0000950146-95-000468.txt : 19950821
0000950146-95-000468.hdr.sgml : 19950821
ACCESSION NUMBER: 0000950146-95-000468
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950818
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: KEYSTONE LIQUID TRUST
CENTRAL INDEX KEY: 0000005384
STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000]
IRS NUMBER: 046196129
STATE OF INCORPORATION: NJ
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: N-30D
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-02521
FILM NUMBER: 95565119
BUSINESS ADDRESS:
STREET 1: 200 BERLELEY ST
CITY: BOSTON
STATE: MA
ZIP: 02116
BUSINESS PHONE: 6173383200
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN LIQUID TRUST
DATE OF NAME CHANGE: 19830523
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN LIQUITY FUND INC
DATE OF NAME CHANGE: 19751102
N-30D
1
Keystone Liquid Trust
Seeks stability of principal and liquidity with current
income from high quality money market instruments.
Dear Shareholder:
We are pleased to report to you on the activities of Keystone Liquid Trust
for the twelve-month period which ended June 30, 1995. Your Fund provided the
following returns:
Class A shares returned 4.63% for the period which includes reinvested
dividends of 4.5 cents per share.
Class B shares returned 3.68% for the period which includes reinvested
dividends of 3.6 cents per share.
Class C shares returned 3.68% for the period which includes reinvested
dividends of 3.6 cents per share.
Your Fund maintained a constant net asset value of $1 per share during the
period, and continued to offer a safe haven for investors by focusing on
high-quality, short-term money market instruments.
Short-term interest rates rose during the second half of 1994 and declined
slightly in the first half of 1995, resulting in more income for
shareholders. In 1994, the Federal Reserve Bank (the Fed) increased the
federal funds rate from 3 to 6% in an effort to control inflation. In 1995,
the Fed appeared to have achieved this objective with its last rate increase
on February 5. As economic indicators continued to slow in the following
months, investors began to anticipate a possible cut in short-term rates. The
Fed cut rates by one quarter of 1 percent in July, fulfilling these
expectations.
As interest rates rose in the second half of 1994, we maintained a
relatively short average maturity which was 18 days on December 31, 1994.
This strategy helped your Fund to take advantage of higher current yields.
Higher interest rates meant that many high quality money market instruments
that Keystone Liquid Trust typically invests in paid more income. In
anticipation of a decline in interest rates in 1995, we attempted to lock in
high current rates by lengthening the average maturity of the portfolio. At
June 30, 1995 the average maturity was 56 days.
Looking ahead we expect short-term interest rates may decline further as
growth slows and the Fed attempts to provide a "soft landing" for the
economy. We think the economy is healthy, but is slowing to a more
sustainable level. In this environment, we will attempt to preserve income if
rates decline-as we expect-by maintaining a relatively long average maturity.
We think that Keystone Liquid Trust can provide a valuable haven for
investors. The Fund remains committed to high quality and liquid money market
instruments. We believe that these securities can provide the stability and
safety that investors seek, especially during times of uncertainty. We intend
to continue with our conservative management approach for Keystone Liquid
Trust. In all market environments, we will seek stability of principal and
liquidity with current income.
We appreciate your continued support of Keystone funds. If you have any
questions or comments about your investment, we encourage you to write to us.
Sincerely,
[signature of Albert H. Elfner, III]
Albert H. Elfner, III
Chairman and President
Keystone Investments, Inc.
[signature of George S. Bissell]
George S. Bissell
Chairman of the Board
Keystone Funds
August 1995
Keystone Liquid Trust
SCHEDULE OF INVESTMENTS--June 30, 1995
Maturity Principal Market
Date Amount Value
------------------------------------------------------------------------------------------
BANKERS' ACCEPTANCES (9.4%)
Bank of New York 07/24/95 $ 5,000,000 $ 4,982,821
First Union National Bank 07/07/95 9,000,000 8,994,120
National Bank of Detroit 07/14/95 5,000,000 4,990,940
Northern Trust Corp. 07/05/95 1,000,000 999,672
Northern Trust Corp. 07/18/95 1,300,000 1,296,783
Republic Bank, New York 08/16/95 3,000,000 2,978,006
------------------------------------------------------------------------------------------
TOTAL BANKERS' ACCEPTANCES (COST--$24,242,776) 24,242,342
------------------------------------------------------------------------------------------
BANK NOTES (3.9%)
Fifth Third Bank, Cincinnati, Ohio, 6.08% 11/10/95 5,000,000 5,002,231
Wachovia Bank & Trust, 5.76% 09/05/95 5,000,000 4,997,388
------------------------------------------------------------------------------------------
TOTAL BANK NOTES (COST--$9,999,408) 9,999,619
------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (17.9%)
Algemene Bank Nederland NV, Yankee CD, 6.16% 07/05/95 5,000,000 5,000,023
Bayerische Landesbank, Yankee CD, 6.10% 07/12/95 8,000,000 8,000,058
Commerzbank, Yankee CD, 6.43% 08/07/95 5,000,000 5,001,937
Commerzbank, Yankee CD, 6.19% 09/26/95 5,000,000 5,001,042
First Alabama Bank, CD, 5.95% 08/08/95 10,000,000 9,999,310
Rabobank, Yankee CD, 5.81% 12/29/95 5,000,000 5,000,939
Swiss Bank, New York, Yankee CD, 6.01% 07/21/95 8,000,000 8,000,119
------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT (COST--$46,004,382) 46,003,428
------------------------------------------------------------------------------------------
COMMERCIAL PAPER (27.2%)
ABN-AMRO North America Finance Co. 10/02/95 3,000,000 2,955,258
Associates Corp. North America 07/19/95 4,000,000 3,989,333
Associates Corp. North America 08/21/95 5,000,000 4,959,711
Bell Atlantic Network Funding 07/13/95 5,000,000 4,991,736
Caisse Nationale des Telecommunications 07/17/95 5,000,000 4,988,411
Coca Cola Co. 08/03/95 5,000,000 4,973,750
Coca Cola Financial Corp. 07/17/95 4,800,000 4,788,893
Emerson Electric Co. 08/16/95 5,000,000 4,963,654
General Electric Capital Corp. 09/11/95 5,000,000 4,943,125
Hewlett Packard Co. 09/28/95 5,000,000 4,928,588
Nestle Capital Corp. 09/05/95 5,000,000 4,947,556
Procter & Gamble Co. 08/02/95 3,600,000 3,581,883
Unilever Capital Corp. (b) 10/05/95 5,000,000 4,924,931
Unilever Capital Corp. (b) 12/11/95 5,000,000 4,874,107
Wal Mart Stores Inc. 07/06/95 5,000,000 4,997,513
------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (COST--$69,819,595) 69,808,449
------------------------------------------------------------------------------------------
See Notes to Schedule of Investments.
SCHEDULE OF INVESTMENTS--June 30, 1995
Maturity Principal Market
Date Amount Value
-------------------------------------------------------------------------------------------
U.S. GOVERNMENT (AND AGENCY) ISSUES (34.3%)
FFCB, 6.02% 08/01/95 $ 8,000,000 $ 7,999,794
FHLB Discount Notes 08/30/95 10,000,000 9,903,000
FHLB Discount Notes 09/05/95 5,000,000 4,948,622
FHLB Discount Notes 11/06/95 5,000,000 4,902,000
FHLMC Discount Notes 07/19/95 5,000,000 4,986,667
FHLMC Discount Notes 08/18/95 10,000,000 9,925,634
FNMA Discount Notes 07/24/95 10,000,000 9,965,933
FNMA Discount Notes 09/14/95 5,000,000 4,941,600
FNMA Discount Notes 10/03/95 6,000,000 5,912,447
FNMA Discount Notes 10/18/95 10,000,000 9,831,772
FNMA Discount Notes 10/20/95 5,000,000 4,914,465
FNMA Discount Notes 11/01/95 5,000,000 4,905,553
U.S. Treasury Bills 11/16/95 5,000,000 4,896,489
-------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT (AND AGENCY) ISSUES (COST--$88,023,616) 88,033,976
-------------------------------------------------------------------------------------------
Maturity
Value
-------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (5.1%)
Paine Webber Inc., 6.10%, purchased 06/29/95
(Collateralized by $10,245,131 FNMA #66243,
6.17%, due 01/01/19) 07/03/95 $10,006,778 10,000,000
Sanwa-BGK Securities Co., 6.25%, purchased
06/30/95 (Collateralized by $2,982,058 FHLMC
#G10134, 7.50%, due 10/01/08) 07/03/95 2,981,552 2,980,000
-------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (COST--$12,980,000) 12,980,000
-------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST--$251,069,777) (A) 251,067,814
-------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--NET (2.2%) 5,633,501
-------------------------------------------------------------------------------------------
NET ASSETS--(100.0%) $256,701,315
-------------------------------------------------------------------------------------------
See Notes to Schedule of Investments. (continued on next page)
Keystone Liquid Trust
NOTES TO SCHEDULE OF INVESTMENTS:
(a) The cost of investments for federal income tax purposes is identical.
Gross unrealized appreciation and depreciation of investments, based on
identified tax cost, at June 30, 1995, are as follows:
Gross unrealized appreciation $ 16,513
Gross unrealized depreciation (18,476)
----------
Net unrealized appreciation (depreciation) ($ 1,963)
==========
(b) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to Section 4(2) 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.
Legend of Portfolio Abbreviations
FFCB--Federal Farm Credit Bank
FHLB--Federal Home Loan Bank
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS--CLASS A SHARES
(For a share outstanding throughout the year)
Year Ended June 30,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------------------------
Net asset value beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .0454 .0235 .0230 .0386 .0634
Net realized gain (loss) on
investments 0 0 (.0001) .0003 0
-----------------------------------------------------------------------------------------------------------
Total from investment operations .0454 .0235 .0229 .0389 .0634
-----------------------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0454) (.0235) (.0229) (.0389) (.0634)
-----------------------------------------------------------------------------------------------------------
Net asset value end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------
Total return 4.63% 2.37% 2.31% 3.96% 6.47%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 4.42% 2.50% 2.29% 3.99% 6.51%
Total expenses 0.92% 1.02% 1.11% 1.10% 0.92%
Net assets, end of year (thousands) $245,308 $398,617 $189,167 $227,115 $400,597
-----------------------------------------------------------------------------------------------------------
Year Ended June 30,
-------------------------------------------------------------------
1990 1989 1988 1987 1986
-----------------------------------------------------------------------------------------------------------
Net asset value beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------
Income from investment
operations
Net investment income .0760 .0786 .0597 .0524 .0667
Net realized gain (loss) on
investments 0 .0001 (.0001) 0 (.0002)
-----------------------------------------------------------------------------------------------------------
Total from investment operations .0760 .0787 .0596 .0524 .0665
-----------------------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0760) (.0787) (.0596) (.0524) (.0665)
-----------------------------------------------------------------------------------------------------------
Net asset value
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------
Total return 7.81% 8.18% 6.31% 5.35% 6.85%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 7.53% 7.88% 5.99% 5.30% 6.67%
Total expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net assets, end of year (thousands) $406,306 $475,640 $461,032 $375,542 $326,149
-----------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Keystone Liquid Trust
FINANCIAL HIGHLIGHTS--CLASS B SHARES
(For a share outstanding throughout the period)
February 1, 1993
Year Ended June 30, (Date of Initial
------------------------ Public Offering) to
1995 1994 June 30, 1993
--------------------------------------------------------------------------------------------
Net asset value beginning of period $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .0362 .0142 .0047
Net realized gain (loss) on investments 0 0 (.0001)
--------------------------------------------------------------------------------------------
Total from investment operations .0362 .0142 .0046
--------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0362) (.0142) (.0046)
--------------------------------------------------------------------------------------------
Net asset value end of period $ 1.00 $ 1.00 $ 1.00
============================================================================================
Total return (b) 3.68% 1.43% 0.46%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 3.66% 1.84% 1.08% (a)
Total expenses 1.84% 1.85% 2.15% (a)
Net assets, end of period (thousands) $7,281 $11,198 $ 241
--------------------------------------------------------------------------------------------
(a) Annualized.
(b) Excluding applicable sales charges.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS--CLASS C SHARES
(For a share outstanding throughout the period)
February 1, 1993
Year Ended June 30, (Date of Initial
------------------------ Public Offering) to
1995 1994 June 30, 1993
--------------------------------------------------------------------------------------------
Net asset value beginning of period $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .0362 .0142 .0045
Net realized gain (loss) on investments 0 0 (.0002)
--------------------------------------------------------------------------------------------
Total from investment operations .0362 .0142 .0043
--------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0362) (.0142) (.0043)
--------------------------------------------------------------------------------------------
Net asset value end of period $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------------------
Total return 3.68% 1.43% 0.43%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 3.52% 1.97% 1.01% (a)
Total expenses 1.82% 1.86% 2.09% (a)
Net assets, end of period (thousands) $4,112 $6,599 $ 34
=============================================================================================
(a) Annualized.
See Notes to Financial Statements.
Keystone Liquid Trust
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
===================================================================
Assets:
Investments at market value
(identified cost--$251,069,777) (Note 1) $251,067,814
Cash 497
Receivable for:
Fund shares sold 6,306,713
Interest 699,359
Prepaid expenses and other assets 61,061
-------------------------------------------------------------------
Total assets 258,135,444
-------------------------------------------------------------------
Liabilities (Note 3):
Payable for:
Fund shares redeemed 399,458
Distributions to shareholders 971,569
Due to related parties 16,661
Other accrued expenses 46,441
-------------------------------------------------------------------
Total liabilities 1,434,129
-------------------------------------------------------------------
Net assets $256,701,315
-------------------------------------------------------------------
Net assets represented by paid-in capital (Note 2):
Class A Shares ($1.00 a share on 245,308,083
shares outstanding) $245,308,083
Class B Shares ($1.00 a share on 7,281,559 shares
outstanding) 7,281,559
Class C Shares ($1.00 a share on 4,111,673 shares
outstanding) 4,111,673
-------------------------------------------------------------------
$256,701,315
-------------------------------------------------------------------
Net asset value and offering price per share
(Classes A, B, and C) $1.00
-------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended June 30, 1995
===============================================================
Investment income (Note 1):
Interest $20,575,720
---------------------------------------------------------------
Expenses (Notes 2 and 3):
Management fees $1,923,870
Transfer agent fees 866,507
Accounting, auditing and legal
fees 60,878
Custodian fees 89,690
Trustees' fees and expenses 21,456
Printing expenses 18,383
Registration fees 188,229
Distribution Plan expenses 533,618
Insurance expenses 12,814
Miscellaneous 5,926
---------------------------------------------------------------
Total expenses 3,721,371
---------------------------------------------------------------
Net investment income 16,854,349
---------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments (71)
Net change in unrealized
appreciation (depreciation) on
investments (685)
---------------------------------------------------------------
Net gain (loss) on investments (756)
---------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations $16,853,593
===============================================================
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended June 30,
------------------------------
1995 1994
=================================================================================================================
Operations:
Net investment income $ 16,854,349 $ 6,954,755
Net realized gain (loss) on investments (71) (189)
Net change in unrealized appreciation (depreciation) on investments (685) 6,970
-----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 16,853,593 6,961,536
-----------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 1):
Class A Shares (16,168,849) (6,849,293)
Class B Shares (435,508) (62,830)
Class C Shares (249,236) (49,413)
-----------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (16,853,593) (6,961,536)
-----------------------------------------------------------------------------------------------------------------
Capital share transactions (Note 2):
Proceeds from shares sold:
Class A Shares 725,781,933 905,957,790
Class B Shares 30,267,166 23,326,893
Class C Shares 11,924,336 14,136,918
Payment for shares redeemed:
Class A Shares (892,973,139) (701,655,443)
Class B Shares (34,518,836) (12,406,378)
Class C Shares (14,624,256) (7,601,012)
Net asset value of shares issued in reinvestment of distributions from net
investment income:
Class A Shares 13,882,242 5,148,145
Class B Shares 335,641 36,291
Class C Shares 212,269 29,614
----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital share
transactions (159,712,644) 226,972,818
----------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (159,712,644) 226,972,818
----------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 416,413,959 189,441,141
----------------------------------------------------------------------------------------------------------------
End of year $ 256,701,315 $ 416,413,959
================================================================================================================
See Notes to Financial Statements.
Keystone Liquid Trust
NOTES TO FINANCIAL STATEMENTS
(1.) Summary of Accounting Policies
Keystone Liquid Trust (the "Fund") is a no-load, open-end diversified
investment company for which Keystone Management, Inc. ("KMI") is the
Investment Manager and Keystone Investment Management Company (formerly
Keystone Custodian Funds, Inc.) ("Keystone") is the Investment Adviser. The
Fund is registered under the Investment Company Act of 1940.
The Fund currently offers three classes of shares. Class A shares are
offered without an initial sales charge. Class B shares are offered without
an initial sales charge, although a contingent deferred sales charge may be
imposed at the time of redemption which decreases depending on when the
shares were purchased and how long the shares have been held. Class C shares
are offered without an initial sales charge, although a contingent deferred
sales charge may be imposed on redemptions 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.) ("KIDC"), the Fund's underwriter.
Keystone is a wholly-owned subsidiary of Keystone Investments, Inc.
(formerly Keystone Group, Inc.) ("KII"), a Delaware corporation. KII is
privately owned by an investor group consisting of members of current and
former management of Keystone. Keystone Investor Resource Center, Inc.
("KIRC"), a wholly-owned subsidiary of Keystone, is the Fund's transfer
agent.
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.
Valuation of Securities--Money market investments maturing in sixty days
or less are valued at amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount) which when combined with
accrued interest approximates market. Money market investments maturing in
more than sixty days for which market quotations are readily available are
valued at current market value. Money market investments maturing in more
than sixty days when purchased which are held on the sixtieth day prior to
maturity are valued at amortized cost (market value on the sixtieth day
adjusted for amortization of premium or accretion of discount) which when
combined with accrued interest approximates market.
Repurchase Agreements--When the Fund enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price) the repurchase price of the
securities will generally equal the amount paid by the Fund plus a negotiated
interest amount. The seller under the repurchase agreement will be required
to provide securities ("collateral") to the Fund whose value will be
maintained at an amount not less than the repurchase price. The Fund monitors
the value of collateral on a daily basis, and if the value of collateral
falls below required levels, the Fund intends to seek additional collateral
from the seller or terminate the repurchase agreement. If the seller
defaults, the Fund would suffer a loss to the extent that the proceeds from
the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on disposing of such
securities. If bankruptcy proceedings are commenced against the seller under
the repurchase agreement, the realization on the collateral may be delayed or
limited. Repurchase agreements entered into by the Fund will be limited to
transactions with dealers or domestic banks believed to present minimal
credit
risks, and the Fund will take constructive receipt of all securities
underlying repurchase agreements until such agreements expire.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with certain other Keystone funds, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury and/or Federal Agency obligations.
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 ("Internal Revenue Code"). Thus, the Fund expects to be
relieved of any federal income tax liability by distributing all of its net
tax basis investment income and net tax basis capital gains, if any, to its
shareholders. The Fund intends to avoid excise tax liability by making the
required distributions under the Internal Revenue Code.
Distributions--The Fund declares dividends daily, pays dividends monthly
and automatically reinvests such dividends in additional shares at net asset
value, unless shareholders request payment in cash. Dividends are declared
from the total of net investment income, plus realized and unrealized gain
(loss) on investments.
Other--Securities transactions are accounted for on the trade date.
Interest income is accrued as earned. Realized gains and losses from
securities transactions are computed on the identified cost basis.
(2.) Shares of Beneficial Interest
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of beneficial interest with a par value of $1.00. Transactions in
shares of the Fund were as follows:
Class A Shares
------------------------------
Year Ended June 30,
1995 1994
-----------------------------------------------------------
Shares sold 725,781,933 905,957,790
Shares redeemed (892,973,139) (701,655,443)
Shares issued in
reinvestment of
distributions from
available sources 13,882,242 5,148,145
---------- ------------
Net increase (decrease) (153,308,964) 209,450,492
========== ============
Class B Shares
----------------------------
Year Ended June 30,
1995 1994
---------------------------------------------------------
Shares sold 30,267,166 23,326,893
Shares redeemed (34,518,836) (12,406,378)
Shares issued in
reinvestment of
distributions from
available sources 335,641 36,291
--------- -----------
Net increase (decrease) (3,916,029) 10,956,806
========= ===========
Class C Shares
---------------------------
Year Ended June 30,
1995 1994
--------------------------------------------------------
Shares sold 11,924,336 14,136,918
Shares redeemed (14,624,256) (7,601,012)
Shares issued in
reinvestment of
distributions from
available sources 212,269 29,614
--------- ----------
Net increase (decrease) (2,487,651) 6,565,520
========= ==========
Keystone Liquid Trust
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 ("1940 Act").
The Class A Distribution Plan provides for payments which are currently
limited to 0.25% annually of the average daily net asset value of Class A
shares, to pay expenses 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 the
recipient and outstanding on the Fund's books for specified periods.
The Class B Distribution Plan provides 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 Plan 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 the
recipient 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 after June 1, 1995 at rates ranging from a maximum of 5% of
amounts redeemed during the first 12 months following the date of purchase to
1% 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 from the month of purchase will
automatically convert to Class A shares without a front end sales charge or
exchange fee. Class B shares purchased prior to June 1, 1995 will retain
their existing conversion rights.
The Class C Distribution Plan provides for payments at an annual rate of
up to 1.00% of the average daily net asset value of Class C shares to pay
expenses for the distribution of Class C shares. Amounts paid by the Fund
under the Class C Distribution Plan are currently used to pay others
(dealers) a commission at the time of purchase in the amount of 0.75% of the
price paid for each Class C share sold, plus the first year's service fee in
advance in the amount of 0.25% of the price paid for each Class C share, and,
beginning approximately 15 months after purchase, a commission at an annual
rate of 0.75% (subject to applicable limitations imposed by the rules of the
National Association of Securities Dealers, Inc.) ("NASD Rule") plus service
fees at the annual rate of 0.25%, respectively, of the average net asset
value of each Class C share maintained by the recipient 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, at the discretion of the Board of Trustees, payments to
KIDC may continue as compensation for its services which had been earned
while the Distribution Plan was in effect.
For the year ended June 30, 1995, the Fund paid or accrued Distribution
Plan fees of $343,747, $119,037 and $70,834 for Class A, Class B and Class C,
respectively. These fees, which are charged to the operating expenses of the
Fund, represent 0.09%,
1.00% and 1.00%, respectively, of the average net assets of each Class.
Under the NASD Rule, the maximum uncollected amounts for which KIDC may
seek payment from the Fund under its Distribution Plans are $746,584 and
$825,276 for Class B and C, respectively, as of June 30, 1995.
(3.) Investment Management and Other Transactions with Affiliates
Under the terms of the Investment Management Agreement between KMI and the
Fund KMI provides investment management and administrative services to the
Fund. In return, KMI is paid a management fee computed daily and payable
monthly calculated by applying percentage rates, starting at 0.50%, and
declining as net assets increase, to 0.40% per annum, to the net asset value
of the Fund. KMI has entered into an Investment Advisory Agreement with
Keystone under which Keystone provides investment advisory and management
services to the Fund and receives for its services an annual fee representing
85% of the management fee received by KMI.
During the year ended June 30, 1995, the Fund paid or accrued to KMI
investment management and administration services fees of $1,923,870, which
represented 0.50% of the Fund's average net assets. Of such amount paid to
KMI, $1,635,290 was paid to Keystone for its services to the Fund.
During the year ended June 30, 1995, the Fund paid or accrued $24,777 to
KII as reimbursement for certain accounting and printing services provided to
the Fund, and $866,507 was paid or accrued to KIRC for transfer agent fees.
(4.) Class Level Expenses
Presently, the Fund's class-specific expenses are limited to expenses
incurred by a class of shares pursuant to its respective Distribution Plan.
For the year ended June 30, 1995, the total amount of expenses incurred by
the Distribution Plan of each respective class is set forth in Note (2.)
"Shares of Beneficial Interest."
Keystone Liquid Trust
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Keystone Liquid Trust
We have audited the accompanying statement of assets and liabilities of
Keystone Liquid Trust, including the schedule of investments, as of June 30,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
ten-year period then ended for Class A shares, and for each of the years in
the two-year period then ended and the period from February 1, 1993 (date of
initial public offering) to June 30, 1993 for Class B and Class C shares.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 1995, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Keystone Liquid Trust as of June 30, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years or periods specified in the first paragraph above in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
July 28, 1995
FEDERAL TAX STATUS--FISCAL 1995 DISTRIBUTIONS (Unaudited)
During the fiscal year ended June 30, 1995, dividends of $0.0454, $0.0362,
and $0.0362 per share were paid or are payable to shareholders of Keystone
Liquid Trust Class A, B, and C, respectively. All dividends are taxable to
shareholders as ordinary income in the year in which received by them or
credited to their accounts and are not eligible for the corporate dividend
received deduction. In January 1996 we will send you information on the
distributions paid during the calendar year to help you in completing your
federal tax return.
[cover]
KEYSTONE
FAMILY OF FUNDS
*
Balanced Fund (K-1)
Diversified Bond Fund (B-2)
Growth and Income Fund (S-1)
High Income Bond Fund (B-4)
International Fund
Liquid Trust
Mid-Cap Growth Fund (S-3)
Precious Metals Holdings
Quality Bond Fund (B-1)
Small Company Growth Fund (S-4)
Strategic Growth Fund (K-2)
Tax Exempt Trust
Tax Free Fund
This report was prepared primarily for the information of the Fund's
shareholders. Its use for other purposes is authorized only when it is
preceded or accompanied by the prospectus, describing all fees, charges and
other important facts about the Fund.
[keystone logo] KEYSTONE
INVESTMENTS
P.O. Box 2121
Boston, Massachusetts 02106-2121
KLT-AR-8/95 [recycle logo]
16M
KEYSTONE
[picture of boy riding bike
with man helping him]
LIQUID TRUST
[keystone logo]
ANNUAL REPORT
JUNE 30, 1995