SUPPLEMENT TO THE PROSPECTUSES
                                      OF
   KEYSTONE QUALITY BOND FUND (B-1), KEYSTONE HIGH INCOME BOND FUND (B-4),
     KEYSTONE BALANCED FUND (K-1), KEYSTONE STRATEGIC GROWTH FUND (K-2),
 KEYSTONE SMALL COMPANY GROWTH FUND (S-4), KEYSTONE INTERNATIONAL FUND INC.,
      KEYSTONE PRECIOUS METALS HOLDINGS, INC. AND KEYSTONE TAX FREE FUND
                  (EACH A "FUND," COLLECTIVELY, THE "FUNDS")

     The prospectus of each of the above-referenced Funds is hereby supplemented
as follows:

     On December 11, 1996, Keystone Investments, Inc. ("Keystone Investments")
and indirectly each of its subsidiaries, including Keystone Investment
Management Company ("Keystone"), each Fund's investment adviser, were acquired
(the "Acquisition") by First Union National Bank of North Carolina ("FUNB"), a
wholly-owned subsidiary of First Union Corporation ("First Union"). Keystone
Investments was acquired by FUNB by merger into a wholly-owned subsidiary of
FUNB, which entity then succeeded to the business of Keystone Investments.
Contemporaneously with the Acquisition, each Fund entered into a new investment
advisory agreement with Keystone and into a principal underwriting agreement
with Evergreen Keystone Distributor, Inc. (formerly Evergreen Funds Distributor,
Inc.) ("EKD"), a wholly-owned subsidiary of Furman Selz LLC ("Furman Selz"). The
new investment advisory agreements were approved by the shareholders of each
Fund on December 9, 1996, and became effective on December 11, 1996. As a result
of the above transactions, Keystone Management, Inc. ("Keystone Management"),
which, prior to the Acquisition, acted as investment manager to certain of the
Funds, no longer acts as such to any of the Funds. Keystone currently provides
each Fund with all the services that may previously have been provided by
Keystone Management. The fee rate paid by each Fund for the services provided by
Keystone and its affiliates has not changed as a result of the Acquisition.

     Keystone Investments and each of its subsidiaries, including Keystone, are
now indirectly owned by First Union. First Union is headquartered in Charlotte,
North Carolina, and had $133.9 billion in consolidated assets as of September
30, 1996. First Union and its subsidiaries provide a broad range of financial
services to individuals and businesses throughout the United States. The Capital
Management Group of FUNB, together with Lieber & Company and Evergreen Asset
Management Corp., wholly-owned subsidiaries of FUNB, manage or otherwise oversee
the investment of over $50 billion in assets belonging to a wide range of
clients, including the Evergreen Family of Funds.

     EKD, which is not affiliated with First Union, is now each Fund's principal
underwriter (the "Principal Underwriter"). EKD replaces Evergreen Keystone
Investment Services, Inc. (formerly Keystone Investment Distributors Company)
("EKIS") as the Funds' principal underwriter. EKIS may no longer act as
principal underwriter of the Funds due to regulatory restrictions imposed by the
Glass-Steagall Act upon national banks such as FUNB and their affiliates, that
prohibit such entities from acting as the underwriters of mutual fund shares.
While EKIS may no longer act as principal underwriter of the Funds as discussed
above, EKIS may continue to receive compensation from such Funds or the
Principal Underwriter in respect of underwriting and distribution services
performed prior to the termination of EKIS as principal underwriter. In
addition, EKIS may also be compensated by the Principal Underwriter for the
provision of certain marketing support services to the Principal Underwriter at
an annual rate of up to .75% of the average daily net assets of each Fund,
subject to certain restrictions.

     Furman Selz will provide personnel to serve as officers of the Funds and
certain administrative services to the Funds pursuant to a sub-administration
agreement under which it will receive from Keystone an annual fee at the maximum
annual rate of .01% of the average daily net assets of each Fund. Both EKD and
Furman Selz are located at 230 Park Avenue, New York, New York 10169.

     It is expected that on or about January 2, 1997, Furman Selz will transfer
EKD, and its related mutual fund distribution and administration business, to
BISYS Group, Inc. ("BISYS"). At that time, BISYS will succeed as sub-
administrator to each of the Funds. It is not expected that the acquisition of
the mutual fund distribution and administration business by BISYS will affect
the services currently provided by EKD or Furman Selz.

     CERTAIN OTHER CHANGES

     In connection with the Acquisition described above, the following changes
have also occurred or will occur with respect to each Fund:

     * The name of Keystone Investor Resource Center, Inc., each Fund's transfer
       and dividend disbursing agent, has been changed to Evergreen Keystone
       Service Company. It is not expected that the Acquisition or the change of
       name will have any effect on the services provided.

     * Effective January 1, 1997, the $10.00 exchange fee charged on exchanges
       not placed through "KARL" will be eliminated. All exchanges will be free
       (but will remain subject to the frequency limitations set forth in the
       prospectus).

     * With respect to shares purchased after January 1, 1997, no contingent
       deferred sales charge will be imposed on amounts derived from (1)
       increases in the value of shares redeemed above the total cost of such
       shares due to increases in the net asset value per share of a Fund; (2)
       certain shares with respect to which the Fund did not pay a commission on
       issuance, including shares acquired through reinvestment of dividend
       income and capital gains distributions; or (3) shares held in all or part
       of more than four consecutive calendar years.

KEYSTONE PRECIOUS METALS HOLDINGS, INC. ONLY

     Currently and for sales of Fund shares after January 1, 1997, the Fund's
Principal Underwriter will generally reallow to broker-dealers or others
commissions in accordance with the following schedule: sales of less than
$100,000, 4.0%; sales of $100,000 or more but less than $250,000, 2.0%; sales of
$250,000 or more but less than $500,000, 1.0%; sales of $500,000 or more, 0.5%.

KEYSTONE SMALL COMPANY GROWTH FUND (S-4), ONLY

     J. Gary Craven is now the Fund's Portfolio Manager. Mr. Craven is currently
a Keystone Senior Vice President and Group Leader for the small cap equity area.
Mr. Craven has been an investment professional since 1987.

GENERAL

     Currently and for shares sold after January 1, 1997, shares of any Fund
will be subject to a six month holding period before such shares may be
exchanged for shares of Keystone Precious Metals Holdings, Inc.

EFFECTS OF BANKING LAWS

     The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of its customer. Keystone
and its affiliates, since they are direct or indirect subsidiaries of FUNB, are
subject to and in compliance with the aforementioned laws and regulations. In
the event the Glass-Steagall Act is deemed to prohibit depository institutions
from accepting certain payments from the Fund, or should Congress relax current
restrictions on depository institutions, the Boards of Trustees* will consider
what action, if any, is appropriate.

     The foregoing disclosure supersedes any prior disclosure in any Fund's
prospectus or statement of additional information or any supplement thereto, to
the extent that it relates to the same subject matter.

*The term "Trustees" includes the Directors of Keystone International Fund,
 Inc. and Keystone Precious Metals Holdings, Inc.

December 16, 1996
                                                                      CUST-SK3