETS> 2,162,852
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 130,442
<OTHER-INCOME> 0
<EXPENSES-NET> (31,050)
<NET-INVESTMENT-INCOME> 99,392
<REALIZED-GAINS-CURRENT> (153,826)
<APPREC-INCREASE-CURRENT> 140,286
<NET-CHANGE-FROM-OPS> 85,852
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (107,525)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96,577
<NUMBER-OF-SHARES-REDEEMED> (75,526)
<SHARES-REINVESTED> 6,859
<NET-CHANGE-IN-ASSETS> 273,256
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (5,714)
<OVERDIST-NET-GAINS-PRIOR> (18,660)
<GROSS-ADVISORY-FEES> (11,317)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (69,541)
<AVERAGE-NET-ASSETS> 2,075,715
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.05
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 203
<NAME> KEYSTONE TEXAS TAX FREE FUND CLASS C
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 3,946,643
<INVESTMENTS-AT-VALUE> 3,993,044
<RECEIVABLES> 62,893
<ASSETS-OTHER> 5,974
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,061,911
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,309
<TOTAL-LIABILITIES> 40,309
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 335,680
<SHARES-COMMON-STOCK> 22,316
<SHARES-COMMON-PRIOR> 80,975
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,786)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (35,821)
<ACCUM-APPREC-OR-DEPREC> (74,146)
<NET-ASSETS> 223,927
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 38,100
<OTHER-INCOME> 0
<EXPENSES-NET> (8,961)
<NET-INVESTMENT-INCOME> 29,139
<REALIZED-GAINS-CURRENT> (24,607)
<APPREC-INCREASE-CURRENT> (28,426)
<NET-CHANGE-FROM-OPS> (23,894)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (31,235)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,015
<NUMBER-OF-SHARES-REDEEMED> (74,258)
<SHARES-REINVESTED> 1,584
<NET-CHANGE-IN-ASSETS> (589,365)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (4,301)
<OVERDIST-NET-GAINS-PRIOR> (11,214)
<GROSS-ADVISORY-FEES> (3,336)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (19,604)
<AVERAGE-NET-ASSETS> 599,053
<PER-SHARE-NAV-BEGIN> 10.04
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> 0.03
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.03
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
The Trustees and Shareholders
Keystone State Tax Free Fund (formerly Keystone America State Tax Free Fund)
In planning and performing our audit of the financial statements of Keystone Tax
Free Fund for the year ended December 31, 1994 we considered its internal
control structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on the internal control structure.
The management of Keystone Tax Free Fund is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
December 31, 1994.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
KPMG Peat Marwick LLP
May 5, 1995
The Board of Directors
Keystone Custodian Funds, Inc.
We have examined the accompanying description of the operations and control
procedures of Keystone Custodian Funds, Inc. (Keystone) entitled Procedures for
Multiple Class Distribution Net Asset Value and Dividend/Distribution
Determination (Control Procedures). Our examination included procedures to
obtain reasonable assurance about whether (1) the accompanying description
presents fairly, in all material respects, Keystone's Control Procedures, (2)
the Control Procedures in the description were suitably designed to achieve the
control objectives specified in the description, if those Control Procedures
were complied with satisfactorily, and (3) such Control Procedures had been
placed in operation during the period from July 1, 1994 to December 31, 1994.
The control objectives were specified by Keystone. Our examination was
performed in accordance with standards established by the American Institute
of Certified Public Accountants and included those procedures we considered
necessary in the circumstances to obtain a reasonable basis for rendering
our opinion.
In our opinion, the accompanying description presents fairly, in all material
respects, the relevant aspects of Keystone's Control Procedures that had been
placed in operation as of and during the period from July 1, 1994 to December
31, 1994. Also, in our opinion, the Control Procedures, as described, are
suitably designed to provide reasonable assurance that the specified control
objectives would be achieved if the described Control Procedures were complied
with satisfactorily.
In addition to the procedures we considered necessary to render our opinion as
expressed in the previous paragraph, we applied tests listed in Exhibit II to
specific Control Procedures, to obtain evidence about their effectiveness in
meeting the control objectives described in Exhibit I, during the period from
July 1, 1994 to December 31, 1994. In our opinion, the Control Procedures that
were tested were operating with sufficient effectiveness to provide reasonable,
but not absolute, assurance that the control objectives specified in Exhibit I
were achieved for the period from July 1, 1994 to December 31, 1994.
The description of Keystone's Control Procedures is as of December 31, 1994,
and information about tests of the operating effectiveness of specified Control
Procedures covers the period from July 1, 1994 to December 31, 1994. Any
projection of such information to the future is subject to the risk that,
because of change, the description may no longer portray the system in
existence. The potential effectiveness of specific Control Procedures is
subject to inherent limitations and accordingly, errors or irregularities may
occur and not be detected. Furthermore, the projection of any conclusions,
based on our findings, to future periods is subject to the risk that changes
may alter the validity of such conclusions.
This report is intended solely for use of the management of Keystone and the
Securities and Exchange Commission as it relates to the annual reporting
required under the order granted pursuant to section 6(c) of the Investment
Company Act of 1940 for an exemption from the provisions of sections 18(f),
18(g), and 18(i) of such Act and should not be used for any other purpose.
Boston, Massachusetts
January 25, 1995
<PAGE>
PROCEDURES FOR MULTIPLE CLASS DISTRIBUTION NET ASSET
VALUE AND DIVIDEND/DISTRIBUTION DETERMINATION
Keystone Custodian Funds, Inc. (Keystone) has implemented a plan which allows
funds which it manages or administers or which it or an affiliate distributes
("the Funds") to issue separate classes of shares in the Funds under a Multiple
Class Distribution System ("the System").
The Funds are required to maintain records that account for all classes of
shares. Shares electing to be subject to a 12b-1 plan or Shareholder Services
plan are charged with a fee (12b-1 fee) on a daily basis. Thus, separate NAVs
and/or dividends and distributions must be calculated for each class of shares.
That is, net investment income, unrealized and realized gains or losses are
allocated daily to each class of shares based on the percentage of net assets
at the beginning of the day. These balances are accumulated by class of shares.
On a daily basis, expenses are attributable to each class of shares depending
on the nature of the expenditures. These expenditures fall into two categories;
(1) expenses attributable to all classes that are allocated based on net assets
at the beginning of the day (i.e., legal, audit, etc.) and, (2) certain
expenses that have a higher cost for one class versus the others (i.e., 12b-1
fees and transfer agent fees). Prior to determining the day's NAV or dividends
and distributions, the following expense items are calculated as indicated:
(degree) Management Fee:
Using the beginning of the day's net assets for the Fund, calculate the
current day's accrual and allocate to each class. The effective rate used
is based on the combined net assets of all classes of shares (i.e., total
net assets of the fund)
(degree) 12b-1 fee:
Calculate the current day's accrual using the beginning of the day's net
assets for shares subject to a 12b-1 fee.
(degree) Transfer Agent Fees:
Using existing budgets for each class of shares, accrue separate daily
amounts for each class.
(degree) All other expenses:
Determine the daily accrual from fund level expense budget and allocate
to each class.
Control Objectives and Procedures of the Multiple Class Pricing Worksheet
The Multiple Class Pricing Worksheet (Worksheet) (Exhibit I, page I-5) is a
supplementary computer application to the Funds' primary accounting system.
Certain data is extracted from the primary accounting system to allocate income
and expenses and to calculate the daily net asset value and, if applicable,
dividends/distributions for each class of shares. The primary accounting system
includes the details of transactions in accordance with the Investment Company
Act of 1940, as amended.
The following represents the internal accounting control objectives and
procedures for the allocation of income and expenses and the computation of the
net asset value and, if applicable, the dividend/distribution for each class of
shares utilizing the Worksheet. It does not cover the internal accounting
control procedures governing the processing of information by the Funds'
primary accounting system.
<PAGE>
<TABLE>
<C> <C>
Control Objectives Control Procedures
A. Capital share activity as 1. Daily, the transfer agent forwards
reported by the Funds' transfer reports of capital share activity
agent is recorded for each for each class which includes a
class in an accurate and timely summary of subscriptions, redemptions,
manner by the Fund. exchanges and other information
(the "Summary Report"). The opening
day's balance for shares outstanding
and for shares eligible for
capital share activity for the
current day are recorded on the
Worksheet.
B. Net Asset Value ("NAV") and, 1. Agree the prior day's ending NAV
if applicable, the dividend/ per share (unrounded) for each class
distribution for each class are to the prior day's Worksheet.
accurately computed on a daily basis.
2. Agree the daily net capital
stock activity for
each class for the current day to
the Summary Reportas described in
Control Procedure A.1 above.
3. Calculate the
percent of assets
by class and the
percent of
dividend assets by
class for each
class based upon
information from
the prior day
Worksheet and
information
recorded on the
Summary Report.
4. Allocate daily income among
classes based on the appropriate
asset allocation percentage for
each class.
5. Agree composite
daily income,
advisory fee,
management and
distribution fees,
other fund
expenses, fee
waivers and
expense reimbursements,
realized gains and
losses, and the change in
unrealized appreciation/
depreciation to the primary
accounting system of the Fund.
6. Allocate expenses among classes as follows:
a. Expenses directly attributable to each
class (transfer agent/shareholder service, 12b-1 fee and
other class expenses) are calculated and recorded to
that class.
b. Expenses attributable to all classes are
allocated in accordance with the appropriate asset
allocation percentage for each class.
</TABLE>
<PAGE>
<TABLE>
<C> <C>
Control Objectives Control Procedures
7. Allocate realized and unrealized gains and
losses among the classes in accordance with the
appropriate asset allocation percentage of each class.
8. Calculate the income dividend distribution rate
for each class as follows:
a. For periodic dividend
Funds, the distribution rate
for each class is
either determined by
the manager or administrator or
upon completion of
the Worksheet. Agree
the dividend rate
for each class to
the rate as determined by the
manager or administrator and
approved by the
board of trustees or
calculate the dividend
distribution rate
for each class based
on the record shares
outstanding as
follows: Divide net
investment income
(after deduction of
allocated expenses
but before consideration of
expenses unique to
any class) by record
date shares for all
classes and arrive
at a gross dividend
rate for all shares.
From this gross rate, deduct
any per-share class
specific expenses for each class.
b. For daily dividend
Funds, calculate the
distribution rate
for each class based
on settled shares
outstanding. Divide
net investment
income for each
class by settled
shares for each class.
9. Calculate the capital gains
distribution rate
by dividing the
total undistributed net
realized gains by
the total record
date shares outstanding of all
classes or agree to the rate as
determined by the manager or
administrator and approved by the
board of trustees.
10.Record dividends/
distributions to
shareholders of each
class in the primary
accounting system.
11.Aggregate the net
assets for each class
and agree to the total
net assets per the
primary accounting system.
12.For each class,
reconcile the current
day's NAV and, if applicable, the
dividend/distribution,
to the previous day's NAV.
13.The above procedures
are reviewed by the
Fund supervisor or manager.
</TABLE>
<PAGE>
Exhibit I
(Continued)
Financial Reporting and Disclosure
Standard reporting practices as used in the following descriptions refer to
compliance with the current AICPA Audit and Accounting Guide, Audits of
Investment Companies with Conforming Changes as of May 1, 1994 and Article
6 of Regulation S-X of the Securities and Exchange Commission.
Schedule of Investments - Presented in accordance with standard reporting
practices.
Statement of Assets and Liabilities - Assets and liabilities will be disclosed
on a combined basis. Net asset value per share data will be presented for
each class as appropriate:
For each class of shares:
Total net assets (allocated to each class) $ ________
Net Asset Value and redemption price per share ________
($____, ____ shares of capital shares issued and outstanding)
Add sales charge (_____% of sales) ________
Sales price ________
Statement of Operations - A standard reporting format will be utilized with
separate disclosure in the footnotes of class specific expenses.
Statements of Changes in Net Assets - A standard reporting format will be
utilized with separate disclosure of dividends and distributions by class.
Capital share activity for each class will be disclosed therein or within
the footnotes to the financial statements.
Financial Highlights - For each of the required reporting periods, utilizing a
standard format, we will show the various per share data and ratios for
each class, except for portfolio turnover which will be shown in total.
Notes to Financial Statements - In addition to the standard footnotes, the notes
to the financial statements will include additional disclosures as follows:
Footnote describing each class of shares and their respective attributes.
Footnote describing the allocation of income, expense and gain/loss to each
class of shares and amounts of class specific expenses charged to each
class of shares.
Footnote disclosing the transactions in fund shares will include the
appropriate information for each class of shares for the two most recent
periods.
Footnote describing the distribution agreement will incorporate data on the
class' 12b-1 fee and shareholder servicing fee arrangements including
amounts earned by the distributor for the period.
<PAGE>
Exhibit I
(Continued)
MULTIPLE CLASS PRICING WORKSHEET
FUND: ________________________________
<TABLE>
<S> <C> <C> <C> <C>
COMPOSITE CLASS A CLASS B CLASS C
1. Prior day NAV per Share
ASSET ALLOCATION:
2. Shares Outstanding - Beginning of Day ________ _______ ______ _______
3. Net Share Activity ________ _______ ______ _______
4. Current Shares Outstanding ________ _______ ______ _______
5. Adjusted Total Assets ________ _______ ______ _______
6. Percent of Assets by Class 100%
DIVIDEND ASSET ALLOCATION: REVIEWED BY SUPERVISOR:
7. Div Shares Outstanding-Beginning of Day________ _______ ______ _______
8. Net Div Share Activity ________ _______ ______ _______
9. Current Div Shares Outstanding ________ _______ ______ _______
10. Adjusted Total Div Assets ________ _______ ______ _______
11. Percent of Div Assets by Class 100%
INCOME AND EXPENSES: REVIEWED BY SUPERVISOR:
12. Dividend Income ________ _______ ______ _______
13. Interest Income ________ _______ ______ _______
14. Amortization ________ _______ ______ _______
15. Total Daily Income ________ _______ ______ _______
16. Management Fee ________ _______ ______ _______
17. 12b-1 Fee - Class ________ _______ ______ _______
18. Fixed Expenses - Fund ________ _______ ______ _______
19. Transfer Expenses - Class ________ _______ ______ _______
20. Total Expenses ________ _______ ______ _______
21. Expenses Borne by Manager ________ _______ ______ _______
22. Net Expenses ________ _______ ______ _______
23. Daily Net Income ________ _______ ______ _______
24. Dividend Rate ________ _______ ______ _______
25. Prior Day Dividend Rate ________ _______ ______ _______
26. Change in Rate ________ _______ ______ _______
CAPITAL:
27. Income Distribution ________ _______ ______ _______
28. Undistributed Net Income ________ _______ ______ _______
29. Capital Stock Activity ________ _______ ______ _______
30. Capital Gain Distribution ________ _______ ______ _______
31. Realized Gain/Loss ________ _______ ______ _______
32. Change in Options/Futures ________ _______ ______ _______
33. Change in Total Mark-to Market ________ _______ ______ _______
34. Change in Unreal Appreciation/Depreciation_____ _______ ______ _______
35. Daily Net Asset Change ________ _______ ______ _______
36. Prior Day Net Assets ________ _______ ______ _______
37. Current Day Net Assets ________ _______ ______ _______
38. NAV per Share ________ _______ ______ _______
39. Load ________ _______ ______ _______
40. Offering Price ________ _______ ______ _______
PREPARER SIGNATURE ________________ REVIEWED BY SUPERVISOR:____________
</TABLE>
<PAGE>
Exhibit I
(Continued)
EXPLANATION OF MULTIPLE CLASS PRICING WORKSHEET
CALCULATION OF ASSET ALLOCATION:
Work-
Step sheet
# Line #
1. 1. The NAV per share by class at the close of the previous day.
2. 2. The number of shares outstanding by class at the beginning of
the business day, per the transfer agent.
3. 3. Record the Net Share Activity per the transfer agent.
4. 4. Calculate the Current Shares Outstanding by adding lines 2 and
3, and agree to daily share proof total of shares outstanding
per the transfer agent.
5. 5. Calculate the Adjusted Total Assets by multiplying the prior
day's NAV per line 1, by the Current Shares Outstanding per
line 4.
6. 6. Calculate the Percentage Allocation of Assets for each class
based upon the Adjusted Total Assets in line 5. (Class Adjusted
Total Assets divided by Composite Adjusted Total Assets)
CALCULATION OF DIVIDEND ALLOCATION:
7. 7. The number of dividend shares outstanding by composite total and
class at the beginning of the business day, as per the prior
day's worksheet, and agreed to daily share proof and dividend
shares outstanding per the transfer agent.
8. 8. Record the net settled share activity as reported by the
transfer agent.
9. 9. Calculate the Current Dividend Shares Outstanding by adding
lines 7 and 8.
10. 10. Calculate the Adjusted Total Dividend Assets by multiplying the
previous day's NAV per line 1, by the Current Dividend Shares
Outstanding per line 9.
11. 11. Calculate the Percentage of Dividend Assets by Class for each
class based upon the Adjusted Total Dividend Assets in line 10.
(Class Assets divided by Composite Adjusted Dividend Assets)
CALCULATION OF INCOME AND EXPENSE DISTRIBUTION:
12. 12,13 Determine daily investment income, from the Multi-Currency
& 14 System and allocate based on the appropriate Percent of
Dividend Assets by Class calculated in line 11.
13. 15. Determine the Total Daily Income by adding the individual income
items allocated in lines 12 to 14.
14. 16. Using the prior day's combined average daily net assets,
calculate the daily management fee, before any waivers, and
allocate the fees per the Percent of Dividend Assets by Class
at line 11, to the respective classes.
<PAGE>
Exhibit I
(Continued)
Work-
Step sheet
# Line #
15. 17. Based on adjusted total assets by class per worksheet line 5,
calculate the 12b-1 distribution fees and post to appropriate
class.
16. 18. The expenses of the fund that are attributable to all classes
based upon the budgeted daily accrual, and allocated,
per the Percent of Dividend Assets by Class at line 11, to
the respective classes.
17. 19. The expenses of the fund that are attributable to a specific
class and are based upon the budgeted daily accrual of the
respective classes.
18. 20. Determine the Total Expenses by adding the individual expense
items listed in lines 16 through 19, for the respective classes.
19. 21. Determine whether expenses are to be waived and borne by the
Manager and/or Advisor (if any), either on the fund level and
allocated per the Percent of Dividend Assets by Class or to the
specific class.
20. 22. Determine the Net Expenses by subtracting the expenses borne by
the Manager and/or Advisor, per line 21, from the Total Expenses
per line 20, for the respective classes.
21. 23. Determine the Daily Net Income by subtracting the Net Expenses,
per line 22, from the Total Daily Income, per line 15, for the
respective classes.
22. 24. Calculate the Dividend Rate by dividing the Daily Net Income,
per line 23, by the Current Dividend Shares outstanding, per
line 9.
23. 25. Post the prior day's dividend rate per class from the previous
day Multiple Class Pricing Worksheet to line 25.
24. 26. Determine the Change in Dividend Rate by subtracting the
dividend rate, per line 24, from the prior day's dividend rate,
per line 25, for the respective classes.
CALCULATION OF CAPITAL DISTRIBUTION:
25. 27. The Income Distribution of the fund is based either upon the
fixed dividend amount or upon the Daily Net Income, per line 23,
of the respective classes.
26. 28. The Undistributed Net Income of the fund is based upon the
difference between the Daily Net Income, per line 23, and the
Income Distribution, per line 27, to the respective classes.
27. 29. Capital Stock Activity is determined by multiplying net share
activity by class (line 3) by prior day's NAV per share, agree
totals to transfer agent records or the accounting records.
28. 30. Capital Gain Distribution as declared by the advisor from the
net capital gains, to the respective classes.
<PAGE>
Work-
Step sheet
# Line #
29. 31,32 Determine the allocation of the Realized Gains/Loss, the
33&34 Change in Unrealized Appreciation/Depreciation on Investments,
Mark-to Market, Options, and Futures, as designated in the
Multiple Class Pricing Worksheet, allocated based on the
appropriate Asset Allocation Percentage calculated in line 6, to
the respective classes.
30. 35. Calculate the Daily Net Asset Change by adding the individual
capital items, per lines 28 through 34, to the respective
classes.
31. 36. Post the Prior Day's Net Assets per the prior day's Multiple
Class Pricing Worksheet's Current Day Net Assets, to the
respective classes.
32. 37. Determine the Current Day's Net Assets by adding (subtracting)
the Daily Net Asset Change per line 35, and the Prior Day's Net
Assets, per line 36, to the respective classes.
33. 38. Determine the NAV per share for the close of the business day by
dividing the Current Day Net Assets, per line 37, by the Current
Shares Outstanding, per line 4, to the respective classes.
34. 39. The Load rate as per the fund prospectus, to the respective
classes.
35. 40. Determine the Offering Price by dividing the NAV per share, per
line 38, by one minus the Load rate, per line 39, to the
respective classes.
<PAGE>
Exhibit II
KEYSTONE CUSTODIAN FUNDS, INC.
Tests of Effectiveness of the Procedures for Multiple Class Distribution Net
Asset Value and Dividend/Distribution Determination
<TABLE>
<S> <C> <C> <C>
Control Objectives Control Procedures Test of Procedures Results
A. Capital share activity 1. Daily, the transfer On a test basis No exceptions were noted as a result
as reported by the agent forwards reports for the days selected, of the procedures performed.
Funds' transfer agent of capital share activity KPMG obtained the daily
is recorded for each for each class which includes capital share activity
class in an accurate a summary of subscriptions, reports received from
and timely manner redemption, exchanges and the transfer agent. We
by the Fund. other information (the agreed the capital stock
"Summary Report"). share and dollars to the
The opening day's balances change in dollars in net
for shares outstanding and assets per the Worksheet.
for shares eligible for We also agreed the change
dividends and the capital in the shares outstanding per
share activity for the the Worksheet to the capital
current day are recorded stock activity reports.
on the Worksheet.
Net Asset Value ("NAV") 1. Agree the prior day's ending KPMG obtained the prior day's No exceptions were noted as a result
and, if applicable, the NAV per share (unrounded) for Worksheet and agreed the prior of the procedures performed.
dividend/distribution each class to the prior day's day net assets by class to the
for each class are Worksheet. current day's Worksheet.
accurately computed on
a daily basis. 2. Agree the daily net capital We obtained the Summary Reports No exceptions were noted as a result
stock activity for each class for the days selected and agreed of the procedures performed.
for the current day to the the daily net capital stock
Summary Report as described activity for each class to the
in Control Procedure A.1 above. change in net assets from the
prior day Worksheet.
3. Calculate the Percent of Assets KPMG recalculated the No exceptions were noted as a result
by Class and the Percent of percentage of assets by of the procedures performed.
Dividend Assets by Class class and the percent of
for each class based upon dividend assets by class
information from the prior for each of the days
day Worksheet and information chosen by dividing each
recorded on the Summary Report. class' adjusted total
or adjusted total
dividend assets for the
day by the composite
adjusted total or adjusted
total dividend assets of
the Fund for the day.
4. Allocate daily income among KPMG recalculated, for the No exceptions were noted as a result
classes based on the days selected, the daily of the procedures performed.
appropriate asset allocation income to each class based
percentage for each class. upon the asset allocation
percentage for each class
tested in Step B.3, above.
5. Agree composite daily income, KPMG agreed daily income and No exceptions were noted as a result
advisory fee, management and expenses for each fund for of the procedures performed.
distribution fees, other the days selected, to the
fund expenses, fee waivers and Fund's trial balances
expense reimbursements, and statements of condition.
realized gains and losses, and The trial balance and
the change in unrealized statement of condition are
appresiation/depreciation to the primary accounting system
the primary accounting system subledgers for interim periods.
of the Fund.
</TABLE>
<PAGE>
Exhibit II
(Continued)
KEYSTONE CUSTODIAN FUNDS, INC.
Tests of Effectiveness of the Procedures for Multiple Class Distribution
Net Asset Value and Dividend/Distribution Determination
<TABLE>
<S> <C> <C> <C>
Control Objectives Control Procedures Test of Procedures Results
6.Allocate expenses among
classes as follows:
a. Expenses directly a. KPMG recalculated, for the No exceptions were noted as a result
attributable to each class days selected, the transfer of the procedures performed.
(transfer agent/shareholder agent/shareholder service
service, 12b-1 fee and other and 12b-1 fee for each class
class expenses) are and agreed the result to the
calculated and recorded to Worksheet.
that class.
b. Expenses attributable to b. KPMG recalculated the No exceptions were noted as a result
all classes are allocated allocated expenses of the procedures performed.
in accordance with the using the appropriate
appropriate asset allocation asset allocation percentages
percentage for each class. for each class and agreed
the result to the Worksheet.
7. Allocate realized and KPMG reclaculated the No exceptions were noted as a result
unrealizied gains and losses allocation of realized of the procedures performed.
among the classes in gains and losses among the
accordance with the classes, for the days
appropriate asset allocation selected, in accordance
percentage of each class. with the appropriate asset
allocation percentage of
each class and agreed the
result to the Worksheet.
8. Calculate the income dividend
distribution rate for each
class as follows:
a.For periodic dividend KPMG agreed the dividend No exceptions were noted as a result
funds, the distribution rate rate as determined by the of the procedures performed.
for each class is either manager or administrator
determined by the manager or and traced to approval by
administrator or upon the board of trustees or,
completion of the Worksheet. for calculated dividend
Agree the dividend rate rates recalculated the
for each class to the rate and agreed to the
rate as determined by Worksheet.
the manager or administrator
and approved by the board
of trustees or calculate
the dividend distribution
rate for each class based
on the record shares
outstanding as follows:
Divide net investment
income (after deduction of
allocated expenses but
before consideration of
expenses unique to any class)
by record date shares for all
classes and arrive at a gross
dividend rate for all shares.
From this gross rate, deduct
any per-share class specific
expenses for each class.
</TABLE>
<PAGE>
Exhibit II
(Continued)
KEYSTONE CUSTODIAN FUNDS, INC.
Tests of Effectiveness of the Procedures for Multiple Class Distribution
Net Asset Value and Dividend/Distribution Determination
<TABLE>
<S> <C> <C> <C>
Control Objectives Control Procedures Test of Procedures Results
b.For daily dividend Funds, KPMG recalculated the daily No exceptions were noted as a result
calculate the distribution dividend rate for each of the procedures performed.
rate for each class based class based on settled
on settled shares outstand- shares outstanding for the
ing. Divide net investment days selected. KPMG
income for each class by divided the net investment
settled shares for each income for each class per
class. the Worksheet by the settled
shares outstanding from the
transfer agent.
9. Calculate the capital gains KPMG recalculated the No exceptions were noted as a result
distribution rate by divid- distribution rate by divid- of the procedures performed.
ing the total undistributed ing total undistributed net
net realized gains by the realized gains by the total
total record date shares record date shares of all
outstanding of all classes classes or agreed to the
or agree the rate as rate as determined by the
determined by the manager or manager or administrator and
administrator and approved approved by the board of
by the board of trustees. trustees.
10. Record dividends/distribut- KPMG agreed the dividends No exceptions were noted as a result
ions to shareholders of declared to shareholders of the procedures performed.
each class in the primary of each class to the
accounting system. Worksheet for the days
selected.
11. Aggregate the net assets KPMG agreed, for the days No exceptions were noted as a result
for each class and agree selected the aggregate net of the procedures performed.
to the total net assets assets for each class to
per the primary accounting the Worksheet.
system.
12. For each class, reconcile KPMG examined the Worksheet No exceptions were noted as a result
the current day's NAV and, for the days selected and of the procedures performed.
if applicable, the dividend/ reviewed the reconciliation
distribution, to the of the current day's NAV to
previous day's NAV. the prior day's NAV to
ensure the reconciliation
was performed.
13. The above procedures are KPMG examined the Worksheet No exceptions were noted as a result
reviewed by the Fund for the days selected for of the procedures performed.
supervisor or manager. evidence of supervisory
review and sign off.
</TABLE>
The Board of Directors
Keystone Custodian Funds, Inc.
We have examined the accompanying description of the operations and control
procedures of Keystone Custodian Funds, Inc. (Keystone) entitled Procedures for
Multiple Class Distribution Net Asset Value and Dividend/Distribution
Determination (Control Procedures). Our examination included procedures to
obtain reasonable assurance about whether (1) the accompanying description
presents fairly, in all material respects, Keystone's Control Procedures, (2)
the Control Procedures in the description were suitably designed to achieve the
control objectives specified in the description, if those Control Procedures
were complied with satisfactorily, and (3) such Control Procedures had been
placed in operation during the period from January 1, 1994 to June 30, 1994.
The control objectives were specified by Keystone. Our examination was
performed in accordance with standards established by the American Institute
of Certified Public Accountants and included those procedures we considered
necessary in the circumstances to obtain a reasonable basis for rendering
our opinion.
In our opinion, the accompanying description presents fairly, in all material
respects, the relevant aspects of Keystone's Control Procedures that had been
placed in operation as of and during the period from January 1, 1994 to June
30, 1994. Also, in our opinion, the Control Procedures, as described, are
suitably designed to provide reasonable assurance that the specified control
objectives would be achieved if the described Control Procedures were complied
with satisfactorily.
In addition to the procedures we considered necessary to render our opinion as
expressed in the previous paragraph, we applied tests listed in Exhibit II to
specific Control Procedures, to obtain evidence about their effectiveness in
meeting the control objectives described in Exhibit I, during the period from
January 1, 1994 to June 30, 1994. In our opinion, the Control Procedures that
were tested were operating with sufficient effectiveness to provide reasonable,
but not absolute, assurance that the control objectives specified in Exhibit I
were achieved for the period from January 1, 1994 to June 30, 1994.
The description of Keystone's Control Procedures is as of June 30, 1994,
and information about tests of the operating effectiveness of specified Control
Procedures covers the period from January 1, 1994 to June 30, 1994. Any
projection of such information to the future is subject to the risk that,
because of change, the description may no longer portray the system in
existence. The potential effectiveness of specific Control Procedures is
subject to inherent limitations and accordingly, errors or irregularities may
occur and not be detected. Furthermore, the projection of any conclusions,
based on our findings, to future periods is subject to the risk that changes
may alter the validity of such conclusions.
This report is intended solely for use of the management of Keystone and the
Securities and Exchange Commission as it relates to the annual reporting
required under the order granted pursuant to section 6(c) of the Investment
Company Act of 1940 for an exemption from the provisions of sections 18(f),
18(g), and 18(i) of such Act and should not be used for any other purpose.
Boston, Massachusetts
July 29, 1994
<PAGE>
PROCEDURES FOR MULTIPLE CLASS DISTRIBUTION NET ASSET
VALUE AND DIVIDEND/DISTRIBUTION DETERMINATION
Keystone Custodian Funds, Inc. (Keystone) has implemented a plan which allows
funds which it manages or administers or which it or an affiliate distributes
("the Funds") to issue separate classes of shares in the Funds under a Multiple
Class Distribution System ("the System").
The Funds are required to maintain records that account for all classes of
shares. Shares electing to be subject to a 12b-1 plan or Shareholder Services
plan are charged with a fee (12b-1 fee) on a daily basis. Thus, separate NAVs
and/or dividends and distributions must be calculated for each class of shares.
That is, net investment income, unrealized and realized gains or losses are
allocated daily to each class of shares based on the percentage of net assets
at the beginning of the day. These balances are accumulated by class of shares.
On a daily basis, expenses are attributable to each class of shares depending
on the nature of the expenditures. These expenditures fall into two categories;
(1) expenses attributable to all classes that are allocated based on net assets
at the beginning of the day (i.e., legal, audit, etc.) and, (2) certain
expenses that have a higher cost for one class versus the others (i.e., 12b-1
fees and transfer agent fees). Prior to determining the day's NAV or dividends
and distributions, the following expense items are calculated as indicated:
(degree) Management Fee:
Using the beginning of the day's net assets for the Fund, calculate the
current day's accrual and allocate to each class. The effective rate used
is based on the combined net assets of all classes of shares (i.e., total
net assets of the fund)
(degree) 12b-1 fee:
Calculate the current day's accrual using the beginning of the day's net
assets for shares subject to a 12b-1 fee.
(degree) Transfer Agent Fees:
Using existing budgets for each class of shares, accrue separate daily
amounts for each class.
(degree) All other expenses:
Determine the daily accrual from fund level expense budget and allocate
to each class.
Control Objectives and Procedures of the Multiple Class Pricing Worksheet
The Multiple Class Pricing Worksheet (Worksheet) (Exhibit I, page I-5) is a
supplementary computer application to the Funds' primary accounting system.
Certain data is extracted from the primary accounting system to allocate income
and expenses and to calculate the daily net asset value and, if applicable,
dividends/distributions for each class of shares. The primary accounting system
includes the details of transactions in accordance with the Investment Company
Act of 1940, as amended.
The following represents the internal accounting control objectives and
procedures for the allocation of income and expenses and the computation of the
net asset value and, if applicable, the dividend/distribution for each class of
shares utilizing the Worksheet. It does not cover the internal accounting
control procedures governing the processing of information by the Funds'
primary accounting system.
<PAGE>
<TABLE>
<C> <C>
Control Objectives Control Procedures
A. Capital share activity as 1. Daily, the transfer agent forwards
reported by the Funds' transfer reports of capital share activity
agent is recorded for each for each class which includes a
class in an accurate and timely summary of subscriptions, redemptions,
manner by the Fund. exchanges and other information
(the "Summary Report"). The opening
day's balance for shares outstanding
and for shares eligible for
capital share activity for the
current day are recorded on the
Worksheet.
B. Net Asset Value ("NAV") and, 1. Agree the prior day's ending NAV
if applicable, the dividend/ per share (unrounded) for each class
distribution for each class are to the prior day's Worksheet.
accurately computed on a daily basis.
2. Agree the daily net capital
stock activity for
each class for the current day to
the Summary Reportas described in
Control Procedure A.1 above.
3. Calculate the
percent of assets
by class and the
percent of
dividend assets by
class for each
class based upon
information from
the prior day
Worksheet and
information
recorded on the
Summary Report.
4. Allocate daily income among
classes based on the appropriate
asset allocation percentage for
each class.
5. Agree composite
daily income,
advisory fee,
management and
distribution fees,
other fund
expenses, fee
waivers and
expense reimbursements,
realized gains and
losses, and the change in
unrealized appreciation/
depreciation to the primary
accounting system of the Fund.
6. Allocate expenses among classes as follows:
a. Expenses directly attributable to each
class (transfer agent/shareholder service, 12b-1 fee and
other class expenses) are calculated and recorded to
that class.
b. Expenses attributable to all classes are
allocated in accordance with the appropriate asset
allocation percentage for each class.
</TABLE>
<PAGE>
<TABLE>
<C> <C>
Control Objectives Control Procedures
7. Allocate realized and unrealized gains and
losses among the classes in accordance with the
appropriate asset allocation percentage of each class.
8. Calculate the income dividend distribution rate
for each class as follows:
a. For periodic dividend
Funds, the distribution rate
for each class is
either determined by
the manager or administrator or
upon completion of
the Worksheet. Agree
the dividend rate
for each class to
the rate as determined by the
manager or administrator and
approved by the
board of trustees or
calculate the dividend
distribution rate
for each class based
on the record shares
outstanding as
follows: Divide net
investment income
(after deduction of
allocated expenses
but before consideration of
expenses unique to
any class) by record
date shares for all
classes and arrive
at a gross dividend
rate for all shares.
From this gross rate, deduct
any per-share class
specific expenses for each class.
b. For daily dividend
Funds, calculate the
distribution rate
for each class based
on settled shares
outstanding. Divide
net investment
income for each
class by settled
shares for each class.
9. Calculate the capital gains
distribution rate
by dividing the
total undistributed net
realized gains by
the total record
date shares outstanding of all
classes or agree to the rate as
determined by the manager or
administrator and approved by the
board of trustees.
10.Record dividends/
distributions to
shareholders of each
class in the primary
accounting system.
11.Aggregate the net
assets for each class
and agree to the total
net assets per the
primary accounting system.
12.For each class,
reconcile the current
day's NAV and, if applicable, the
dividend/distribution,
to the previous day's NAV.
13.The above procedures
are reviewed by the
Fund supervisor or manager.
</TABLE>
<PAGE>
Exhibit I
(Continued)
Financial Reporting and Disclosure
Standard reporting practices as used in the following descriptions refer to
compliance with the current AICPA Audit and Accounting Guide, Audits of
Investment Companies with Conforming Changes as of May 1, 1994 and Article
6 of Regulation S-X of the Securities and Exchange Commission.
Schedule of Investments - Presented in accordance with standard reporting
practices.
Statement of Assets and Liabilities - Assets and liabilities will be disclosed
on a combined basis. Net asset value per share data will be presented for
each class as appropriate:
For each class of shares:
Total net assets (allocated to each class) $ ________
Net Asset Value and redemption price per share ________
($____, ____ shares of capital shares issued and outstanding)
Add sales charge (_____% of sales) ________
Sales price ________
Statement of Operations - A standard reporting format will be utilized with
separate disclosure in the footnotes of class specific expenses.
Statements of Changes in Net Assets - A standard reporting format will be
utilized with separate disclosure of dividends and distributions by class.
Capital share activity for each class will be disclosed therein or within
the footnotes to the financial statements.
Financial Highlights - For each of the required reporting periods, utilizing a
standard format, we will show the various per share data and ratios for
each class, except for portfolio turnover which will be shown in total.
Notes to Financial Statements - In addition to the standard footnotes, the notes
to the financial statements will include additional disclosures as follows:
Footnote describing each class of shares and their respective attributes.
Footnote describing the allocation of income, expense and gain/loss to each
class of shares and amounts of class specific expenses charged to each
class of shares.
Footnote disclosing the transactions in fund shares will include the
appropriate information for each class of shares for the two most recent
periods.
Footnote describing the distribution agreement will incorporate data on the
class' 12b-1 fee and shareholder servicing fee arrangements including
amounts earned by the distributor for the period.
<PAGE>
Exhibit I
(Continued)
MULTIPLE CLASS PRICING WORKSHEET
FUND: ________________________________
<TABLE>
<S> <C> <C> <C> <C>
COMPOSITE CLASS A CLASS B CLASS C
1. Prior day NAV per Share
ASSET ALLOCATION:
2. Shares Outstanding - Beginning of Day ________ _______ ______ _______
3. Net Share Activity ________ _______ ______ _______
4. Current Shares Outstanding ________ _______ ______ _______
5. Adjusted Total Assets ________ _______ ______ _______
6. Percent of Assets by Class 100%
DIVIDEND ASSET ALLOCATION: REVIEWED BY SUPERVISOR:
7. Div Shares Outstanding-Beginning of Day________ _______ ______ _______
8. Net Div Share Activity ________ _______ ______ _______
9. Current Div Shares Outstanding ________ _______ ______ _______
10. Adjusted Total Div Assets ________ _______ ______ _______
11. Percent of Div Assets by Class 100%
INCOME AND EXPENSES: REVIEWED BY SUPERVISOR:
12. Dividend Income ________ _______ ______ _______
13. Interest Income ________ _______ ______ _______
14. Amortization ________ _______ ______ _______
15. Total Daily Income ________ _______ ______ _______
16. Management Fee ________ _______ ______ _______
17. 12b-1 Fee - Class ________ _______ ______ _______
18. Fixed Expenses - Fund ________ _______ ______ _______
19. Transfer Expenses - Class ________ _______ ______ _______
20. Total Expenses ________ _______ ______ _______
21. Expenses Borne by Manager ________ _______ ______ _______
22. Net Expenses ________ _______ ______ _______
23. Daily Net Income ________ _______ ______ _______
24. Dividend Rate ________ _______ ______ _______
25. Prior Day Dividend Rate ________ _______ ______ _______
26. Change in Rate ________ _______ ______ _______
CAPITAL:
27. Income Distribution ________ _______ ______ _______
28. Undistributed Net Income ________ _______ ______ _______
29. Capital Stock Activity ________ _______ ______ _______
30. Capital Gain Distribution ________ _______ ______ _______
31. Realized Gain/Loss ________ _______ ______ _______
32. Change in Options/Futures ________ _______ ______ _______
33. Change in Total Mark-to Market ________ _______ ______ _______
34. Change in Unreal Appreciation/Depreciation_____ _______ ______ _______
35. Daily Net Asset Change ________ _______ ______ _______
36. Prior Day Net Assets ________ _______ ______ _______
37. Current Day Net Assets ________ _______ ______ _______
38. NAV per Share ________ _______ ______ _______
39. Load ________ _______ ______ _______
40. Offering Price ________ _______ ______ _______
PREPARER SIGNATURE ________________ REVIEWED BY SUPERVISOR:____________
</TABLE>
<PAGE>
Exhibit I
(Continued)
EXPLANATION OF MULTIPLE CLASS PRICING WORKSHEET
CALCULATION OF ASSET ALLOCATION:
Work-
Step sheet
# Line #
1. 1. The NAV per share by class at the close of the previous day.
2. 2. The number of shares outstanding by class at the beginning of
the business day, per the transfer agent.
3. 3. Record the Net Share Activity per the transfer agent.
4. 4. Calculate the Current Shares Outstanding by adding lines 2 and
3, and agree to daily share proof total of shares outstanding
per the transfer agent.
5. 5. Calculate the Adjusted Total Assets by multiplying the prior
day's NAV per line 1, by the Current Shares Outstanding per
line 4.
6. 6. Calculate the Percentage Allocation of Assets for each class
based upon the Adjusted Total Assets in line 5. (Class Adjusted
Total Assets divided by Composite Adjusted Total Assets)
CALCULATION OF DIVIDEND ALLOCATION:
7. 7. The number of dividend shares outstanding by composite total and
class at the beginning of the business day, as per the prior
day's worksheet, and agreed to daily share proof and dividend
shares outstanding per the transfer agent.
8. 8. Record the net settled share activity as reported by the
transfer agent.
9. 9. Calculate the Current Dividend Shares Outstanding by adding
lines 7 and 8.
10. 10. Calculate the Adjusted Total Dividend Assets by multiplying the
previous day's NAV per line 1, by the Current Dividend Shares
Outstanding per line 9.
11. 11. Calculate the Percentage of Dividend Assets by Class for each
class based upon the Adjusted Total Dividend Assets in line 10.
(Class Assets divided by Composite Adjusted Dividend Assets)
CALCULATION OF INCOME AND EXPENSE DISTRIBUTION:
12. 12,13 Determine daily investment income, from the Multi-Currency
& 14 System and allocate based on the appropriate Percent of
Dividend Assets by Class calculated in line 11.
13. 15. Determine the Total Daily Income by adding the individual income
items allocated in lines 12 to 14.
14. 16. Using the prior day's combined average daily net assets,
calculate the daily management fee, before any waivers, and
allocate the fees per the Percent of Dividend Assets by Class
at line 11, to the respective classes.
<PAGE>
Exhibit I
(Continued)
Work-
Step sheet
# Line #
15. 17. Based on adjusted total assets by class per worksheet line 5,
calculate the 12b-1 distribution fees and post to appropriate
class.
16. 18. The expenses of the fund that are attributable to all classes
based upon the budgeted daily accrual, and allocated,
per the Percent of Dividend Assets by Class at line 11, to
the respective classes.
17. 19. The expenses of the fund that are attributable to a specific
class and are based upon the budgeted daily accrual of the
respective classes.
18. 20. Determine the Total Expenses by adding the individual expense
items listed in lines 16 through 19, for the respective classes.
19. 21. Determine whether expenses are to be waived and borne by the
Manager and/or Advisor (if any), either on the fund level and
allocated per the Percent of Dividend Assets by Class or to the
specific class.
20. 22. Determine the Net Expenses by subtracting the expenses borne by
the Manager and/or Advisor, per line 21, from the Total Expenses
per line 20, for the respective classes.
21. 23. Determine the Daily Net Income by subtracting the Net Expenses,
per line 22, from the Total Daily Income, per line 15, for the
respective classes.
22. 24. Calculate the Dividend Rate by dividing the Daily Net Income,
per line 23, by the Current Dividend Shares outstanding, per
line 9.
23. 25. Post the prior day's dividend rate per class from the previous
day Multiple Class Pricing Worksheet to line 25.
24. 26. Determine the Change in Dividend Rate by subtracting the
dividend rate, per line 24, from the prior day's dividend rate,
per line 25, for the respective classes.
CALCULATION OF CAPITAL DISTRIBUTION:
25. 27. The Income Distribution of the fund is based either upon the
fixed dividend amount or upon the Daily Net Income, per line 23,
of the respective classes.
26. 28. The Undistributed Net Income of the fund is based upon the
difference between the Daily Net Income, per line 23, and the
Income Distribution, per line 27, to the respective classes.
27. 29. Capital Stock Activity is determined by multiplying net share
activity by class (line 3) by prior day's NAV per share, agree
totals to transfer agent records or the accounting records.
28. 30. Capital Gain Distribution as declared by the advisor from the
net capital gains, to the respective classes.
<PAGE>
Work-
Step sheet
# Line #
29. 31,32 Determine the allocation of the Realized Gains/Loss, the
33&34 Change in Unrealized Appreciation/Depreciation on Investments,
Mark-to Market, Options, and Futures, as designated in the
Multiple Class Pricing Worksheet, allocated based on the
appropriate Asset Allocation Percentage calculated in line 6, to
the respective classes.
30. 35. Calculate the Daily Net Asset Change by adding the individual
capital items, per lines 28 through 34, to the respective
classes.
31. 36. Post the Prior Day's Net Assets per the prior day's Multiple
Class Pricing Worksheet's Current Day Net Assets, to the
respective classes.
32. 37. Determine the Current Day's Net Assets by adding (subtracting)
the Daily Net Asset Change per line 35, and the Prior Day's Net
Assets, per line 36, to the respective classes.
33. 38. Determine the NAV per share for the close of the business day by
dividing the Current Day Net Assets, per line 37, by the Current
Shares Outstanding, per line 4, to the respective classes.
34. 39. The Load rate as per the fund prospectus, to the respective
classes.
35. 40. Determine the Offering Price by dividing the NAV per share, per
line 38, by one minus the Load rate, per line 39, to the
respective classes.
<PAGE>
Exhibit II
KEYSTONE CUSTODIAN FUNDS, INC.
Tests of Effectiveness of the Procedures for Multiple Class Distribution Net
Asset Value and Dividend/Distribution Determination
<TABLE>
<S> <C> <C> <C>
Control Objectives Control Procedures Test of Procedures Results
A. Capital share activity 1. Daily, the transfer On a test basis No exceptions were noted as a result
as reported by the agent forwards reports for the days selected, of the procedures performed.
Funds' transfer agent of capital share activity KPMG obtained the daily
is recorded for each for each class which includes capital share activity
class in an accurate a summary of subscriptions, reports received from
and timely manner redemption, exchanges and the transfer agent. We
by the Fund. other information (the agreed the capital stock
"Summary Report"). share and dollars to the
The opening day's balances change in dollars in net
for shares outstanding and assets per the Worksheet.
for shares eligible for We also agreed the change
dividends and the capital in the shares outstanding per
share activity for the the Worksheet to the capital
current day are recorded stock activity reports.
on the Worksheet.
Net Asset Value ("NAV") 1. Agree the prior day's ending KPMG obtained the prior day's No exceptions were noted as a result
and, if applicable, the NAV per share (unrounded) for Worksheet and agreed the prior of the procedures performed.
dividend/distribution each class to the prior day's day net assets by class to the
for each class are Worksheet. current day's Worksheet.
accurately computed on
a daily basis. 2. Agree the daily net capital We obtained the Summary Reports No exceptions were noted as a result
stock activity for each class for the days selected and agreed of the procedures performed.
for the current day to the the daily net capital stock
Summary Report as described activity for each class to the
in Control Procedure A.1 above. change in net assets from the
prior day Worksheet.
3. Calculate the Percent of Assets KPMG recalculated the No exceptions were noted as a result
by Class and the Percent of percentage of assets by of the procedures performed.
Dividend Assets by Class class and the percent of
for each class based upon dividend assets by class
information from the prior for each of the days
day Worksheet and information chosen by dividing each
recorded on the Summary Report. class' adjusted total
or adjusted total
dividend assets for the
day by the composite
adjusted total or adjusted
total dividend assets of
the Fund for the day.
4. Allocate daily income among KPMG recalculated, for the No exceptions were noted as a result
classes based on the days selected, the daily of the procedures performed.
appropriate asset allocation income to each class based
percentage for each class. upon the asset allocation
percentage for each class
tested in Step B.3, above.
5. Agree composite daily income, KPMG agreed daily income and No exceptions were noted as a result
advisory fee, management and expenses for each fund for of the procedures performed.
distribution fees, other the days selected, to the
fund expenses, fee waivers and Fund's trial balances
expense reimbursements, and statements of condition.
realized gains and losses, and The trial balance and
the change in unrealized statement of condition are
appresiation/depreciation to the primary accounting system
the primary accounting system subledgers for interim periods.
of the Fund.
</TABLE>
<PAGE>
Exhibit II
(Continued)
KEYSTONE CUSTODIAN FUNDS, INC.
Tests of Effectiveness of the Procedures for Multiple Class Distribution
Net Asset Value and Dividend/Distribution Determination
<TABLE>
<S> <C> <C> <C>
Control Objectives Control Procedures Test of Procedures Results
6.Allocate expenses among
classes as follows:
a. Expenses directly a. KPMG recalculated, for the No exceptions were noted as a result
attributable to each class days selected, the transfer of the procedures performed.
(transfer agent/shareholder agent/shareholder service
service, 12b-1 fee and other and 12b-1 fee for each class
class expenses) are and agreed the result to the
calculated and recorded to Worksheet.
that class.
b. Expenses attributable to b. KPMG recalculated the No exceptions were noted as a result
all classes are allocated allocated expenses of the procedures performed.
in accordance with the using the appropriate
appropriate asset allocation asset allocation percentages
percentage for each class. for each class and agreed
the result to the Worksheet.
7. Allocate realized and KPMG reclaculated the No exceptions were noted as a result
unrealizied gains and losses allocation of realized of the procedures performed.
among the classes in gains and losses among the
accordance with the classes, for the days
appropriate asset allocation selected, in accordance
percentage of each class. with the appropriate asset
allocation percentage of
each class and agreed the
result to the Worksheet.
8. Calculate the income dividend
distribution rate for each
class as follows:
a.For periodic dividend KPMG agreed the dividend No exceptions were noted as a result
funds, the distribution rate rate as determined by the of the procedures performed.
for each class is either manager or administrator
determined by the manager or and traced to approval by
administrator or upon the board of trustees or,
completion of the Worksheet. for calculated dividend
Agree the dividend rate rates recalculated the
for each class to the rate and agreed to the
rate as determined by Worksheet.
the manager or administrator
and approved by the board
of trustees or calculate
the dividend distribution
rate for each class based
on the record shares
outstanding as follows:
Divide net investment
income (after deduction of
allocated expenses but
before consideration of
expenses unique to any class)
by record date shares for all
classes and arrive at a gross
dividend rate for all shares.
From this gross rate, deduct
any per-share class specific
expenses for each class.
</TABLE>
<PAGE>
Exhibit II
(Continued)
KEYSTONE CUSTODIAN FUNDS, INC.
Tests of Effectiveness of the Procedures for Multiple Class Distribution
Net Asset Value and Dividend/Distribution Determination
<TABLE>
<S> <C> <C> <C>
Control Objectives Control Procedures Test of Procedures Results
b.For daily dividend Funds, KPMG recalculated the daily No exceptions were noted as a result
calculate the distribution dividend rate for each of the procedures performed.
rate for each class based class based on settled
on settled shares outstand- shares outstanding for the
ing. Divide net investment days selected. KPMG
income for each class by divided the net investment
settled shares for each income for each class per
class. the Worksheet by the settled
shares outstanding from the
transfer agent.
9. Calculate the capital gains KPMG recalculated the No exceptions were noted as a result
distribution rate by divid- distribution rate by divid- of the procedures performed.
ing the total undistributed ing total undistributed net
net realized gains by the realized gains by the total
total record date shares record date shares of all
outstanding of all classes classes or agreed to the
or agree the rate as rate as determined by the
determined by the manager or manager or administrator and
administrator and approved approved by the board of
by the board of trustees. trustees.
10. Record dividends/distribut- KPMG agreed the dividends No exceptions were noted as a result
ions to shareholders of declared to shareholders of the procedures performed.
each class in the primary of each class to the
accounting system. Worksheet for the days
selected.
11. Aggregate the net assets KPMG agreed, for the days No exceptions were noted as a result
for each class and agree selected the aggregate net of the procedures performed.
to the total net assets assets for each class to
per the primary accounting the Worksheet.
system.
12. For each class, reconcile KPMG examined the Worksheet No exceptions were noted as a result
the current day's NAV and, for the days selected and of the procedures performed.
if applicable, the dividend/ reviewed the reconciliation
distribution, to the of the current day's NAV to
previous day's NAV. the prior day's NAV to
ensure the reconciliation
was performed.
13. The above procedures are KPMG examined the Worksheet No exceptions were noted as a result
reviewed by the Fund for the days selected for of the procedures performed.
supervisor or manager. evidence of supervisory
review and sign off.
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