PAGE 1
- ---------------------------------
Keystone Fund of the Americas
Seeks long-term growth of capital by investing in equity
and debt securities in Latin America, the United States and Canada.
Dear Shareholder:
We are writing to report to you on activities of Keystone Fund of the
Americas for the six-month period which ended April 30, 1996.
Performance
For the periods which ended April 30, 1996, your Fund produced the following
total returns.
Class A shares returned 10.54% for the six-month period and 17.83% for the
twelve-month period.
Class B shares returned 10.21% for the six-month period and 16.90% for the
twelve-month period.
Class C shares returned 10.09% for the six-month period and 16.90% for the
twelve-month period.
Keystone Fund of the America's satisfactory performance reflected the
generally strong market conditions in the Americas during the period.
Consistent with its objective, your Fund did not experience the extreme share
price fluctuations of a purely Latin American equity fund. The IFC Latin
American 50 Stock Index, representing the performance of the 50 largest Latin
American stocks, returned 18.08% and 25.01% respectively for the six- and
twelve-month periods. The J.P. Morgan Latin-Euro Bond Index returned 13.30%
and 30.20% respectively for the six- and twelve-month periods, and the
Standard & Poor's 500 Stock Index returned 13.76% for six months and 30.21%
for twelve months.
Market Environment
After an extremely volatile period at the beginning of 1995 caused by the
Mexican peso devaluation, Latin American stocks rebounded. This was fueled by
positive investor sentiment that economic conditions had finally stabilized.
In the U.S., stock performance was generally positive, but there were wide
short-term price fluctuations in March when long-term interest rates rose in
the U.S.
A Conservative Strategy
We employ a conservative approach to investing in the Americas to help
protect it from extreme price fluctuations. We allocate assets among three
types of investments: Latin American stocks, Latin American bonds, and U.S.
and Canadian stocks. This is a strategy designed to take advantage of
investment opportunities in the Americas while reducing the risk associated
with investing solely in Latin America. We think this approach has proven its
worth given the price fluctuations we have seen in Latin American securities
during the past few years.
Greater Emphasis on Stocks
During the six-month period, investment conditions in Latin America began to
improve. We increased our stock allocation and reduced our exposure to bonds
to take advantage of new opportunities. As of April 30, 1996, 60% of your
Fund's assets were invested in stocks from nine countries, with the largest
positions in the U.S., Brazil, Peru and Colombia. This represented an
increase from 54% on October 31, 1995. As of April 30, 1996, 26% of your
Fund's holdings were in Latin American fixed income securities, down from 33%
at the beginning of the period.
(continued on next page)
<PAGE>
PAGE 2
- ---------------------------------
Keystone Fund of the Americas
Looking Ahead
We expect conditions in the U.S. and Canada to remain relatively attractive
for stocks. We have seen a turnaround in the Latin American markets, which we
expect to continue as the economic fundamentals improve. We believe economic
recovery there will be an extended process. We expect to continue to
concentrate on larger, seasoned companies that we think are well run and less
susceptible to economic uncertainties.
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
Albert H. Elfner, III
Chairman and President
Keystone Investments, Inc.
/s/George S. Bissell
George S. Bissell
Chairman of the Board
Keystone Funds
[photo of Elfner] [photo of Bissell]
Albert H. Elfner, III George S. Bissell
June 1996
[Dalbar logo] Dalbar Key Honors
Honoring Commitment to Excellence
Keystone was recently recognized by Dalbar, an independent
mutual fund rating organization, for demonstrating a commitment
to serving the needs of customers. The award is intended to
distinguish companies who are committed to investors and have a
proven ability to provide good service.
[start shaded box]
[telephone receiver picture]
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
[telephone picture]
[end shaded box]
<PAGE>
PAGE 3
- ---------------------------------
A Discussion With
Your Fund Manager
[photo of Gilman C. Gunn)
Gilman C. Gunn is portfolio manager of Keystone Fund of the Americas and
leads Keystone's international investment team. An investment professional
with 23 years of experience, Mr. Gunn has spent more than ten years in
investment management positions in London, Kuwait and New York.
Your Fund's investment team is comprised of several professionals who have
expertise on the economic, political and business environments in specific
areas. The team includes Maureen Cullinane (U.S. equities), Richard
Wisentaner (Latin American fixed-income) and Francis X. Claro and Antonio
Docal (Latin American equities).
Q Please describe the investment climate in the Americas over the past six
months.
A It's been a good period for equity investors in the Americas. Performance
in Latin American equity markets was very strong, although week-to-week
prices fluctuated significantly. The Mexican market, for example, rose 15% in
two weeks in January, largely in response to new inflows from investors.
Shortly thereafter, the year-to-date return was negative 2%. But as of April
30, 1996, it had rebounded, and was up 38.5% year-to-date (in local
currency).
In the U.S., the economic environment changed during the period. For most of
1995, U.S. economic growth was slow, and inflation remained moderate. In
response, the Federal Reserve Board lowered short-term interest rates in
December 1995 and January 1996. As we moved further into 1996, however, there
were indications that the economy was stronger than had previously been
thought. The release of stronger-than-expected economic data in March caused
a rise in long-term interest rates which triggered stock price declines.
Q How did the bond markets perform?
A Bonds represented 26% of the Fund's holdings during the period. The bond
markets responded favorably to lower rates at the beginning of the period,
then declined in March when long-term U.S. interest rates rose. Latin
American dollar-denominated bonds experienced a strong rally during January
and February, due to an increase in investor interest.
Q How did the Fund perform?
A The rebound in Latin American markets during the period contributed to the
performance of the Fund's Latin American stock and bond holdings. In
addition, most of our bond holdings had 3-10 year maturities which provided
some protection from rising interest rates during the period. The Fund's
North American equity holdings also responded well to the generally favorable
conditions in the stock markets. We believe your Fund performed as it was
designed, providing exposure to the fast growing markets of Latin America
with significantly lower volatility than a purely Latin American equity fund.
[start shaded box]
Fund Profile
Objective: Seeks long-term growth of capital by investing in equity and debt
securities in Latin America, the United States and Canada.
Commencement of investment operations: November 1, 1993
Number of countries: 9
Net assets: $110 million
Newspaper listing: "FndAm"
[end shaded box]
<PAGE>
PAGE 4
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Keystone Fund of the Americas
Geographic Diversification
as of April 30, 1996
Common and
Preferred Stocks Fixed-Income
CANADA CANADA
4.7% [map of Canada, 0%
United States,
UNITED STATES and Latin America] UNITED STATES
20.6% 0%
LATIN AMERICA LATIN AMERICA
42.3% 26.2%
Other investments totaled 6.2% and included short-term investments, foreign
currency holdings and other assets and liabilities.
(percentage of net assets)
Q What were the Fund's largest country holdings?
A We maintained broad geographic diversification to reduce risk. The largest
country weighting was in the U.S. at 20%, followed by Brazil at 14% of net
assets. The next largest country weighting was Peru at 7%. We maintained
minimal exposure to Mexico, as we believed that the strength of its stock
market was not yet fully supported by underlying fundamentals in the economy.
As of April 30, 1996, 51% of the portfolio (including our cash position) was
denominated in U.S. dollars. This helped to reduce the risks associated with
fluctuations in Latin American currencies.
Q Please describe some of the Fund's Latin American holdings.
A We continued to concentrate on larger, well managed companies that we
believed would benefit from the industrial and infrastructure development
that has been taking place in the Americas and around the world. Our largest
holding is the Brazilian company Brahma, the world's sixth largest beer
company. With a population of 150 million in Brazil, much of it young, we
believe the prospects for Brahma remain bright. We also owned Banco Bradesco,
one of the three largest banks in Brazil. We believe well-managed financial
institutions have much to gain as the country's economy stabilizes and people
reestablish a variety of relationships with banks including bank accounts,
credit cards and loans.
Our third largest holding was CPT Telefonica in Peru. Telephone service
throughout Latin America is still very underdeveloped by American standards,
and we believe the growth potential for telecommunications is excellent. In
Mexico, we continued to hold Penoles, the world's largest producer of refined
silver and a world class industry leader in silver and gold mining and
processing. We purchased the stock in mid-1994 when mining stocks were out of
favor, and have seen it double in value. We believe Penoles is still
undervalued in light of its proven and probable reserves and expanding
production levels.
Q What North American stocks did the Fund hold?
A In the U.S., we owned Caterpillar, the world's leading manufacturer of
earth moving equipment. We expect it to benefit from increasing mining
activity in Latin America. We added Microsoft to the portfolio during the
period. As the world's leading software company, it is uniquely positioned to
take advantage of opportunities in developing markets in Latin
<PAGE>
PAGE 5
- ---------------------------------
Top 10 Holdings
as of April 30, 1996
Percent of
Stock Industry net assets
-------------------------------------------------------------------
Brahma (Brazil) Beverages & tobacco 3.9
-------------------------------------------------------------------
Banco Bradesco (Brazil) Banking 3.7
-------------------------------------------------------------------
CPT Telefonica (Peru) Telecommunications 3.0
-------------------------------------------------------------------
Caterpillar (U.S.) Machinery 2.9
-------------------------------------------------------------------
General Electric (U.S.) Electronics Products 2.5
-------------------------------------------------------------------
Bond/Interest Rate/Maturity Date
-------------------------------------------------------------------
CVRD Cenibra, 9.375%, mat. 12/23/2003 5.5
-------------------------------------------------------------------
Telefonica de Argentina, 11.875%, mat. 11/01/2004 4.6
-------------------------------------------------------------------
Klabin Fabricadora Papel, 10.000%, mat. 12/20/2001 4.5
-------------------------------------------------------------------
Ispat Mexicana, 10.375%, mat. 3/15/2001 2.6
-------------------------------------------------------------------
Rep. of Argentina, 8.375%, mat. 12/20/2003 2.3
-------------------------------------------------------------------
America and worldwide. We also owned shares of Potash Corp., the fertilizer
manufacturer, which stands to benefit from improvements to agricultural
practices in emerging markets.
Q What is your outlook?
A Our outlook is cautiously optimistic. We believe economic improvements in
the Latin American countries, notably Mexico, will take some time, despite
the impressive stock market performance in recent months. But we also think
the worst has past, and believe that the long-term opportunities in Latin
America remain very attractive. In the U.S. and Canada, we believe the
economy will continue to grow moderately and inflation will remain under
control. We think that interest rates have stabilized, and our overall
outlook for the market is favorable, although we will not rule out the
possibility of a short-term correction. Keystone Fund of the Americas will
continue to seek to provide investors with access to the growth opportunities
of Latin America, with lower risk than a purely Latin American equity fund.
[diamond]
This column is intended to answer
questions about your Fund. If you have a question
you would like answered, please write to:
Keystone Investment Distributors Company
Attn: Shareholder Communications, 22nd Floor
200 Berkeley Street, 22nd Floor,
Boston, Massachusetts 02116-5034.
<PAGE>
PAGE 6
- ---------------------------------
Keystone Fund of the Americas
Your Fund's Performance
[typeset representation of mountain chart]
Growth of an investment in
Keystone Fund of the Americas Class A
In Thousands
Initial Investment Reinvested Distributions
11/93 9680 9680
4/94 9425 9425
4/95 8860 9162
4/96 10113 10795
A $10,000 investment in Keystone Fund of the Americas Class A made on
November 1, 1993 with all distributions reinvested was worth $10,795 on April
30, 1996. Past performance is no guarantee of future results.
[end mountain chart]
Six-Month Performance as of April 30, 1996
================================================================
Class A Class B Class C
Total returns* 10.54% 10.21% 10.09%
Net asset value 10/31/95 $ 9.86 $ 9.76 $ 9.77
4/30/96 $10.73 $10.60 $10.60
Dividends $ 0.16 $0.148 $0.148
Capital Gains None None None
* Before deducting front-end or contingent deferred sales charge (CDSC) if
applicable.
Historical Record as of April 30, 1996
=====================================================================
Average Annual Returns Class A Class B Class C
1-year w/o sales charge 17.83% 16.90% 16.90%
1-year 11.05% 12.90% 16.90%
Life of Class 3.11% 3.75% 4.88%
Class A, Class B, and Class C shares were introduced on November 1, 1993.
Class A performance is reported at the current maximum front-end sales
charge of 5.75%.
Class B shares purchased after June 1, 1995 are subject to a contingent
deferred sales charge (CDSC) that declines from 5% to 1% over six years from
the month purchased. Performance assumes that shares were redeemed after the
end of a one-year holding period and reflects the deduction of a 4% CDSC.
Class C share performance reflects the deduction of the 1% CDSC which will
not apply to shares that are held for one year or more.
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 7
- ---------------------------------
SCHEDULE OF INVESTMENTS--April 30, 1996
(Unaudited)
MARKET
SHARES VALUE
- -------------------------------- ---------- -----------
COMMON STOCKS (51.5%)
ARGENTINA (4.3%)
Automotive (0.5%)
CIADEA 92,000 $ 533,653
- -------------------------------- ---------- -----------
Beverages & Tobacco (0.8%)
Embotelladora Baesa 145 114,561
Quilmes (ADR) 11,000 132,000
Nobleza Piccardo 209,143 679,783
- -------------------------------- ---------- -----------
926,344
- -------------------------------- ---------- -----------
Energy Sources (2.0%)
Perez Companc 188,650 1,173,520
CAPSA 95,000 201,895
Yacimientos Petroliferos
Fiscales S.A. (YPF) (ADR) 38,900 850,938
- -------------------------------- ---------- -----------
2,226,353
- -------------------------------- ---------- -----------
Utilities (1.0%)
Capex S.A. 18,100 133,048
Central Costarena 91,800 312,152
Transportadora de Gas (ADR) 46,000 592,250
- -------------------------------- ---------- -----------
1,037,450
- -------------------------------- ---------- -----------
TOTAL ARGENTINA 4,723,800
- -------------------------------- ---------- -----------
BOLIVIA (0.2%)
Utilities (0.2%)
Compania Bolivia de Energia
(ADR) 5,600 207,200
- -------------------------------- ---------- -----------
BRAZIL (0.9%)
Metals & Mining (0.5%)
Companhia Sidurgica Nacional 19,800,000 558,814
Telecommunications (0.4%)
Telecommunicacaos Brasilieras
(ADR) 8,500 460,063
- -------------------------------- ---------- -----------
TOTAL BRAZIL 1,018,877
- -------------------------------- ---------- -----------
CANADA (4.7%)
Advertising & Publishing (1.4%)
Quebecor, Inc. 90,500 $1,502,240
- -------------------------------- ---------- -----------
Conglomerates (0.8%)
Canadian Pacific Ltd. 44,100 897,224
- -------------------------------- ---------- -----------
Fertilizer (2.0%)
Potash Corp. of Saskatchewan,
Inc. 30,650 2,183,658
- -------------------------------- ---------- -----------
Services (0.5%)
Loewen Group, Inc. 19,000 572,163
- -------------------------------- ---------- -----------
TOTAL CANADA 5,155,285
- -------------------------------- ---------- -----------
CHILE (3.1%)
Business / Public Services (0.4%)
A.F.P. Habitat S.A. 1,900,000 396,562
- -------------------------------- ---------- -----------
Construction & Housing (0.3%)
Maderas Y Sinteticos S.A.
(ADR) 20,200 320,675
- -------------------------------- ---------- -----------
Forest Products (1.0%)
Compania Manufacturera de
Papeles y Cartones S.A. 91,254 1,093,479
- -------------------------------- ---------- -----------
Gold Mines (0.1%)
Empresa Electra de Antofagasta 245,750 139,998
- -------------------------------- ---------- -----------
Metals (0.3%)
Madeco 118,600 294,134
- -------------------------------- ---------- -----------
Utilities (1.0%)
Enersis S.A. (ADR) 37,350 1,111,163
- -------------------------------- ---------- -----------
TOTAL CHILE 3,356,011
- -------------------------------- ---------- -----------
COLOMBIA (5.2%)
Banking (2.8%)
Banco de Bogota 505,899 2,929,503
Exito 53,000 154,701
- -------------------------------- ---------- -----------
3,084,204
- -------------------------------- ---------- -----------
(continued on next page)
<PAGE>
PAGE 8
- ------------------------------
Keystone Fund of the Americas
MARKET
SHARES VALUE
- -------------------------------- ---------- -----------
Beverage & Tobacco (1.2%)
Bavaria 133,300 $ 564,804
Coltobaco 216,147 712,315
- -------------------------------- ---------- -----------
1,277,119
- -------------------------------- ---------- -----------
Construction & Housing (0.2%)
Cementos Argos 50,000 278,236
- -------------------------------- ---------- -----------
Food/Household Products (0.1%)
Cia Nacional Chocolates 13,909 116,558
- -------------------------------- ---------- -----------
Insurance (0.9%)
Suramericana de Seguros S.A. 53,466 986,708
- -------------------------------- ---------- -----------
TOTAL COLOMBIA 5,742,825
- -------------------------------- ---------- -----------
MEXICO (5.8%)
Building Materials (2.2%)
Apasco 296,900 1,610,373
GEO 5,000 19,785
Grupo Cementos Chihuahua 860,000 807,914
- -------------------------------- ---------- -----------
2,438,072
- -------------------------------- ---------- -----------
Banking (0.5%)
Grupo Financiero Banorte 385,000 535,787
- -------------------------------- ---------- -----------
Beverages & Tobacco (0.7%)
Panamercan Beverages, Inc.
(ADR) 17,000 745,875
- -------------------------------- ---------- -----------
Food/Household Products (0.1%)
Tablex S.A. de C.V. 50,000 105,653
- -------------------------------- ---------- -----------
Industrial Products (0.4%)
Tubos de Acero de Mexico (ADR) 52,400 445,400
- -------------------------------- ---------- -----------
Metals & Mining (1.7%)
Hylsamex (ADR) (a) 13,000 302,250
Industrias Penoles S.A. de
C.V. 372,000 1,567,106
- -------------------------------- ---------- -----------
1,869,356
- -------------------------------- ---------- -----------
Transportation/Shipping (0.2%)
Transportacion Maritima Mexica
(ADR) 24,000 201,000
- -------------------------------- ---------- -----------
TOTAL MEXICO 6,341,143
- -------------------------------- ---------- -----------
PERU (6.8%)
Banking (1.1%)
Credicorp (ADR) (a) 72,398 $1,230,780
- -------------------------------- ---------- -----------
Beverages & Tobacco (1.1%)
Cerveceria Backus & Johnston
Corp. 916,192 1,229,062
- -------------------------------- ---------- -----------
Metals & Mining (1.4%)
Minas Buenaventura 182,435 1,539,211
- -------------------------------- ---------- -----------
Forest Products (0.2%)
Papeles Nacionales (GDR) 18,300 178,425
- -------------------------------- ---------- -----------
Telecommunications (3.0%)
Compania Telefonica Del Peru 1,459,369 3,262,879
- -------------------------------- ---------- -----------
TOTAL PERU 7,440,357
- -------------------------------- ---------- -----------
UNITED STATES (20.6%)
Banking (1.5%)
Bank of Boston 34,300 1,659,263
- -------------------------------- ---------- -----------
Beverages/Tobacco (1.6%)
Philip Morris Companies, Inc. 20,000 1,802,500
- -------------------------------- ---------- -----------
Chemicals (1.5%)
E.I. DuPont DeNemours & Co. 21,000 1,687,875
- -------------------------------- ---------- -----------
Computer Software (1.7%)
Microsoft Corporation 16,500 1,867,594
- -------------------------------- ---------- -----------
Conglomerate (2.5%)
General Electric Co. 35,000 2,712,500
- -------------------------------- ---------- -----------
Health & Personal Care (4.3%)
Gillette Co. 20,600 1,112,400
Johnson & Johnson 9,000 832,500
Estee Lauder Companies, Inc. 75,100 2,750,538
- -------------------------------- ---------- -----------
4,695,438
- -------------------------------- ---------- -----------
Industrials (1.0%)
Goodyear Tire & Rubber 22,000 1,146,750
- -------------------------------- ---------- -----------
Machinery (2.9%)
Caterpillar, Inc. 50,000 3,200,000
- -------------------------------- ---------- -----------
<PAGE>
PAGE 9
- -------------------------------
MARKET
SHARES VALUE
- -------------------------------- ---------- -----------
Office/Business Equipment (2.5%)
EMC Corporation 135,000 $ 2,767,500
- -------------------------------- ---------- -----------
Software Services (1.1%)
System Software Associates 50,000 1,184,375
- -------------------------------- ---------- -----------
TOTAL UNITED STATES 22,723,795
- -------------------------------- ---------- -----------
TOTAL COMMON STOCKS
(Cost--$49,792,586) 56,709,293
- -------------------------------- ---------- -----------
PREFERRED STOCKS (16.1%)
ARGENTINA (0.1%)
Beverages & Tobacco (0.1%)
Quilmes Industrial (ADR) 5,500 65,313
- -------------------------------- ---------- -----------
BRAZIL (15.5%)
Automotive (0.5%)
QSA Organization 37,700,000 309,702
Pirelli Pneus S.A. 168,000 279,407
- -------------------------------- ---------- -----------
589,109
- -------------------------------- ---------- -----------
Banking (5.8%)
Banco Bradesco 359,173,542 4,054,776
Banco Itau 4,484,700 1,753,920
Unibanco 12,750,000 544,905
- -------------------------------- ---------- -----------
6,353,601
- -------------------------------- ---------- -----------
Beverages & Tobacco (3.9%)
Companhia Cervejaria Brahma
S.A. 8,960,235 4,308,066
- -------------------------------- ---------- -----------
Chemicals (0.4%)
Companhia Petroleo Brasiliero
S.A. 4,000,000 465,675
- -------------------------------- ---------- -----------
Conglomerate (0.3)
Vale do Rio Doce Navegacao
S.A. (CVRD) 248,000,000 282,472
- -------------------------------- ---------- -----------
Food/Household Products (0.9%)
Ceval Alimentos S.A. 55,600,000 $ 644,491
Freios Varga S.A. 5,950,000 222,083
Iven S.A. 200,000 93,741
- -------------------------------- ---------- -----------
960,315
- -------------------------------- ---------- -----------
Metals & Mining (0.2%)
Mangels Industrial S.A. 100,750,000 243,725
Usiminas 1,300,000 23,848
- -------------------------------- ---------- -----------
267,573
- -------------------------------- ---------- -----------
Telecommunications (0.9%)
Ericsson Telecommunications
S.A. 14,000,000 103,437
Telemig S.A. 3,100,000 253,412
Telesponsora Television Sao
Paolo 3,700,000 660,115
- -------------------------------- ---------- -----------
1,016,964
- -------------------------------- ---------- -----------
Textiles & Apparel (0.7%)
Coteminas S.A. 1,802,000 755,601
- -------------------------------- ---------- -----------
Utilities (1.9%)
Cemig Cia Energ MG 82,200,000 2,071,364
- -------------------------------- ---------- -----------
TOTAL BRAZIL 17,070,743
- -------------------------------- ---------- -----------
COLOMBIA (0.5%)
Banking (0.5%)
Banco Industrial Colombiano
S. A. (ADR) 29,700 582,863
- -------------------------------- ---------- -----------
TOTAL PREFERRED STOCKS
(Cost--$15,122,768) 17,718,916
- -------------------------------- ---------- -----------
TOTAL EQUITIES
(Cost--$64,915,354) 74,428,209
- -------------------------------- ---------- -----------
(continued on next page)
<PAGE>
PAGE 10
- ---------------------------------
Keystone Fund of the Americas
<TABLE>
<CAPTION>
INTEREST MATURITY PAR MARKET
RATE DATE VALUE VALUE
- ------------------------------------------------- ------ --------- --------- -------------
<S> <C> <C> <C> <C>
FIXED INCOME (26.2%)
U.S. DOLLAR DENOMINATED FIXED INCOME (25.9%)
ARGENTINA (8.3%)
Foreign Government (2.3%)
Republic of Argentina 8.375% 12/20/2003 $4,600,000 $ 2,507,000
- ------------------------------------------------- ------ --------- --------- -------------
Telecommunications (6.0%)
Telecom Argentina Stet France 12.000 11/15/2002 1,500,000 1,612,500
Telefonica de Argentina 11.875 11/01/2004 4,750,000 5,058,750
- ------------------------------------------------- ------ --------- --------- -------------
6,671,250
- ------------------------------------------------- ------ --------- --------- -------------
TOTAL ARGENTINA 9,178,250
- ------------------------------------------------- ------ --------- --------- -------------
BRAZIL (14.1%)
Chemicals (1.8%)
Companhia Brasiliera de Petroleo Ipiranga 8.625 02/25/2002 2,000,000 1,992,500
- ------------------------------------------------- ------ --------- --------- -------------
Conglomerate (5.5%)
CVRD Cenibra 9.375 12/23/2003 6,120,000 5,997,600
- ------------------------------------------------- ------ --------- --------- -------------
Foreign Government (2.3%)
Republic of Brazil 4.250 04/15/2024 4,400,000 2,526,000
- ------------------------------------------------- ------ --------- --------- -------------
Forest Products (4.5%)
Klabin Fabricadora Papel 10.000 12/20/2001 5,000,000 4,987,500
- ------------------------------------------------- ------ --------- --------- -------------
TOTAL BRAZIL 15,503,600
- ------------------------------------------------- ------ --------- --------- -------------
GUATEMALA (0.9%)
Beverages & Tobacco (0.9%)
Asociacion Nacional Del Cafe 11.000 08/31/1998 1,000,000 1,027,500
- ------------------------------------------------- ------ --------- --------- -------------
MEXICO (2.6%)
Metals & Mining (2.6%)
Ispat Mexicana 10.375 03/15/2001 300,000 2,835,000
- ------------------------------------------------- ------ --------- --------- -------------
TOTAL U.S. DOLLAR DENOMINATED FIXED INCOME
(Cost--$27,156,786) 28,544,350
- ------------------------------------------------- ------ --------- --------- -------------
FOREIGN DENOMINATED FIXED INCOME (0.3%)
BRAZILIAN REAL
Merchandising (0.3%)
Mesbla S.A. 13.250 11/01/1996 200,000 298,095
- ------------------------------------------------- ------ --------- --------- -------------
<PAGE>
PAGE 11
- ------------------------------------
SCHEDULE OF INVESTMENTS--April 30, 1996
(Unaudited)
INTEREST MATURITY PAR MARKET
RATE DATE VALUE VALUE
- ------------------------------------------------- ------ --------- --------- -------------
TOTAL FOREIGN DENOMINATED FIXED INCOME (Cost--$214,460) $ 298,095
- ------------------------------------------------------------------------------------- -----------
TOTAL FIXED INCOME (Cost--$27,371,246) 28,842,445
- ------------------------------------------------- ------ --------- --------- -------------
SHORT-TERM INVESTMENTS (6.8%)
Keystone Joint Repurchase Agreement (Investments
in repurchase agreements, in a joint trading
account, purchased 4/29/96, 5.34%, maturing
5/01/96) (Cost--$7,511,000)(c) 5.340% 5/01/1996 7,513,228 7,511,000
- ------------------------------------------------- ------ --------- --------- -------------
TOTAL INVESTMENTS (Cost $99,797,600) 110,781,654
FOREIGN CURRENCY HOLDINGS (Cost $570,279) (0.5%) (b) 575,913
OTHER ASSETS AND LIABILITIES--NET (-1.1%) (1,195,213)
- ------------------------------------------------------------------------ ------- -----------
NET ASSETS (100%) $110,162,354
- ------------------------------------------------- ------ --------- --------- -------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income-producing securities.
(b) Investments denominated in the local currency and/or foreign currency
holdings of certain countries are considered illiquid due to foreign
exchange restrictions of these markets.
(c) The repurchase agreements are fully collateralized by U.S. Government
and/or agency obligations based on market prices at April 30, 1996.
See Notes to Financial Statements.
<PAGE>
PAGE 12
- ---------------------------------
Keystone Fund of the Americas
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
Net Unrealized
Exchange U.S. Value at In Exchange Appreciation/
Date April 30, 1996 for U.S. $ (Depreciation)
- --------- ---------- ------------------ --------------- --------------- ----------------
Forward Foreign Currency Exchange Contracts to Receive:
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/02/96 168,161,769 Colombian Peso $ 158,337 $ 159,451 ($1,114)
05/02/96 468,072 Mexican Peso 62,998 63,104 (106)
05/03/96 1,536,953 Brazilian Real 1,031,834 1,031,834 0
05/03/96 476,079,440 Colombian Peso 448,265 449,216 (951)
---------------
Net Unrealized Appreciation/Depreciation on Forward Foreign Currency Exchange
Contracts ($2,171)
===============
</TABLE>
See Notes to Financial Statements.
<PAGE>
PAGE 13
- ---------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------
Six Months
Ended
April 30, 1996 1995 1994
------------------------------------------------------------------- --------------- -------- ----------
(Unaudited)
<S> <C> <C> <C>
Net asset value beginning of period $ 9.86 $10.550 $10.000
------------------------------------------------------------------- --------------- -------- ----------
Income from investment operations:
Net investment income 0.24 0.443 0.212
Net realized and unrealized gains (losses) on investment and
foreign currency related transactions 0.79 (0.813) 0.498
------------------------------------------------------------------- --------------- -------- ----------
Total income from investment operations 1.03 (0.370) 0.710
------------------------------------------------------------------- --------------- -------- ----------
Less distributions from:
Net investment income (0.16) (0.299) (0.102)
In excess of net investment income 0.00 0.000 (0.009)
Tax basis return of capital 0.00 (0.021) (0.049)
------------------------------------------------------------------- --------------- -------- ----------
Total distributions (0.16) (0.320) (0.160)
------------------------------------------------------------------- --------------- -------- ----------
Net asset value end of period $ 10.73 $ 9.860 $10.550
------------------------------------------------------------------- --------------- -------- ----------
Total return (a) 10.54% (3.35%) 7.21%
Ratios/supplemental data
Ratios to average net assets:
Total expenses (b) 1.94%(c) 1.86% 1.79%
Net investment income 4.65%(c) 4.02% 2.45%
Portfolio Turnover Rate 69% 57% 104%
Average Commission Rate Paid $0.0005 N/A N/A
------------------------------------------------------------------- --------------- -------- ----------
Net assets end of period (thousands) $12,861 $14,333 $23,880
------------------------------------------------------------------- --------------- -------- ----------
</TABLE>
(a) Excluding applicable sales charges.
(b) The expense ratio includes indirectly paid expenses for the six month
period ended April 30, 1996 and the year ended October 31, 1995.
Excluding indirectly paid expenses, the expense ratio would have been
1.93% and 1.84% for the respective periods.
(c) Annualized.
See Notes to Financial Statements.
<PAGE>
PAGE 14
- ---------------------------------
Keystone Fund of the Americas
FINANCIAL HIGHLIGHTS--CLASS B SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------
Six Months
Ended
April 30, 1996 1995 1994
------------------------------------------------------------------- --------------- -------- ----------
(Unaudited)
<S> <C> <C> <C>
Net asset value beginning of period $ 9.76 $10.490 $ 10.000
------------------------------------------------------------------- --------------- -------- ----------
Income from investment operations:
Net investment income 0.24 0.319 0.144
Net realized and unrealized gains (losses) on investment and
foreign currency related transactions 0.75 (0.753) 0.494
------------------------------------------------------------------- --------------- -------- ----------
Total income from investment operations 0.99 (0.434) 0.638
------------------------------------------------------------------- --------------- -------- ----------
Less distributions from:
Net investment income (0.15) (0.275) (0.090)
In excess of net investment income 0.00 0.000 (0.009)
Tax basis return of capital 0.00 (0.021) (0.049)
------------------------------------------------------------------- --------------- -------- ----------
Total distributions (0.15) (0.296) (0.148)
------------------------------------------------------------------- --------------- -------- ----------
Net asset value end of period $ 10.60 $ 9.760 $ 10.490
------------------------------------------------------------------- --------------- -------- ----------
Total return (a) 10.21% (4.00%) 6.48%
Ratios/supplemental data
Ratios to average net assets:
Total expenses (b) 2.69%(c) 2.61% 2.54%
Net investment income 3.88%(c) 3.27% 1.70%
Portfolio turnover rate 69% 57% 104%
Average commission rate paid $0.0005 N/A N/A
------------------------------------------------------------------- --------------- -------- ----------
Net assets, end of period (thousands) $88,048 $97,165 $148,769
------------------------------------------------------------------- --------------- -------- ----------
</TABLE>
(a) Excluding applicable sales charges.
(b) The expense ratio includes indirectly paid expenses for the six month
period ended April 30, 1996 and the year ended October 31, 1995.
Excluding indirectly paid expenses, the expense ratio would have been
2.68% and 2.59% for the respective periods.
(c) Annualized.
See Notes to Financial Statements.
<PAGE>
PAGE 15
- ---------------------------------
FINANCIAL HIGHLIGHTS--CLASS C SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------
Six Months
Ended
April 30, 1996 1995 1994
------------------------------------------------------------------- --------------- -------- ----------
(Unaudited)
<S> <C> <C> <C>
Net asset value beginning of period $ 9.77 $10.500 $10.000
------------------------------------------------------------------- --------------- -------- ----------
Income from investment operations:
Net investment income 0.16 0.316 0.142
Net realized and unrealized gains (losses) on investment and
foreign currency related transactions 0.81 (0.750) 0.506
------------------------------------------------------------------- --------------- -------- ----------
Total income from investment operations 0.98 (0.434) 0.648
------------------------------------------------------------------- --------------- -------- ----------
Less distributions from:
Net investment income (0.15) (0.275) (0.090)
In excess of net investment income 0.00 0.000 (0.009)
Tax basis return of capital 0.00 (0.021) (0.049)
------------------------------------------------------------------- --------------- -------- ----------
Total distributions (0.15) (0.296) (0.148)
------------------------------------------------------------------- --------------- -------- ----------
Net asset value end of period $ 10.60 $ 9.770 $10.500
------------------------------------------------------------------- --------------- -------- ----------
Total return (a) 10.09% (4.00%) 6.58%
Ratios/supplemental data
Ratios to average net assets:
Total expenses (b) 2.69%(c) 2.61% 2.54%
Net investment income 3.88%(c) 3.27% 1.74%
Portfolio turnover rate 69% 57% 104%
Average commission rate paid $0.0005 N/A N/A
------------------------------------------------------------------- --------------- -------- ----------
Net assets, end of period (thousands) $ 9,253 $11,242 $17,740
------------------------------------------------------------------- --------------- -------- ----------
</TABLE>
(a) Excluding applicable sales charges.
(b) The expense ratio includes indirectly paid expenses for the six month
period ended April 30, 1996 and the year ended October 31, 1995.
Excluding indirectly paid expenses, the expense ratio would have been
2.68% and 2.59% for the respective periods.
(c) Annualized.
See Notes to Financial Statements.
<PAGE>
PAGE 16
- ---------------------------------
Keystone Fund of the Americas
STATEMENT OF ASSETS AND LIABILITIES--
April 30, 1996 (Unaudited)
- -------------------------------------------------- -----------
Assets:
Investments at market value (identified cost--
$99,797,600) (Note 1) $110,781,654
Foreign currency holdings (identified
cost--570,279) (Note 1) 575,913
- -------------------------------------------------- -------------
Total investments and foreign currency
holdings 111,357,567
- -------------------------------------------------- -------------
Receivable for:
Dividends and interest 1,439,260
Fund shares sold 41,852
Deferred organization expense (Note 1) 26,139
Prepaid expenses 24,190
- -------------------------------------------------- -------------
Total assets 112,889,008
- -------------------------------------------------- -------------
Liabilities:
Payable for:
Investments purchased 2,309,267
Fund shares redeemed 184,592
Unrealized depreciation on foreign currency
contracts 2,171
Foreign taxes withheld 34,540
Other accrued expenses 196,084
- -------------------------------------------------- -------------
Total liabilities 2,726,654
- -------------------------------------------------- -------------
Net assets $110,162,354
- -------------------------------------------------- -------------
Net assets represented by:
Paid-in-capital $116,808,630
Accumulated undistributed net investment income 560,518
Accumulated realized losses on investment and
foreign currency related transactions--net (18,195,681)
Net unrealized appreciation on investment
holdings and other assets and liabilities 10,991,058
Net unrealized depreciation on forward foreign
currency contacts (2,171)
- -------------------------------------------------- -------------
Total net assets $110,162,354
- -------------------------------------------------- -------------
Net asset value per share and redemption price per share (Note 2):
Class A Share $10.73 shares outstanding) $ 12,861,134
Class B Share $10.60 shares outstanding) 88,048,448
Class C Share $10.60 shares outstanding) 9,252,772
- -------------------------------------------------- -------------
$110,162,354
- -------------------------------------------------- -------------
Offering price per share:
Class A Shares (including sales shares of 5.75%)
(Note 2) $ 11.38
- -------------------------------------------------- -------------
Class B Shares $ 10.60
- -------------------------------------------------- -------------
Class C Shares $ 10.60
- -------------------------------------------------- -------------
STATEMENT OF OPERATIONS--
Six Months Ended April 30, 1996 (Unaudited)
- ----------------------------------- ------ ---------
Investment income: (Note 1)
Interest $ 2,470,805
Dividends (net of foreign taxes
of $278,456) 1,340,711
- ----------------------------------- -------- -----------
Total income 3,811,516
- ----------------------------------- -------- -----------
Expenses (Notes 1, 2 and 4):
Management fee $ 436,018
Shareholder services 271,015
Accounting 10,850
Auditing and legal 17,452
Custodian fees 163,688
Printing 16,455
Trustees' fees and expenses 9,090
Distribution Plan expenses 530,406
Registration fees 54,848
Amortization of organization
expense 4,152
Miscellaneous expenses 2,709
- ----------------------------------- -------- -----------
Total expenses 1,516,683
Less: Fees paid indirectly
(Note 4) (10,087)
- ----------------------------------- -------- -----------
Net expenses 1,506,596
- ----------------------------------- -------- -----------
Net investment income 2,304,920
- ----------------------------------- -------- -----------
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions: (Notes 1 and 3)
Net realized gain on investment
and foreign currency related
transactions 1,263,159
Net change in unrealized
appreciation (depreciation) on
investments and foreign
currency related transactions: 7,619,976
- ----------------------------------- -------- -----------
Net realized and unrealized gain
on investments and foreign
currency related transactions: 8,883,135
- ----------------------------------- -------- -----------
Net increase in net assets
resulting from operations $11,188,055
- ----------------------------------- -------- -----------
See Notes to Financial Statements.
<PAGE>
PAGE 17
- ---------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 1996 October 31, 1995
---------------------------------------------------------- --------------- ----------------
(Unaudited)
<S> <C> <C>
Operations:
Net investment income (Note 1) $ 2,304,920 $ 4,955,486
Net realized gain (loss) on investments and foreign
currency related transactions: (Notes 1 and 3) 1,263,159 (12,645,021)
Net change in unrealized appreciation or depreciation on
investments and foreign currency related transactions 7,619,976 (2,699,054)
---------------------------------------------------------- --------------- ----------------
Net increase (decrease) in net assets resulting from
operations 11,188,055 (10,388,589)
---------------------------------------------------------- --------------- ----------------
Distributions to shareholders from: (Notes 1 and 5)
Net investment income:
Class A Shares (203,482) (539,452)
Class B Shares (1,342,376) (3,268,145)
Class C Shares (139,770) (389,267)
Tax basis return of capital
Class A Shares 0 (36,708)
Class B Shares 0 (225,106)
Class C Shares 0 (26,989)
---------------------------------------------------------- --------------- ----------------
Total distributions to shareholders (1,685,628) (4,485,667)
---------------------------------------------------------- --------------- ----------------
Capital share transactions: (Note 2)
Proceeds from shares sold:
Class A Shares 1,112,006 2,223,084
Class B Shares 6,186,175 6,934,330
Class C Shares 363,628 1,057,154
Payments for shares redeemed:
Class A Shares (3,907,604) (10,485,266)
Class B Shares (24,070,896) (49,897,788)
Class C Shares (3,258,595) (6,568,724)
Net asset value of shares issued in reinvestment of
distributions:
Class A Shares 185,056 522,497
Class B Shares 1,188,369 3,066,527
Class C Shares 121,799 372,904
---------------------------------------------------------- --------------- ----------------
Net decrease in net assets resulting from capital share
transactions (22,080,062) (52,775,282)
---------------------------------------------------------- --------------- ----------------
Total decrease in net assets (12,577,635) (67,649,538)
---------------------------------------------------------- --------------- ----------------
Net assets:
Beginning of period 122,739,989 190,389,527
---------------------------------------------------------- --------------- ----------------
End of period [including undistributed net investment
income of $560,518 for 1996 and $127,346 for 1995]
(Note 1) $110,162,354 $122,739,989
---------------------------------------------------------- --------------- ----------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
PAGE 18
- ---------------------------------
Keystone Fund of the Americas
NOTES TO FINANCIAL STATEMENTS
(1.) Significant Accounting Policies
Keystone Fund of the Americas (the "Fund") is an open-end diversified
management investment company. The Fund was formed as a Massachusetts
business trust on June 16, 1993. Keystone Investment Management Company
(formerly Keystone Custodian Funds, Inc.) ("Keystone") is the Fund's
investment adviser. The Fund's primary objective is long term growth of
capital through investments in equity and fixed income securities of North
America (United States and Canada) and Latin America (Mexico and countries in
South and Central America). As a secondary objective, the Fund seeks current
income.
Keystone is a wholly-owned subsidiary of Keystone Investments, Inc.
(formerly Keystone Group, Inc.) ("KII"), a Delaware corporation. KII is
private corporation predominantly owned by current and former members of
management of Keystone and its affiliates. Keystone Investor Resource Center,
Inc. ("KIRC"), a wholly-owned subsidiary of Keystone, is the Fund's transfer
agent.
The Fund currently offers 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 (formerly Keystone
Distributors, Inc.) ("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 require 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") and Global
Depository Receipts ("GDRs") 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, by or under the direction of the Board of
Trustees, to be fair: (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. Foreign currency
amounts are translated into United States dollars as follows: market value of
investments, assets and liabilities at the daily rate of exchange; purchases
and sales of investments, income and expenses at the rate of exchange
prevailing on the dates of such transactions. Net unrealized foreign exchange
gains/losses are a component of unrealized appreciation/ depreciation on
investment holdings and other assets and liabilities.
Short-term investments, if purchased with maturities of sixty days or less,
are valued at amortized cost (original purchase price as adjusted for
amortization of premium or accretion of discount) which, when combined with
accrued interest, approximates market. Short-term investments maturing in
more than sixty
<PAGE>
PAGE 19
- ---------------------------------
days for which market quotations are readily available are valued at current
market value. Short-term investments maturing in more than sixty days, 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. All other securities and other assets and liabilities
are valued at fair value as determined in good faith using methods prescribed
by the Board of Trustees.
Investments denominated in foreign currencies are adjusted daily to reflect
changes in exchange rates. Those securities traded in foreign currency
amounts 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. Net unrealized foreign exchange
gains/losses are a component of unrealized appreciation/depreciation of
investments. In addition to market risk, the Fund is subject to the credit
risk that the other party will not be able to complete the obligation of the
contract. For federal tax purposes, any futures contracts which remain open
at the 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 no later than the day after
trade date. Realized gains and losses are computed on the identified cost
basis. Gains and losses on foreign currency related transactions are treated
as ordinary income for federal income tax purposes. 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 will be relieved of any
federal income or excise tax liability by distributing all of its net taxable
investment income and net taxable capital gains, if any, to its shareholders.
The Fund intends to avoid any excise tax liability by making the required
distributions under the Internal Revenue Code.
D. When the Fund enters into a repurchase agreement (a purchase of
securities whereby the seller agrees
<PAGE>
PAGE 20
- ---------------------------------
Keystone Fund of the Americas
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 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 foreign currency, the Fund may from time to time enter into
forward foreign currency exchange contracts ("contracts"). Contracts are
recorded at market value. 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. Organization expenses are being amortized to operations over a five-year
period on a straight-line basis. In the event any of the initial shares are
redeemed by any holder thereof during the five-year amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses
in the same proportion as the number of initial shares being redeemed bears
to the number of initial shares outstanding at the time of redemption.
G. The Fund distributes net investment income quarterly 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 difference between financial statement amounts
available for distribution and distributions made in accordance with income
tax regulations is due to the treatment of foreign currency gains and losses.
(2.) Capital Share Transactions
The Declaration of Trust Agreement authorizes the issuance of an unlimited
number of shares of beneficial interest without par value. Transactions in
shares of the Fund were as follows:
<PAGE>
PAGE 21
- ---------------------------------
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
- ---------------------- ------------------ --------------------
<S> <C> <C>
Sales 228,352 2,887,081
Redemptions (1,093,787) (655,592)
Reinvestment of
dividends and
distributions 55,264 32,771
- ---------------------- ------------------ --------------------
Net increase
(decrease) (810,171) 2,264,260
- ---------------------- ------------------ --------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
------------------------------------------
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
- ---------------------- ------------------ --------------------
<S> <C> <C>
Sales 722,537 16,411,620
Redemptions (5,283,163) (2,411,035)
Reinvestment of
dividends and
distributions 326,301 185,370
- ---------------------- ------------------ --------------------
Net increase
(decrease) (4,234,325) 14,185,955
- ---------------------- ------------------ --------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
------------------------------------------
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
- ---------------------- ------------------ --------------------
<S> <C> <C>
Sales 108,457 2,093,070
Redemptions (687,611) (425,174)
Reinvestment of
dividends and
distributions 39,672 22,477
- ---------------------- ------------------ --------------------
Net increase
(decrease) (539,482) 1,690,373
- ---------------------- ------------------ --------------------
</TABLE>
The Fund bears some of the costs of selling its shares under a Distribution
Plan adopted with respect to its Class A, Class B and Class C shares pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). Under its Distribution Plans, the Fund pays Keystone (formerly
Keystone Investment Distributors, Inc.) ("KIDCO"), the Fund's 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 KIDC under the Class A Distribution Plan are currently used to
pay others, such as dealers, service fees at an annual rate of up to 0.25% of
the average daily net asset value of Class A shares maintained by such
recipients and outstanding on the Fund's books 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); a commission at the time of purchase normally equal to 4.00% of
the price paid for 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 daily 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
<PAGE>
PAGE 22
- ---------------------------------
Keystone Fund of the Americas
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 of the distribution of Class C shares. Amounts paid by the Fund
under the Class C Distribution Plan are currently used to pay others
(dealers) a commission at the time of purchase in the amount of 0.75% of the
price paid for each Class C share sold, plus the first year's service fee in
advance in the amount of 0.25% of the price paid for each Class C share.
Beginning approximately 15 months after purchase, the other party will
receive 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 the 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 at
any time 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 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-month period ended April 30, 1996, the Fund paid KIDCO
$15,361 pursuant to its Class A Distribution Plan; $456,309 for Class B
shares sold prior to June 1, 1995 and $10,079 for Class B shares sold on or
after June 1, 1995 under its Class B Distribution Plans; and $48,657 under
its Class C Distribution Plan.
Under the NASD Rule, as of April 30, 1996 the maximum uncollected amounts
for which KIDCO may seek payment from the Fund under its Class B and Class C
Distribution Plans were $7,270,892 for Class B shares purchased prior to June
1, 1995 and $145,336 for Class B shares purchased on or after June 1, 1995;
and $1,145,752 under its Class C Distribution Plan.
Presently, the Fund's class-specific expenses are limited to Distribution
Plan expenses incurred by a class of shares.
(3.) Securities Transactions
As of October 31, 1995 the Fund had a capital loss carryover for federal
income tax purposes of approximately $19,474,000 which expires as follows:
$6,032,000--2001 and $13,442,000--2002.
Cost of purchases and proceeds from sales of investment securities
(excluding short-term securities) during the six month period ended April 30,
1996 were $75,941,290 and $88,709,200, respectively.
(4.) Investment Management and Transactions with Affiliates
The Fund pays Keystone a fee calculated by applying percentage rates starting
at 0.75% and declining, as net assets increase, to 0.45% per annum, of the
aver-
<PAGE>
PAGE 23
- ---------------------------------
age net asset value of the Fund. The Fund paid or accrued a management fee of
$436,018 to Keystone for the six months ended April 30, 1996 which
represented 0.75% of the Fund's average net assets on an annualized basis.
For the six month period ended April 30, 1996, the Fund paid or accrued to
KII $27,305 as reimbursement for certain accounting, tax and printing
services and $271,015 to KIRC for shareholder services.
For the six month period ended April 30, 1996, Keystone voluntarily limited
ordinary expenses (excluding foreign taxes withheld) of Class A to 2.00%,
Class B & C to 2.75% annually of average daily net assets.
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 month period ended April 30, 1996, the Fund paid custody fees in
the amount of $163,688 and received a credit of $10,087 pursuant to the
expense offset arrangement, resulting in a net custody expense of $153,601.
The assets deposited with the custodian under the expense offset arrangement
could have been invested in an income-producing asset.
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 April 30, 1996, the Fund had entered into currency exchange contracts that
obligate the Fund to deliver currencies at specified future dates. The
unrealized depreciation of $2,171 on these contracts is included in the
accompanying financial statements.
(6.) Distributions to Shareholders
The Fund intends to distribute in the future dividends from net investment
income quarterly and all realized long-term capital gains, if any, annually,
to its shareholders. Any taxable distribution which is declared in December
and paid in the following fiscal year will be taxable to shareholders in the
year declared.
<PAGE>
[cover]
KEYSTONE AMERICA
FAMILY OF FUNDS
[Diamond]
Capital Preservation and Income Fund
Government Securities Fund
Intermediate Term Bond Fund
Strategic Income Fund
World Bond Fund
Tax Free Income Fund
California Insured Tax Free Fund
Florida Tax Free Fund
Massachusetts Tax Free Fund
Missouri Tax Free Fund
New York Insured Tax Free Fund
Pennsylvania Tax Free Fund
Fund for Total Return
Global Opportunities Fund
Hartwell Emerging Growth Fund, Inc.
Omega Fund
Fund of the Americas
Small Company Growth Fund II
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 Logo] KEYSTONE INVESTMENTS
P.O. Box 2121
Boston, Massachusetts 02106-2121
FOA-R-6/96
15.5M [Recycle Logo]
KEYSTONE
[graphic: mosaic of the Americas]
FUND OF THE
AMERICAS
[Keystone logo]
SEMIANNUAL REPORT
APRIL 30, 1996
