<PAGE>
PAGE 1
KEYSTONE FUND OF THE AMERICAS
SEEKS LONG-TERM GROWTH OF CAPITAL BY INVESTING IN EQUITY SECURITIES OF NORTH
AMERICA AND LATIN AMERICA.
Dear Shareholder:
We are pleased to report to you on the activities of Keystone Fund of the
Americas for the six-month period ended April 30, 1997.
PERFORMANCE
For the fiscal periods which ended April 30, 1997, your Fund successfully met
its objective of growth of capital with the following investment returns:
Class A shares returned 25.71% for six months and 32.76% for twelve months.
Class B shares returned 25.28% for six months and 31.65% for twelve months.
Class C shares returned 25.25% for six months and 31.75% for twelve months.
We believe the strong performance reflected the significant investment
opportunities in Latin America during the period along with a favorable
selection of countries and securities in the portfolio. The benchmark, the
unmanaged Morgan Stanley Capital World Index (MSCI), returned 10.34% for the
period. MSCI is not necessarily comprised of the same securities in which your
Fund invests.
IDEAL CLIMATE
The six-month period presented a continuation of favorable economic conditions
in Latin America, confirming our earlier expectations. Virtually the whole
region was thriving. Other than Venezuela, whose stock market was flat during
the first four months of 1997, the weakest market was Mexico with a rate of
growth of 10.59%. Argentina's market appreciation was about 11.28% and Brazil's
was 38.63%. In Mexico, the economic recovery moved forward at a steady pace. In
addition, some second-tier markets, such as Peru and Colombia, where your Fund
has investments, began turning around. Even the watchful bond rating agencies
gave their vote of confidence to the region by raising the rating of Argentinian
and Brazilian bonds.
EXCELLENT VALUE
In our view, the economic progress in the region was spurred by a combination of
three dominant market forces.
First, attractive valuations. Latin American stocks offer growth opportunities
at a fraction of the price that U.S. investors pay at home.
Second, interest rates and inflation have fallen throughout the region. That
means consumers have more purchasing power and can afford to buy more goods and
services.
Third, the trend toward privatizations and restructurings, which has been
instrumental in lifting Latin America out of disfavor over the past several
years, has continued full-force and become firmly entrenched in the region.
Government administrative reforms and reforms in labor laws are taking place in
Venezuela, Argentina and Brazil. Private pension funds, which now manage
billions of dollars, and are growing rapidly, are adding liquidity to the
markets, because so many people are investing in these funds. In Brazil, we see
an opportunity for increased flows to the equity markets as local pension funds
begin placing more emphasis on equities and less on fixed-income assets, which
now make up about 90% of their holdings.
FUND TO INVEST MORE IN LATIN AMERICA
As you may know, the Fund's mandate has been to invest at least 20% of net
assets in U.S. equities. However, that restriction has been relaxed and the Fund
now has authority to invest up to 100% of the portfolio in Latin American
-- CONTINUED--
<PAGE>
PAGE 2
KEYSTONE FUND OF THE AMERICAS
securities. This change is intended to give the Fund a clearer charter. It also
reflects Keystone's confidence in Latin America's markets. Our favorable outlook
for the region is based on the solid fundamental changes and developments
described above. Naturally, we are always vigilant in any emerging market. Your
Fund has retained flexibility to shift investments into the U.S. markets, if
conditions warrant.
OUTLOOK
We expect that economic growth in Latin America has the potential to accelerate
in 1998. The privatizations and reforms that propelled Latin America's economic
growth during the past two years should continue to drive the markets with
increasing force in the foreseeable future. We believe that Latin American
stocks will continue to offer attractive values relative to their earnings
growth as the companies streamline operations and increase productivity under
private managements. The demographic trends in the region are another force that
is likely to feed the upward momentum in the coming years. For example, 60% of
people in Brazil are below the age of 30. In Mexico, 50% of the population is
below the age of 20. They are just beginning to enter the stage of life when
they will need to buy cars, homes and appliances. Another source of new
consumers is emerging as a result of the growing purchasing power in the region.
For example, declining inflation in Brazil has lifted about 10% of the
population out of poverty.
Like any investment that offers a high potential for growth of capital, Latin
America's equity markets can be volatile. We urge you to regard your holdings in
the Fund as a long-term commitment. You can be assured that your money is
professionally managed by proven experts who conduct extensive fundamental
research on every single company they buy and who are thoroughly familiar with
the countries in which they invest.
Sincerely,
(Signature of Albert H. Elfner, III appears here)
Albert H. Elfner, III
CHAIRMAN
KEYSTONE INVESTMENT MANAGEMENT COMPANY
(Signature of George S. Bissell appears here)
George S. Bissell
CHAIRMAN OF THE BOARD
KEYSTONE FUNDS
<TABLE>
<S> <C>
(Photo of Albert H. Elfner, III (Photo of George S. Bissell
appears here) appears here)
ALBERT H. ELFNER, III GEORGE S. BISSELL
</TABLE>
June 1997
<PAGE>
PAGE 3
A Discussion With
Your Fund Managers
<TABLE>
<S> <C>
(Photo of Francis Claro (Photo of Antonio Docal
appears here) apppears here)
FRANCIS CLARO ANTONIO DOCAL
</TABLE>
FRANCIS CLARO IS CO-PORTFOLIO MANAGER OF KEYSTONE FUND OF THE AMERICAS.
HIS UNIQUE QUALIFICATIONS INCLUDE SENIOR-LEVEL RESPONSIBILITIES FOR
PRIVATE EQUITY AND DEBT INVESTMENTS, AS WELL AS MANAGEMENT CONSULTING WORK
IN LATIN AMERICA, AND ACQUISITION WORK FOR MAJOR INTERNATIONAL
CORPORATIONS. MR. CLARO HAS BEEN A MEMBER OF KEYSTONE'S INTERNATIONAL TEAM
SINCE 1994. HE HOLDS A BACHELOR'S DEGREE IN BUSINESS FROM ESADE IN
BARCELONA, SPAIN, AN M.SC. FROM THE LONDON SCHOOL OF ECONOMICS, AND AN
M.B.A. FROM HARVARD BUSINESS SCHOOL. SPANISH AND CATALAN ARE HIS PRIMARY
LANGUAGES AND HE IS ALSO FLUENT IN PORTUGUESE AND CONVERSANT IN FRENCH.
ANTONIO DOCAL IS CO-PORTFOLIO MANAGER OF KEYSTONE FUND OF THE AMERICAS. AN
INVESTMENT PROFESSIONAL WITH BROAD EXPERIENCE IN INTERNATIONAL TRADE AND
MERGERS AND ACQUISITIONS FOR THE LATIN AMERICAN REGION, MR. DOCAL HAS BEEN
A MEMBER OF KEYSTONE'S INTERNATIONAL TEAM SINCE 1994. HE RECEIVED A B.A.
FROM TRINITY COLLEGE, AND AN MSM FROM THE SLOAN SCHOOL OF MANAGEMENT,
M.I.T. SPANISH IS HIS FIRST LANGUAGE AND HE WAS RAISED IN
MEXICO AND COLOMBIA.
YOUR FUND'S INVESTMENT TEAM ALSO INCLUDES MAUREEN CULLINANE, WHO
OVERSEES THE U.S. EQUITY PORTION OF THE PORTFOLIO.
Q THE FUND GENERATED AN EXCELLENT PERFORMANCE FOR THE SIX-MONTH AND TWELVE-MONTH
PERIODS ENDED APRIL 30, 1997. CAN YOU EXPLAIN THE REASONS?
A Latin America has become a very profitable market for equity investors.
Equities in the region are undervalued and have very attractive prospects for
continued earnings growth. The Fund's portfolio of carefully researched and
strategically diversified securities has been well positioned to reap the
rewards of the opportunities available.
Q ARE LATIN AMERICAN STOCKS UNDERVALUED, DESPITE THEIR RALLY?
A The main reason for the relatively low valuations is the strong earnings
growth, which has been substantially higher than in other parts of the world,
including emerging Asia and the U.S. For example, Latin American companies trade
at prices 14 times the projected earnings, versus 18 times in Asia. We expect
that companies in Brazil should post earnings growth greater than 30% for 1997,
compared to about 8% in the U.S. and about 20% in Asia.
Q DID YOU MAKE ANY SIGNIFICANT CHANGES TO THE PORTFOLIO DURING THE SIX-MONTH
PERIOD?
A We made no major changes. We are still heavily weighted in Brazil's state
sector and overweighted in Mexico and we see that progress toward privatization
in
FUND PROFILE
OBJECTIVE: Seeks long-term growth of capital by investing in equity securities
of North America and Latin America.
COMMENCEMENT OF INVESTMENT OPERATIONS: November 1, 1993
NUMBER OF COUNTRIES: 8
NET ASSETS: $111.2 million
<PAGE>
PAGE 4
KEYSTONE FUND OF THE AMERICAS
TOP 10 STOCK HOLDINGS
AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
<S> <C> <C>
Telecomunicacoes
Brasileiras S.A.,
(Brazil) Telecommunications 6.0%
Vale de Rio Doce
Navegacao S.A.
(CVRD)(Brazil) Conglomerate 4.8%
Centrais Electricas
Brasileiras S.A.
(Brazil) Utilities 4.5%
Companhia
Energetica de
Minas Gerais
(Brazil) Utilities 4.0%
Telecomunicacoes de
Sao Paulo S.A.
(Brazil) Telecommunications 3.4%
Companhia
Riograndense de
Telecomunicacoes
(Brazil) Telecommunications 3.0%
General Electric
(U.S.) Electrical 2.7%
Warner-Lambert Co.
(U.S.) Pharmaceuticals 2.3%
Fomento Economico
(Mexico) Food, Beverages & Tobacco 2.0%
Petroleo Brasiliero
Geographic Diversification
</TABLE>
<TABLE>
<S> <C> <C>
S.A. (Brazil) Oil Services 2.0%
</TABLE>
AS OF APRIL 30, 1997
(Map of North and South America appears here)
Common and Preferred Stocks
UNITED STATES 20.4%
LATIN AMERICA 77.2%
Brazil 41.1%
Mexico 18.9%
Argentina 6.0%
Chile 4.2%
Peru 3.1%
Colombia 2.9%
Venezuela 1.0%
(Percentage of
Net Assets)
the telecom area and other state sectors in Brazil has been moving forward. We
increased somewhat our holdings in Brazil, Mexico, Chile and Argentina, and
decreased positions in Peru and Colombia. We also added Venezuela to the
portfolio, representing 1% of net assets. Going forward, we expect to reduce our
weighting in U.S. stocks in favor of Latin American equities.
Q THE FUND HAD ONLY 6% OF NET ASSETS IN ARGENTINA, WHICH IS A FIRST-TIER
ECONOMY. WHY?
A We were somewhat underweighted in Argentina, not because we disliked the
market, but because we have been finding better equity opportunities elsewhere.
Also, Argentina's securities markets tend to be closely correlated with the U.S.
market, so our positions there do not enhance portfolio diversification as
effectively as they might in other countries.
<PAGE>
PAGE 5
Q WERE YOU CONCERNED ABOUT THE APPARENT POLITICAL INSTABILITY IN MEXICO?
A Mexico does have problems, but they hurt its image in the world more than its
viability as an investment market. As institutional investors, we watched
Mexico's recovery and we saw continued progress. The economy grew 5.1% in the
first quarter, a relatively strong broad-based growth. We expect inflation this
year will be about 17%, about half of what it was in 1996. As Mexico approached
major elections this year, the process appeared to be democratic and orderly. It
reflects the overall direction of the country toward a pluralistic, democratic
society. Even more important to us is that Mexico is approaching economic
recovery the right way. The process is slow and for many people painful, but
consistent.
Unfortunately, positive developments tend to get second billing in the press
and media to the more attention-grabbing political and drug scandals.
Q CAN YOU PROVIDE AN EXAMPLE OF A COMPANY OR COMPANIES THAT BEST ILLUSTRATES THE
PROSPECTS FOR GROWTH IN LATIN AMERICA?
A Telebras, a Brazilian telecom company is an excellent example. Even though
Brazil has one of the top ten largest economies in the world, Brazilian phone
penetration is relatively low-- 9 per 100 people. If the government's
privatization efforts continue, and we think they will, Telebras' prospects are
very good. Telebras has experienced tremendous growth over the past year, which
is reflected in its current stock price. In June 1996, the stock traded at $60;
at the end of this six-month period it was selling for more than $110.
Another good example is CVRD, one of the world's largest mining companies that
was just privatized in Brazil. We're expecting to reap strong benefits from the
private management. Among the participants of the shareholder group were a
Brazilian steel company, Brazilian pension funds as well as NationsBank.
Yet another good example is Femsa SA, a Mexico bottler of Coca-Cola and Dos
Equis beer. This company has benefited from the rally in the Mexican economy
since the currency crisis in 1994. For example, during the twelve months ended
April 30, 1997, the stock appreciated 57.07%.
Q DO YOU INVEST PRIMARILY IN LARGE COMPANIES?
A Not necessarily. We also look for small, undiscovered companies with big
potential. Knowing the region as well as we do is very helpful in these
attempts. For example, we visited Embraer, a small Brazilian airline
manufacturer under private management. The company has developed a regional
commuter jet that we expect will become a significant player and a major
competitor to Bombardier in that market. Continental Airlines has demonstrated
its confidence in Embraer by ordering 200 planes, of which 25 are on firm order.
Embraer has had two other successful products before, and has built some of the
most widely used turboprop aircraft currently in use in the United States. So,
although it's small, it has established a solid reputation in its market.
Embraer is a good example of the type of research we can do by knowing the
region and speaking the language. Most of these small, niche companies are not
followed by mainstream analysts. And yet these companies represent some of the
biggest potential for growth.
Q WHAT IS YOUR OUTLOOK FOR LATIN AMERICA?
A We are definitely bullish. We think the economies and corporate earnings in
Latin America will continue to grow strongly, helping to fuel the underlying
stock prices. This adds up to excellent stock picking opportunities and we think
the Fund is well positioned for another strong year.
<PAGE>
PAGE 6
KEYSTONE FUND OF THE AMERICAS
Your Fund's Performance
Growth of an investment in
Keystone Fund of the Americas Class A
Initial Reinvested
Investment Distributions
(In thousands)
11/93 $ 9,524 $ 9,524
4/94 9,524 9,524
4/95 8,952 9,250
4/96 10,219 10,909
4/97 $ 13,210 $ 14,484
Total Value: $14,484
A $10,000 investment in KEYSTONE FUND OF THE AMERICAS CLASS A
made on November 1, 1993 with all distributions reinvested was worth
$14,484 on April 30, 1997. Past performance is no guarantee of
future results.
<TABLE>
<CAPTION>
SIX-MONTH PERFORMANCE AS OF APRIL 30, 1997
<S> <C> <C> <C>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Total returns* 25.71 % 25.28 % 25.25 %
Net asset
value 10/30/96 $11.13 $10.98 $10.99
4/30/97 $13.87 $13.66 $13.67
Dividends $ 0.10 $ 0.08 $ 0.08
Capital gains None None None
</TABLE>
* BEFORE DEDUCTING SALES CHARGE.
[CAPTION]
<TABLE>
<CAPTION>
HISTORICAL RECORD AS OF APRIL 30, 1997
<S> <C> <C> <C>
CUMULATIVE TOTAL RETURNS CLASS A CLASS B CLASS C
<S> <C> <C> <C>
1-year w/o sales charge 32.76 % 31.65 % 31.75%
1-year 26.46 % 26.65 % 30.75%
3-year 44.84 % 45.75 % 48.71%
Life of class 44.84 % 45.31 % 48.41%
AVERAGE ANNUAL RETURNS
1-year w/o sales charge 32.76 % 31.65 % 31.75%
1-year 26.46 % 26.65 % 30.75%
3-year 13.14 % 13.38 % 14.14%
Life of Class 11.17 % 11.27 % 11.95%
</TABLE>
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
4.75%.
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 5% CDSC.
Class C shares are subject to a 1% contingent deferred sales charge for 12
months after the month purchased. One-year performance assumes that shares were
redeemed after the end of a one-year holding period and reflects the deduction
of a 1% CDSC.
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 Evergreen Keystone fund by phone or
in writing. You may also exchange funds through Evergreen Keystone Express Line.
The Fund reserves the right to change or terminate the exchange offer.
<PAGE>
PAGE 7
SCHEDULE OF INVESTMENTS-- APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<C> <S> <C>
<CAPTION>
EQUITIES (97.6%)
COMMON STOCKS (72.0%)
<C> <S> <C>
ARGENTINA (6.0%)
AUTOMOTIVE (0.2%)
57,000 CIADEA S.A. $ 228,023
BEVERAGES & TOBACCO (0.1%)
25,000 Nobleza Piccardo 128,763
DIVERSIFIED HOLDINGS (0.3%)
97,000 Sociedad Comercial Del Plata 293,939
ENERGY SOURCES (2.6%)
221,100 Perez Companc S.A. 1,793,300
38,900 Yacimientos Petroliferos
Fiscales S.A. (YPF), ADR 1,074,613
2,867,913
FINANCE (0.2%)
18,000 BCO Bansud S.A. 249,325
INVESTMENT COMPANIES (0.3%)
65,291 CEI Citicorp Holdings S.A. 349,342
UTILITIES (0.2%)
18,100 Capex S.A. 179,208
TELECOMMUNICATIONS (2.1%)
20,000 Telecom Argentina Stet - France
Telecom S.A., ADR 1,000,000
41,300 Telefonica de Argentina S.A.,
ADR 1,373,225
2,373,225
TOTAL ARGENTINA 6,669,738
BRAZIL (15.5%)
TELECOMMUNICATIONS (9.0%)
4,241,865 Telecomunicacoes de Minas Gerais 602,397
1,050,000 Telecomunicacoes de Parana S.A. 693,079
7,128,567 Telecomunicacoes de Sao Paulo
S.A. 1,974,013
51,000 Telecomunicacoes Brasileiras
S.A., ADR 5,852,248
7,600,000 Telecomunicacoes Brasileiras 818,242
9,939,979
FOREST PRODUCTS/PAPER (0.4%)
99,500 Papeles Nacionales, GDR 472,625
<CAPTION>
MARKET
SHARES VALUE
<C> <S> <C>
UTILITIES (6.1%)
11,000,000 Centrais Electricas Brasileiras
S.A. $ 4,975,082
3,300,000 Companhia Forca e Luz
Cataguazes-Leopoldina 512,051
1,400,000 Light Participacoes S.A. 446,262
2,070,000 Light Servicos de Eletricidade
S.A. 860,310
6,793,705
TOTAL BRAZIL 17,206,309
CHILE (4.2%)
CONTAINERS (0.2%)
9,000 Cristalerias de Chile, ADR 209,250
CONSTRUCTION & HOUSING (0.1%)
11,400 Maderas Y Sinteticos S.A., ADR 182,400
CHEMICALS (0.5%)
9,300 Sociedad Quimica Y Minera Chile
S.A. ADR 551,025
BEVERAGES-- WINE/SPIRITS (0.2%)
6,600 Vina Concha y Toro, ADR 215,325
INDUSTRIAL COMPONENTS (0.6%)
159,968 Madeco 429,560
7,600 Madeco S.A., ADR 208,050
637,610
PAPER & PACKAGING (0.4%)
49,254 Empresas CMPC S.A. 505,531
TELECOMMUNICATIONS (1.5%)
68,760 Cia Telecomunicaciones de Chile
S.A. 536,687
34,500 Cia Telecomunicaciones de Chile
S.A., ADR 1,116,938
1,653,625
UTILITIES-- ELECTRIC (0.7%)
450,000 Chilgener 182,599
17,950 Enersis S.A., ADR 565,425
748,024
TOTAL CHILE 4,702,790
COLOMBIA (2.9%)
BANKING (1.9%)
104,098 Banco de Bogota 636,206
52,500 Banco Ganadero S.A., ADR 1,450,313
2,086,519
</TABLE>
<PAGE>
PAGE 8
KEYSTONE FUND OF THE AMERICAS
SCHEDULE OF INVESTMENTS-- APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<C> <S> <C>
FOOD, BEVERAGES & TOBACCO (1.0%)
144,127 Bavaria $ 1,084,120
TOTAL COLOMBIA 3,170,639
MEXICO (18.9%)
BUILDING MATERIALS (2.8%)
477,100 Cemex S.A. de C.V. 1,747,135
82,300 Tubos de Acero S.A., ADR 1,347,663
3,094,798
BANKING (1.4%)
491,000 Grupo Financiero Banamex 1,051,635
499,750 Grupo Financiero Banorte 488,021
1,539,656
FOOD, BEVERAGES & TOBACCO (2.9%)
480,600 Fomento Economico Mexico 2,267,980
34,000 Panamerican Beverages, Inc.,
Class A, ADR 986,000
3,253,980
CONGLOMERATES (2.2%)
46,056 Desc S.A. de CV, Class C, ADR
(a) 1,185,942
225,000 Grupo Carso 1,299,629
2,485,571
CONSTRUCTION (1.8%)
119,300 Bufete Industrial 794,182
28,000 Empresas ICA Sociedad
Controladora S.A. de C.V., ADR 416,500
157,800 Corp. Geo S.A. de C.V. 734,739
1,945,421
DIVERSIFIED OPERATIONS (0.6%)
130,000 Alfa S.A. de C.V. 713,270
FOOD/HOUSEHOLD PRODUCTS (2.5%)
423,300 Grupo Industrial Maseca 413,365
181,000 Grupo Industrial Bimbo 1,138,866
347,400 Tablex S.A. de C.V. 1,208,785
2,761,016
METALS & MINING (1.4%)
330,000 Industrias Penoles S.A. de C.V. 1,544,831
FOREST PRODUCTS/PAPER (0.4%)
720,000 Empaques Ponderosa S.A. de C.V.,
Series B (a) 452,124
<CAPTION>
MARKET
SHARES VALUE
<C> <S> <C>
INDUSTRIAL COMPONENTS (0.7%)
31,500 Hylsamex S.A. de C.V., ADR (b) $ 826,875
RETAIL (1.1%)
115,458 Cifra S.A. de C.V., A Shares 174,353
694,000 Cifra S.A. de C.V., B Shares 1,065,475
1,239,828
TELECOMMUNICATIONS (0.5%)
12,500 Telefonos de Mexico S.A., ADR 515,625
WHOLESALE DISTRIBUTOR (0.6%)
110,000 Grupo Casa Autrey S.A. de C.V. 192,135
30,000 Grupo Casa Autrey S.A. de C.V.,
ADR 521,250
713,385
TOTAL MEXICO 21,086,380
PERU (3.1%)
BANKING (0.4%)
22,918 Credicorp Ltd. 481,270
GOLD MINING (2.0%)
45,610 Minas Buenaventura 494,608
184,342 Minas Buenaventura, Class A 1,732,746
2,227,354
MACHINERY & ENGINEERING (0.4%)
208,505 Ferreyos S.A. 203,420
10,000 Ferreyos S.A., ADR (b) 197,500
400,920
REAL ESTATE (0.3%)
419,686 Inversiones Centenario 362,206
TOTAL PERU 3,471,750
UNITED STATES (20.4%)
AUTOMOTIVE (1.0%)
22,000 Goodyear Tire & Rubber 1,157,750
BANKING (1.8%)
27,000 BankBoston Corp. 1,964,250
FOOD, BEVERAGES & TOBACCO (2.8%)
35,000 Pepsico 1,220,625
48,000 Philip Morris Companies, Inc. 1,890,000
3,110,625
CHEMICALS (1.7%)
18,000 E.I DuPont DeNemours & Co. 1,910,250
</TABLE>
<PAGE>
PAGE 9
SCHEDULE OF INVESTMENTS-- APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<C> <S> <C>
COMPUTER SOFTWARE (1.8%)
16,000 Microsoft Corporation (a) $ 1,945,000
ELECTRICAL (2.7%)
27,000 General Electric Co. 2,993,625
ELECTRONIC COMPONENTS (1.7%)
53,000 EMC Corp. (a) 1,927,875
HEALTH & PERSONAL CARE (1.5%)
28,000 Johnson & Johnson 1,715,000
MACHINERY (1.6%)
20,000 Caterpillar, Inc. 1,780,000
OIL SERVICES (1.5%)
35,000 BJ Services Co. (a) 1,649,375
PHARMACEUTICALS (2.3%)
26,000 Warner-Lambert Co. 2,548,000
TOTAL UNITED STATES 22,701,750
VENEZUELA (1.0%)
TELECOMMUNICATIONS
35,200 Campania Anonima Nacional
Telefonos de Venezuela 1,056,000
TOTAL COMMON STOCKS
(COST-- $62,596,967) 80,065,356
<CAPTION>
PREFERRED STOCKS (25.6%)
<C> <S> <C>
BRAZIL (25.6%)
AIRCRAFT (0.1%)
9,100,000 Empresa Brasileira de
Aeronautica 121,504
AUTOMOTIVE (1.0%)
58,000 Companhia Fabricadora de Pecas 599,906
5,530,000 Freios Varga S.A. 317,189
46,900,000 Organizacao Sistemas Aplica
(OSA) (a) 242,548
1,159,643
BANKING (3.7%)
164,700,000 Banco Bradesco 1,362,821
3,110,000 Banco Itau S.A. 1,681,476
27,600,000 Uniao de Bancos Brasileiros S.A. 1,019,656
4,063,953
<CAPTION>
MARKET
SHARES VALUE
<C> <S> <C>
BEVERAGES & TOBACCO (1.1%)
1,838,235 Companhia Cervejaria Brahma S.A. $ 1,250,553
CONGLOMERATE (4.8%)
207,800 Vale do Rio Doce Navegacao S.A.,
A shares 5,295,139
207,800 Vale do Rio Doce Navegacao S.A.,
B Shares 0
5,295,139
OIL SERVICES (2.0%)
10,700,000 Petroleo Brasiliero S.A. 2,248,660
METALS & MINING (1.3%)
22,760,000 Caemi Mineraco e Metalurgica
S.A. (a) 1,498,072
TELECOMMUNICATIONS (7.2%)
2,576,400 Companhia Riograndense de
Telecomunicacoes 3,367,368
7,120,000 Telecomunicacoes de Rio de
Janeiro S.A. 1,184,993
4,300,000 Telecomunicacoes de Minas Gerais 684,927
1,280,000 Telecomunicacoes de Parana S.A. 878,608
6,510,000 Telecomunicacoes de Sao Paulo
S.A. 1,848,632
7,964,528
UTILITIES (4.4%)
19,176 Companhia Forca e Luz
Cataguazes-Leopoldina 2,705
96,300,000 Companhia Energetica de Minas
Gerais 4,390,773
2,230,000 Electricidade de Sao Paulo S.A. 447,677
4,841,155
TOTAL BRAZIL 28,443,207
TOTAL PREFERRED STOCKS
(COST-- $22,020,368) 28,443,207
TOTAL EQUITIES
(COST-- $84,617,335) 108,508,563
</TABLE>
<PAGE>
PAGE 10
KEYSTONE FUND OF THE AMERICAS
SCHEDULE OF INVESTMENTS-- APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY PAR MARKET
RATE DATE VALUE VALUE
<S> <C> <C> <C> <C>
<CAPTION>
FOREIGN DENOMINATED FIXED INCOME (0.1%)
<S> <C> <C> <C> <C>
BRAZIL
MERCHANDISING (0.1%)
Mesbla S.A. (c) 13.250% 11/01/1996 $ 200,000 $ 113,239
TOTAL FOREIGN DENOMINATED FIXED INCOME (COST-- $214,460) 113,239
<CAPTION>
MATURITY
VALUE
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT (1.6%) (COST-- $1,734,000)
Keystone Joint Repurchase Agreement (Investments in repurchase agreements, in a joint trading
account, purchased 04/30/97, 5.504%, maturing 5/1/97) (d) $1,734,265 1,734,000
TOTAL INVESTMENTS (COST $86,565,795) (99.3%) 110,355,802
FOREIGN CURRENCY HOLDINGS (COST $29,707) (0.0%) (C) 29,659
OTHER ASSETS AND LIABILITIES-- NET (0.7%) 770,392
NET ASSETS (100%) $111,155,853
</TABLE>
(a) Non-income-producing securities.
(b) Securities that may be resold to "qualified institutional buyers" under Rule
144A of the Federal Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Trustees.
(c) 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.
(d) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at April 30, 1997.
LEGEND OF PORTFOLIO ABBREVIATIONS:
ADR-- American Depository Receipt
GDR-- Global Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 11
FINANCIAL HIGHLIGHTS-- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED OCTOBER 31,
(UNAUDITED) 1996 1995 1994
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $11.13 $9.86 $10.55 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.07 0.39 0.44 0.21
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 2.77 1.24 (0.81) 0.50
Total from investment operations 2.84 1.63 (0.37) 0.71
LESS DISTRIBUTIONS FROM:
Net investment income (0.10) (0.31) (0.30) (0.10)
In excess of net investment income 0 (0.05) 0 (0.01)
Net realized gain on investments and foreign currency related transactions 0 0 (0.02) (0.05)
Total distributions (0.10) (0.36) (0.32) (0.16)
NET ASSET VALUE END OF PERIOD $13.87 $11.13 $9.86 $10.55
TOTAL RETURN (A) 25.71% 16.74% (3.35%) 7.21%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 1.86%(b) 1.83% 1.86% 1.79%
Total expenses excluding indirectly paid expenses 1.85%(b) 1.81% 1.84% N/A
Net investment income 0.77%(b) 3.05% 4.02% 2.45%
Portfolio turnover rate 37% 112% 57% 104%
Average commission rate paid $ 0.0003 $0.0005 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS) $12,887 $11,021 $14,333 $23,880
</TABLE>
(a) Excluding applicable sales charges.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 12
KEYSTONE FUND OF THE AMERICAS
FINANCIAL HIGHLIGHTS-- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED OCTOBER 31,
(UNAUDITED) 1996 1995 1994
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $10.98 $9.76 $10.49 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0 0.23 0.32 0.14
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 2.76 1.30 (0.75) 0.50
Total from investment operations 2.76 1.53 (0.43) 0.64
LESS DISTRIBUTIONS FROM:
Net investment income (0.08) (0.27) (0.28) (0.09)
In excess of net investment income 0 (0.04) 0 (0.01)
Net realized gain on investments and foreign currency related transactions 0 0 (0.02) (0.05)
Total distributions (0.08) (0.31) (0.30) (0.15)
NET ASSET VALUE END OF PERIOD $13.66 $10.98 $9.76 $10.49
TOTAL RETURN (A) 25.28% 15.82% (4.00%) 6.48%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 2.62%(b) 2.59% 2.61% 2.54%
Total expenses excluding indirectly paid expenses 2.61%(b) 2.58% 2.59% N/A
Net investment income (0.05%)(b) 2.30% 3.27% 1.70%
Portfolio turnover rate 37% 112% 57% 104%
Average commission rate paid $ 0.0003 $0.0005 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS) $86,915 $79,026 $97,165 $148,769
</TABLE>
(a) Excluding applicable sales charges.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 13
FINANCIAL HIGHLIGHTS-- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED OCTOBER 31,
(UNAUDITED) 1996 1995 1994
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $10.99 $9.77 $10.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01 0.23 0.32 0.14
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 2.75 1.30 (0.75) 0.51
Total from investment operations 2.76 1.53 (0.43) 0.65
LESS DISTRIBUTIONS FROM:
Net investment income (0.08) (0.27) (0.28) (0.09)
In excess of net investment income 0 (0.04) 0 (0.01)
Net realized gain on investments and foreign currency related transactions 0 0 (0.02) (0.05)
Total distributions (0.08) (0.31) (0.30) (0.15)
NET ASSET VALUE END OF PERIOD $13.67 $10.99 $9.77 $10.50
TOTAL RETURN (A) 25.25% 15.80% (4.00%) 6.58%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 2.62%(b) 2.59% 2.61% 2.54%
Total expenses excluding indirectly paid expenses 2.61%(b) 2.58% 2.59% N/A
Net investment income 0.06%(b) 2.26% 3.27% 1.74%
Portfolio turnover rate 37% 112% 57% 104%
Average commission rate paid $ 0.0003 $0.0005 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS) $11,354 $8,791 $11,242 $17,740
</TABLE>
(a) Excluding applicable sales charges.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 14
KEYSTONE FUND OF THE AMERICAS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value
(identified cost-- $86,565,795) $110,355,802
Foreign currency holdings (identified
cost-- $29,707) 29,659
Cash 2,852
Dividends and interest receivable 637,094
Receivable for Fund shares sold 478,133
Prepaid expenses and other assets 42,683
Total assets 111,546,223
LIABILITIES:
Payable for Fund shares redeemed 128,510
Payable for investments purchased 97,898
Distribution fees payable 68,322
Transfer agent fees payable 41,015
Professional fees payable 22,134
Payable for foreign taxes to be withheld 6,047
Other accrued expenses 26,444
Total liabilities 390,370
NET ASSETS $111,155,853
NET ASSETS REPRESENTED BY:
Paid-in-capital $ 91,202,919
Undistributed net investment income 295,961
Accumulated net realized loss on investments
and foreign currency related transactions (4,131,822)
Net unrealized appreciation (depreciation) on
investments and foreign currency related
transactions 23,788,795
Total net assets $111,155,853
NET ASSET VALUE PER SHARE
CLASS A SHARES
Net assets of $12,887,122 (division mark)
929,301 shares outstanding $13.87
Offering price per share ($13.87 (division mark)
0.9525) (based on sales charge of 4.75% of the
offering price at April 30, 1997) $14.56
CLASS B SHARES
Net assets of $86,914,674 (division mark)
6,360,554 shares outstanding $13.66
CLASS C SHARES
Net assets of $11,354,057 (division mark)
830,709 shares outstanding $13.67
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
withholding
taxes of $21,254) $ 1,357,028
EXPENSES:
Distribution Plan expenses $481,906
Management fee 393,815
Transfer agent fees 234,234
Custodian fees 134,185
Professional fees 23,777
Administrative service fee 15,972
Trustees' fees and expenses 9,801
Amortization of organization
expense 3,624
Miscellaneous expenses 40,137
Total expenses 1,337,451
Less: Expenses paid indirectly (6,559)
Net expenses 1,330,892
Net investment income 26,136
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY RELATED TRANSACTIONS:
Net realized gain on investments 13,095,925
Net realized loss on foreign
currency related transactions (1,786,098)
Net realized gain on investments
and foreign currency related
transactions 11,309,827
Net change in unrealized
appreciation (depreciation) on
investments and foreign currency
related transactions 12,463,403
Net realized and unrealized gain
on investments and foreign
currency related transactions 23,773,230
Net increase in net assets
resulting from operations $23,799,366
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 15
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 26,136 $ 2,640,542
Net realized gain on investments and foreign currency related transactions 11,309,827 5,955,109
Net change in unrealized appreciation (depreciation) on investments and foreign
currency related transactions 12,463,403 7,956,482
Net increase in net assets resulting from operations 23,799,366 16,552,133
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A Shares (91,845) (361,523)
Class B Shares (569,802) (2,175,018)
Class C Shares (62,177) (231,347)
In excess of net investment income
Class A Shares 0 (61,278)
Class B Shares 0 (368,664)
Class C Shares 0 (39,213)
Total distributions to shareholders (723,824) (3,237,043)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
Class A Shares 2,157,956 1,884,412
Class B Shares 8,145,846 7,991,078
Class C Shares 1,701,627 709,458
Payments for shares redeemed
Class A Shares (2,867,736) (7,167,407)
Class B Shares (19,213,403) (39,001,039)
Class C Shares (1,322,921) (4,499,957)
Net asset value of shares issued in reinvestment of distributions
Class A Shares 82,042 382,390
Class B Shares 502,887 2,248,867
Class C Shares 54,852 236,280
Net decrease in net assets resulting from capital share transactions (10,758,850) (37,215,918)
Total increase (decrease) in net assets 12,316,692 (23,900,828)
NET ASSETS:
Beginning of period 98,839,161 122,739,989
End of period [including undistributed net investment income of $295,961 and
$993,649, respectively] $111,155,853 $ 98,839,161
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 16
KEYSTONE FUND OF THE AMERICAS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Keystone Fund of the Americas (the "Fund") is a Massachusetts business trust for
which Keystone Investment Management Company ("Keystone") is the Investment
Adviser and Manager. Keystone was formerly a wholly-owned subsidiary of Keystone
Investments, Inc. ("KII") and is currently a subsidiary of First Union Keystone,
Inc. First Union Keystone, Inc. is a wholly-owned subsidiary of First Union
National Bank of North Carolina which in turn is a wholly-owned subsidiary of
First Union Corporation ("First Union"). The Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified,
open-end investment company. The Fund offers three classes of shares. The Fund's
primary investment objective is long term growth of capital through investments
in equity securities of North America (the United States and Canada) and Latin
America (Mexico and countries in South and Central America.) As a secondary
objective, the Fund seeks current income.
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. VALUATION OF SECURITIES
Investments are usually valued at the closing sales price, or in the absence of
sales and for over-the-counter securities, the mean of the bid and asked prices.
Securities for which valuations are not available from an independent pricing
service (including restricted securities) are valued at fair value as determined
in good faith according to the procedures established by the Board of Trustees.
Short-term investments with remaining maturities of 60 days or less are
carried at amortized cost, which approximates market value. Short-term
securities with greater than 60 days to maturity are valued at market value.
B. REPURCHASE AGREEMENTS
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with certain other Keystone funds, may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are fully collateralized by U.S. Treasury and/or
Federal Agency obligations.
Securities pledged as collateral for repurchase agreements are held by the
custodian on the Fund's behalf. The Fund monitors the adequacy of the collateral
daily and will require the seller to provide additional collateral in the event
the market value of the securities pledged falls below the carrying value of the
repurchase agreement.
C. FOREIGN CURRENCY
The books and records of the Fund are maintained in United States (U.S.)
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 respective dates of such transactions. Net
unrealized foreign exchange gain (loss) resulting from changes in foreign
currency exchange rates is a component of net unrealized appreciation
(depreciation) on investments and foreign currency related transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amount actually received. The portion
of foreign currency gains and losses related to fluctuations in exchange rates
between the initial purchase trade date
<PAGE>
PAGE 17
and subsequent sale trade date is included in realized gain (loss) on foreign
currency related transactions.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated in
a foreign currency and to hedge certain foreign currency assets or liabilities.
Forward contracts are recorded at the forward rate and marked-to-market daily.
Realized gains and losses arising from such transactions are included in net
realized gain (loss) on investments and foreign currency related transactions.
The Fund bears the risk of an unfavorable change in the foreign currency
exchange rate underlying the forward contract and is subject to the credit risk
that the other party will not fulfill their obligations under the contract.
Forward contracts involve elements of market risk in excess of the amount
reflected in the statement of assets and liabilities.
E. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes
amortization of discounts and premiums. Dividend income is recorded on the
ex-dividend date.
F. FEDERAL INCOME TAXES
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 (the
"Code"). Thus, the Fund is relieved of any federal income tax liability by
distributing all of its net taxable investment income and net taxable capital
gains, if any, to its shareholders. The Fund also intends to avoid excise tax
liability by making the required distributions under the Code. Accordingly, no
provision for federal income taxes is required.
G. DISTRIBUTIONS
The Fund distributes net investment income quarterly and net capital gains, if
any, at least annually. Distributions to shareholders are recorded at the close
of business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to the deferral of
losses for income tax purposes that have been recognized for financial statement
purposes and treatment of foreign currency gains as ordinary income for tax
purposes.
H. CLASS ALLOCATIONS
Class A shares are currently offered at a public offering price which includes a
maximum sales charge of 4.75% payable at the time of purchase. Class B shares
are sold subject to a contingent deferred sales charge that is payable upon
redemption and decreases depending on how long the shares have been held. Class
B shares purchased on or after January 1, 1997 will convert to Class A shares
after seven years. Class B shares purchased prior to January 1, 1997 retain
their existing conversion features. Class C shares are sold subject to a
contingent deferred sales charge payable on shares redeemed within one year
after the month of purchase.
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the relative
net assets of each class. Currently, class specific expenses are limited to
expenses incurred under the Distribution Plans for each class.
2. CAPITAL SHARE TRANSACTIONS
The Trust Agreement authorizes the issuance of an unlimited number of shares of
beneficial interest without par value. Transactions in shares of the Fund were
as follows:
<PAGE>
PAGE 18
KEYSTONE FUND OF THE AMERICAS
<TABLE>
<CAPTION>
YEAR ENDED
SIX MONTHS ENDED OCTOBER 31,
CLASS A APRIL 30, 1997 1996
<S> <C> <C>
Shares sold 163,403 176,782
Shares redeemed (231,907) (676,261)
Shares issued in
reinvestment of
distributions 7,159 36,036
Net decrease (61,345) (463,443)
<CAPTION>
CLASS B
<S> <C> <C>
Shares sold 673,347 765,039
Shares redeemed (1,551,720) (3,737,221)
Shares issued in
reinvestment of
distributions 44,425 215,054
Net decrease (833,948) (2,757,128)
<CAPTION>
CLASS C
<S> <C> <C>
Shares sold 132,311 66,448
Shares redeemed (106,540) (439,812)
Shares issued in
reinvestment of
distributions 4,841 22,570
Net increase (decrease) 30,612 (350,794)
</TABLE>
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) for the six months ended April 30, 1997, were $39,306,087
and $53,120,157, respectively.
4. DISTRIBUTION PLANS
The Fund bears some of the costs of selling its shares under Distribution Plans
adopted for its Class A, B and C shares pursuant to Rule 12b-1 under the 1940
Act. Under the Distribution Plans, the Fund pays its principal underwriter
amounts which are calculated daily and paid monthly.
On December 11, 1996, the Fund entered into a principal underwriting agreement
with Evergreen Keystone Distributor, Inc. (formerly, Evergreen Funds
Distributor, Inc.) ("EKD"), a wholly-owned subsidiary of The BISYS Group Inc.
Prior to December 11, 1996, Evergreen Keystone Investment Services, Inc.
(formerly Keystone Investment Distributors Company) ("EKIS"), a wholly-owned
subsidiary of Keystone, served as the Fund's principal underwriter.
The Class A Distribution Plan provides for expenditures, which are currently
limited to 0.25% annually of the average daily net assets of the Class A shares,
to pay expenses related to the distribution of Class A shares.
Pursuant to the Fund's Class B and Class C Distribution Plans, the Fund pays a
distribution fee which may not exceed 1.00% annually of the average daily net
assets of Class B and Class C shares, respectively. Of that amount, 0.75% is
used to pay distribution expenses and 0.25% is used to pay service fees.
During the six months ended April 30, 1997, amounts paid to EKD or EKIS
pursuant to the Fund's Class A, Class B and Class C Distribution Plans were
$13,626, $419,494 and $48,786, respectively.
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, and subject to the discretion of the Independent Trustees, payments to
EKIS and/or EKD may continue as compensation for services that had been earned
while the Distribution Plan was in effect.
EKD intends, but is not obligated, to continue to pay distribution costs that
exceed the current annual payments from the Fund. EKD intends to seek full
payment of such distribution costs from the Fund at such time in the future as,
and to the extent that, payment thereof by the Class B or Class C shares would
be within permitted limits.
At April 30, 1997, total unpaid distribution costs were $7,260,589 for Class B
shares and $1,299,706 for Class C shares.
Contingent deferred sales charges paid by redeeming shareholders are paid to
EKD or its predecessor.
<PAGE>
PAGE 19
5. INVESTMENT MANAGEMENT AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Under the terms of the investment advisory and management agreement dated
December 11, 1996, Keystone serves as Investment Adviser and Manager to the
Fund. Keystone provides the Fund with investment advisory and management
services. In return, Keystone is paid a management fee, computed daily and paid
monthly. The management fee is calculated by applying percentage rates starting
at 0.75% and declining as net assets increase to 0.45% per annum, to the average
daily net asset value of the Fund.
During the six months ended April 30, 1997, the Fund paid or accrued $15,972
to Keystone for certain accounting services. Evergreen Keystone Service Company
(formerly Keystone Investor Resource Center, Inc.), a wholly-owned subsidiary of
Keystone, serves as the Fund's transfer and dividend disbursing agent.
Officers of the Fund and affiliated Trustees receive no compensation directly
from the Fund.
6. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an expense offset arrangement with its custodian. For
the six months ended April 30, 1997, the Fund incurred total custody fees of
$134,185 and received a credit of $6,559 pursuant to this expense offset
arrangement, resulting in a net custody expense of $127,626. The assets
deposited with the custodian under this expense offset arrangement could have
been invested in income-producing assets.
<PAGE>
PAGE 20
KEYSTONE FUND OF THE AMERICAS
ADDITIONAL INFORMATION (UNAUDITED)
Shareholders of the Fund considered and acted upon the proposals listed below at
a special meeting of shareholders held Monday, December 9, 1996. In addition,
below each proposal are the results of that vote.
1. TO ELECT THE FOLLOWING TRUSTEES:
<TABLE>
<CAPTION>
AFFIRMATIVE WITHHELD
<S> <C> <C>
Frederick Amling 7,686,234 210,957
Laurence B. Ashkin 7,685,223 211,968
Charles A. Austin III 7,688,664 208,527
Foster Bam 7,685,017 212,174
George S. Bissell 7,686,670 210,521
Edwin D. Campbell 7,686,800 210,391
Charles F. Chapin 7,687,261 209,930
K. Dun Gifford 7,688,298 208,893
James S. Howell 7,684,660 212,531
Leroy Keith, Jr. 7,688,864 208,327
F. Ray Keyser 7,686,028 211,163
Gerald M. McDonnell 7,688,870 208,321
Thomas L. McVerry 7,688,870 208,321
William Walt Pettit 7,688,870 208,321
David M. Richardson 7,688,867 208,324
Russell A. Salton, III M.D. 7,688,664 208,527
Michael S. Scofield 7,688,870 208,321
Richard J. Shima 7,688,867 208,324
Andrew J. Simons 7,688,867 208,324
</TABLE>
2. TO APPROVE AN INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT BETWEEN THE FUND
AND KEYSTONE INVESTMENT MANAGEMENT COMPANY:
<TABLE>
<S> <C>
Affirmative 7,455,578
Against 127,603
Abstain 314,010
</TABLE>
<PAGE>
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<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
KEYSTONE AMERICA
FAMILY OF FUNDS
u
Balanced Fund II
California Tax Free Fund
Capital Preservation and Income Fund
Florida Tax Free Fund
Fund for Total Return
Global Opportunities Fund
Global Resources and Development Fund
Government Securities Fund
Hartwell Emerging Growth Fund, Inc.
Intermediate Term Bond Fund
Massachusetts Tax Free Fund
Missouri Tax Free Fund
New York Tax Free Fund
Omega Fund
Pennsylvania Tax Free Fund
Small Company Growth Fund II
Strategic Income Fund
Tax Free Income Fund
World Bond 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 Evergreen Keystone funds, contact
your financial adviser or call Evergreen Keystone.
Evergreen Keystone
FUNDS
(Evergreen logo appears here)
P.O. Box 2121
Boston, Massachusetts 02106-2121
FOA-R REV01
6/97
KEYSTONE
(Photo appears here)
FUND OF THE
AMERICAS
Evergreen Keystone
FUNDS
(Evergreen logo appears here)
SEMI-ANNUAL REPORT
APRIL 30, 1997
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