SUPPLEMENT TO THE PROSPECTUSES AND
                   STATEMENTS OF ADDITIONAL INFORMATION OF



                                                        
         KEYSTONE AMERICA CAPITAL PRESERVATION                    KEYSTONE AMERICA STATE TAX FREE FUND
                    AND INCOME FUND                        KEYSTONE AMERICA STATE TAX FREE FUND -- SERIES II
      KEYSTONE AMERICA GOVERNMENT SECURITIES FUND                        KEYSTONE LIQUID TRUST
      KEYSTONE AMERICA INTERMEDIATE TERM BOND FUND                          (THE "FUND(S)")

    The  prospectus  and  statement of  additional  information  of each Fund is
hereby supplemented as follows:

    Effective April 10, 1995 (except as otherwise noted,  the following  changes
    do not apply to Keystone Liquid Trust ("KLT")):

    * Purchases of the Fund's Class A shares in the amount of $1 million or more
      and/or  purchases  of  Class  A  shares  made  by  a  corporate  qualified
      retirement plan or a non-qualified deferred compensation plan sponsored by
      a corporation  having 100 eligible employees or more (a "Qualifying Plan")
      will be at net asset value  without the  imposition  of a front-end  sales
      charge (each such purchase, a "NAV Purchase").

    * With respect to the NAV Purchases  described  above,  Keystone  Investment
      Distributors  Company will pay  broker/dealers or others concessions based
      on (i) the  investor's  cumulative  purchases  during the one-year  period
      beginning  with  the  date  of the  initial  NAV  Purchase  and  (ii)  the
      investor's  cumulative  purchases  during each subsequent  one-year period
      beginning  with the  first  NAV  Purchase  following  the end of the prior
      period.  For such  purchases,  concessions  will be paid at the  following
      rate:  0.50% of the investment  amount up to $4,999,999  plus 0.25% of the
      investment amount over $4,999,999.

    * Class A shares  acquired in a NAV Purchase will be subject to a contingent
      deferred  sales  charge  ("CDSC") of 0.50% upon  redemption  during the 24
      month period commencing on the date the shares were originally purchased.

    * CDSC will be waived under the following additional circumstances:

          For each Fund's Class A, B, and C shares (including KLT), no CDSC will
      be  imposed  on any  redemption  consisting  of  (1)  loan  proceeds  to a
      retirement plan participant;  (2) financial hardship withdrawals made by a
      retirement plan  participant;  or (3) returns of excess  contributions  or
      excess deferral amounts made to a retirement plan participant.

          With respect to Class A shares  purchased by a Qualifying  Plan at net
      asset value or Class C shares purchased by a Qualifying Plan, no CDSC will
      be  imposed  on  any  redemptions  made   specifically  by  an  individual
      participant  in the Qualifying  Plan.  This waiver is not available in the
      event  a  Qualifying  Plan  as a whole  redeems  substantially  all of its
      assets.
                                                                          (over)

    Effective May 1, 1995:

    * Excepting  KLT,  the name of each Fund will be  changed to delete the word
      "America" from the Fund's name.

    * The name of the Funds'  investment  adviser and  certain of the  adviser's
      affiliates  will also be changed:  Keystone  Custodian  Funds,  Inc.,  the
      Funds' investment  adviser,  will become "Keystone  Investment  Management
      Company";  Keystone Distributors,  Inc., the Funds' principal underwriter,
      will become  "Keystone  Investment  Distributors  Company";  and  Keystone
      Group,  Inc., the parent company of both the adviser and the  underwriter,
      will become "Keystone Investments, Inc."

May 1, 1995
                                                                        AMER5-SK