SUPPLEMENT TO THE PROSPECTUSES AND
                    STATEMENTS OF ADDITIONAL INFORMATION OF


KEYSTONE AMERICA HARTWELL EMERGING GROWTH FUND, INC., KEYSTONE BALANCED FUND II,
KEYSTONE CAPITAL  PRESERVATION AND INCOME FUND,  KEYSTONE EMERGING MARKETS FUND,
KEYSTONE FUND FOR TOTAL RETURN,  KEYSTONE FUND OF THE AMERICAS,  KEYSTONE GLOBAL
OPPORTUNITIES FUND, KEYSTONE GOVERNMENT  SECURITIES FUND, KEYSTONE  INTERMEDIATE
TERM BOND FUND,  KEYSTONE  OMEGA FUND,  KEYSTONE  SMALL COMPANY  GROWTH FUND II,
KEYSTONE STRATEGIC  DEVELOPMENT FUND,  KEYSTONE STRATEGIC INCOME FUND,  KEYSTONE
STATE TAX FREE FUND, KEYSTONE STATE TAX FREE FUND - SERIES II, KEYSTONE TAX FREE
INCOME FUND,  AND  KEYSTONE  WORLD BOND FUND (EACH A "FUND";  COLLECTIVELY,  THE
"FUNDS")

         First Union  Corporation  has  entered  into an  Agreement  and Plan of
Acquisition and Merger with Keystone Investments, Inc. ("Keystone"), pursuant to
which Keystone will be merged with and into a subsidiary of First Union National
Bank of North Carolina (the "Merger").  The surviving  corporation will be known
as Keystone  Investments,  Inc.  Keystone  Investment  Management  Company  (the
"Adviser"),  a  wholly-owned  subsidiary  of  Keystone  Investments,   Inc.,  is
investment  adviser  to  each  of the  Funds.  Keystone  Management,  Inc.  (the
"Manager"),  a wholly-owned  subsidiary of the Adviser, is investment manager to
some of the Funds.  

         The proposed  transaction may be deemed to cause an assignment,  within
the  meaning of the  Investment  Company  Act of 1940 (the "1940  Act"),  of the
following  agreements:  (i) with  respect  to  Keystone  Fund for Total  Return,
Keystone  Intermediate Term Bond Fund,  Keystone Omega Fund,  Keystone Strategic
Income Fund and Keystone Tax Free Income Fund, the Investment Advisory Agreement
between the Adviser and the  Manager  and the  Investment  Management  Agreement
between  the  Manager  and the  Funds;  (ii) with  respect to  Keystone  America
Hartwell  Emerging Growth Fund,  Inc.,  Keystone Global  Opportunities  Fund and
Keystone  Strategic  Development  Fund, the  Investment  Advisory and Management
Agreement  between  the  Adviser  and  the  Funds  and  Subinvestment   Advisory
Agreements between the Adviser and certain  subadvisors;  and (iii) with respect
to each of the other Funds,  the Investment  Advisory and  Management  Agreement
between  the  Adviser  and  the  Funds.  Accordingly,   the  completion  of  the
transaction is contingent upon,  among other things,  the approval of the Funds'
shareholders of (i) a new investment  advisory  agreement  between the Funds and
the Adviser;  (ii) a new  subadvisory  agreement  between the Adviser and Credit
Lyonnais International Asset Management,  North America with respect to Keystone
Global Opportunities Fund; (iii) a new subadvisory agreement between the Adviser
and J.M. Hartwell Limited  Partnership with respect to Keystone America Hartwell
Emerging  Growth Fund,  Inc.; and (iv) a new subadvisory  agreement  between the
Adviser and EquitiLink International Management Limited with respect to Keystone
Strategic  Development  Fund.  The Funds'  Trustees/Directors  have approved the
terms of such  agreements,  subject  to the  approval  of  shareholders  and the
completion of the Merger,  and have called a special  meeting of shareholders to
obtain their approval of such agreements.  The meeting is expected to be held in
December 1996. The proposed new investment  advisory agreements and the proposed
new  subadvisory  agreements  have terms,  including  investment  advisory  fees
payable  thereunder,  that are  substantially  identical to those in the current
agreements.

         The proposed transaction may also be deemed to cause an assignment,  as
defined by the 1940 Act, of the Principal  Underwriting  Agreements  between the
Funds  and  Keystone  Investment  Distributors,  Inc.  ("KID"),  a  wholly-owned
subsidiary  of the  Adviser.  As a result,  the Funds'  Trustees/Directors  have
approved the following agreements,  subject to the completion of the Merger: (i)
a principal  underwriting  agreement  with  Evergreen  Funds  Distributor,  Inc.
("EFD") and each of the Funds;  (ii) a marketing  support  agreement between KID
and EFD with  respect  to each  Fund;  and (iii) a  subadministration  agreement
between  the Adviser and EFD with  respect to each Fund.  EFD is a  wholly-owned
subsidiary  of Furman Selz LLC. It is expected that on or about January 2, 1997,
Furman Selz LLC will  transfer  EFD, and its related  services,  to BISYS Group,
Inc.  ("BISYS")  (the  "Transfer").  The  Funds'  Trustees/Directors  have  also
approved,  subject to completion of the Transfer:  (i) a principal  underwriting
agreement  with EFD and each of the Funds;  (ii) a marketing  support  agreement
between  KID and EFD with  respect to each Fund;  and (iii) a  subadministration
agreement  between the Adviser and BISYS with respect to each Fund. The terms of
such agreements are substantially identical to the terms of the agreements to be
executed upon completion of the Merger.

         First  Union   National  Bank  of  North  Carolina  is  a  wholly-owned
subsidiary of First Union  Corporation.  Subject to a number of conditions being
met, it is  currently  anticipated  that the Merger will take place on or around
December 23, 1996.  Thereafter,  Keystone Investments,  Inc. is expected to be a
subsidiary of First Union National Bank of North Carolina.

September 13, 1996