<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1997
Shares Value
- ----------- ---------------
COMMON STOCKS (92.7%)
ARGENTINA (0.4%)
Oil / Energy (0.2%)
104,702 Perez Compancia S.A. $ 844,067
---------------
Telecommunication Services
& Equipment (0.2%)
29,910 Telecom Argentina S.A., Class B,
ADR 910,386
---------------
TOTAL ARGENTINA 1,754,453
===============
AUSTRALIA (0.3%)
Finance & Insurance (0.2%)
39,500 QBE Insurance Group Ltd. 249,215
303,700 Tyndall Australia Ltd. 584,248
---------------
833,463
---------------
Healthcare Products &
Services (0.1%)
350,441 Sonic Healthcare Ltd. 463,013
---------------
TOTAL AUSTRALIA 1,296,476
===============
AUSTRIA (0.3%)
Other (0.3%)
40,470 Julius Meinl International 1,252,941
---------------
BRAZIL (1.3%)
Food & Beverage Products (0.7%)
67,912 Panamerican Beverages, Inc., ADR 2,652,812
---------------
Metals & Mining (0.3%)
46,000 Vale do Rio Doce Navegacao S.A. 1,124,860
---------------
Natural Gas (0.3%)
5,062,800 Petroleo Brasileiro S.A. 1,441,827
---------------
Telecommunication Services
& Equipment (0.0%)
48,084 Compania Riograndense deTelecommunica 60,569
877,079 Telecomunicacoes de Rio de Janiero SA 120,007
---------------
180,576
---------------
TOTAL BRAZIL 5,400,075
===============
CHINA (0.2%)
Automotive Equipment &
Manufacturing (0.1%)
800,000 Qingling Motors Co. Ltd. 506,591
---------------
Electrical Equipment &
Services (0.1%)
237,700 Heilongjiang Electric Power Co.
Ltd. 213,930
---------------
TOTAL CHINA 720,521
===============
FRANCE (3.3%)
Advertising & Related
Services (0.2%)
11,500 Dauphin O.T.A. 798,631
---------------
Automotive Equipment &
Manufacturing (0.3%)
14,111 Sylea 1,343,871
---------------
Healthcare Products &
Services (0.0%)
1,000 Ile de France Pharmaceutique 207,327
---------------
Information Services &
Technology (0.2%)
5,700 * Axime 616,824
---------------
Machinery - Diversified
(1.5%)
8,475 GFI Industries 1,698,528
15,460 Norbert Destressangle 1,980,498
19,400 Societe Technip 2,465,610
---------------
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (continued)
SEPTEMBER 30, 1997
Shares Value
- ----------- ---------------
6,144,636
----------------
Other (0.9%)
14,469 Grandoptical Photo 2,633,986
3,937 Le Carbone Lorraine 1,128,147
---------------
3,762,133
---------------
Textile & Apparel (0.1%)
2,900 Deveaux S.A. 313,334
---------------
Transportation (0.1%)
6,730 Faiveley S.A. 256,375
---------------
TOTAL FRANCE 13,443,131
===============
GERMANY (1.9%)
Automotive Equipment &
Manufacturing (0.6%)
215,000 SAI Automotive AG 2,433,572
---------------
Electrical Equipment &
Services (0.1%)
19,600 * Leica Camera AG 482,527
---------------
Healthcare Products &
Services (0.3%)
36,250 Biotest AG 1,220,677
---------------
Other (0.9%)
111,150 Boewe Systec AG 3,648,490
---------------
TOTAL GERMANY 7,785,266
===============
HONG KONG (0.5%)
Electrical Equipment &
Services (0.0%)
88,000 VTech Holdings Ltd. 169,450
---------------
Finance & Insurance (0.4%)
460,000 Cosco Pacific Ltd. 817,394
524,000 Li & Fung Ltd. 612,846
---------------
1,430,240
---------------
Retailing & Wholesale (0.1%)
80,000 Dickson Concepts International,
Ltd. 298,268
68,000 Wing On Company International Ltd. 74,257
---------------
372,525
---------------
TOTAL HONG KONG 1,972,215
===============
INDONESIA (0.0%)
Finance & Insurance (0.0%)
167 PT Bank Dagang Nasional Indonesia . 33
---------------
IRELAND (0.6%)
Diversified Companies (0.6%)
380,247 DCC PLC 2,381,632
---------------
ITALY (0.9%)
Automotive Equipment &
Manufacturing (0.3%)
107,500 Brembo SPA 1,108,536
---------------
Finance & Insurance (0.5%)
131,300 Mediolanum SPA 2,129,827
---------------
Industrial Specialty Products
& Services (0.1%)
171,000 Interpump Group SPA 500,275
---------------
TOTAL ITALY 3,738,638
===============
JAPAN (5.2%)
Automotive Equipment &
Manufacturing (0.5%)
308,000 Koito Manufacturing Co. Ltd. 1,978,122
---------------
Chemical & Agricultural
Products (0.4%)
229,000 Sumitomo Bakelite 1,624,463
---------------
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (continued)
SEPTEMBER 30, 1997
Shares Value
- ----------- ---------------
Consumer Products &
Services (0.4%)
165,000 Toshiba Ceramics 1,640,839
---------------
Electrical Equipment &
Services (0.2%)
111,000 Hitachi Cable, Ltd. 746,010
---------------
Food & Beverage Products
(0.3%)
177,000 Albis Company, Ltd. 689,401
48,000 Ohsho Food Service Corp. 537,002
---------------
1,226,403
---------------
Healthcare Products &
Services (0.1%)
56,000 Sanyo Chemical Industries 413,491
---------------
Information Services &
Technology (0.5%)
101,000 Aucnet, Inc. 2,176,183
---------------
Metals & Mining (0.6%)
128,000 Sumitomo Sitix 2,471,534
---------------
Manufacturing - Distributing
(1.1%)
51,000 Daiwa Industries, Ltd. 328,391
49,000 Fuji Machine Manufacturing Co. 1,778,570
118,020 Nitto Kohki Co. 2,200,588
---------------
4,307,549
---------------
Retailing & Wholesale (1.1%)
46,100 Aderans Co., Ltd. 1,230,149
26,500 Familymart Co., Ltd. 1,159,526
71,600 Ministop Co., Ltd. 1,934,333
---------------
4,324,008
---------------
TOTAL JAPAN 20,908,602
===============
MEXICO (2.9%)
Banks (0.4%)
445,200 Grupo Finance Banamex Accival SA de
CV, Series B 1,403,784
---------------
Building, Construction &
Furnishings (0.8%)
280,000 Cemex SA de CV 1,679,279
245,000 * Corp. Geo SA de CV 1,545,045
---------------
3,224,324
---------------
Finance & Insurance (0.4%)
33,800 Desc SA de CV, ADR 1,411,150
---------------
Food & Beverage Products
(0.9%)
266,600 Fomento Economico Mexicano 2,298,867
1,032,000 Grupo Industrial Maseca, Class B 1,245,838
---------------
3,544,705
---------------
Healthcare Products &
Services (0.1%)
254,100 * Grupo Casa Autrey SA de CV 578,838
---------------
Manufacturing - Distributing
(0.3%)
1,442,000 * Empaques Ponderosa SA 1,299,099
---------------
TOTAL MEXICO 11,461,900
===============
NETHERLANDS (2.1%)
Engineering (1.1%)
132,612 Fugro N.V. 4,630,726
---------------
Manufacturing - Distributing
(0.6%)
70,600 Koninklijke Ahrend Groep NV 2,429,834
---------------
Retailing & Wholesale (0.4%)
29,208 Ceteco Holding N.V. 1,533,556
---------------
TOTAL NETHERLANDS 8,594,116
===============
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (continued)
SEPTEMBER 30, 1997
Shares Value
- ----------- ---------------
NORWAY (0.2%)
Business Equipment &
Services (0.1%)
22,100 * Tandberg ASA 282,983
---------------
Telecommunication Services
& Equipment (0.1%)
43,063 * Tandberg Television ASA 345,386
---------------
TOTAL NORWAY 628,369
===============
PERU (0.2%)
Finance & Insurance (0.1%)
14,592 Credicorp Holdings Ltd. 277,248
---------------
Machinery - Diversified (0.1%)
20,214 Ferreyros SA ** 439,655
---------------
TOTAL PERU 716,903
===============
PORTUGAL (0.4%)
Telecommunication Services & Equipment (0.4%)
19,400 * Telecel Comunicacaoes Pessoais SA 1,574,080
---------------
SOUTH AFRICA (0.1%)
Finance & Insurance (0.1%)
8,775 Liberty Life Association of Africa,
Ltd. 256,067
---------------
SPAIN (0.5%)
Food & Beverage Products (0.5%)
4,880 Campofrio Alimentacion SA 223,289
24,150 * Telepizza 1,682,589
---------------
1,905,878
---------------
Leisure & Tourism (0.0%)
4,900 Sol Melia SA 189,737
---------------
TOTAL SPAIN 2,095,615
===============
SWEDEN (1.3%)
Healthcare Products &
Services (0.7%)
151,400 Getinge Industrier AB 2,843,427
---------------
Retailing & Wholesale (0.6%)
76,200 Lindex AB 2,179,295
---------------
TOTAL SWEDEN 5,022,722
===============
SWITZERLAND (3.1%)
Advertising & Related
Services (0.1%)
1,525 Societe Generale D'Affichage 559,921
---------------
Business Equipment &
Services (0.1%)
1,350 Danzas Holding AG 288,212
---------------
Diversified Companies (0.2%)
4,000 Valora Holding AG 851,210
---------------
Electrical Equipment &
Services (0.6%)
4,225 Phoenix Mecano AG 2,289,123
---------------
Food & Beverage Products
(0.5%)
1,150 Lindt & Spruengli AG 1,996,528
---------------
Leisure & Tourism (1.0%)
1,000 Kuoni Reisen AG 3,981,023
---------------
Retailing & Wholesale (0.6%)
18,000 * Tag Heuer International SA 2,413,366
---------------
TOTAL SWITZERLAND 12,379,383
===============
UNITED KINGDOM (9.1%)
Advertising & Related
Services (0.8%)
2,431,600 Aegis Group 2,568,226
---------------
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (continued)
SEPTEMBER 30, 1997
Shares Value
- ----------- ---------------
176,500 Dorling Kindersley Holdings PLC 822,512
---------------
3,390,738
---------------
Building, Construction &
Furnishings (0.7%)
238,310 Berkeley Group (The) PLC 2,859,005
---------------
Business Equipment &
Services (1.1%)
603,916 Capita Group PLC 2,775,372
486,132 Corporate Services Group PLC 1,661,842
---------------
4,437,214
---------------
Electrical Equipment &
Services (1.2%)
645,958 Astec (BSR) PLC 1,312,425
90,400 Critchley Group PLC 1,005,813
581,900 Pressac Holdings PLC 2,486,532
---------------
4,804,770
---------------
Finance & Insurance (0.7%)
550,804 Ashtead Group PLC 2,779,977
---------------
Food & Beverage Products
(0.5%)
173,063 Compass Group PLC 1,903,217
---------------
Healthcare Products &
Services (0.3%)
278,703 Westminster Healthcare Holdings,PLC 1,345,979
---------------
Information Services &
Technology (1.5%)
56,657 Oxford Molecular 264,029
361,100 Parity PLC 3,231,619
210,498 Sage Group PLC (The) 2,359,025
---------------
5,854,673
---------------
Leisure & Tourism (0.5%)
168,770 Millennium & Copthorne Hotels PLC 1,175,652
517,614 Vardon PLC 968,197
---------------
2,143,849
---------------
Metals & Mining (0.3%)
115,205 Powerscreen International PLC 1,380,257
---------------
Manufacturing - Distributing
(0.6%)
383,900 Renishaw PLC 2,197,587
---------------
Retailing & Wholesale (0.9%)
195,800 Games Workshop Group PLC 2,206,935
292,303 Harvey Nichols PLC 1,355,099
---------------
3,562,034
---------------
TOTAL UNITED KINGDOM 36,659,300
===============
UNITED STATES (57.9%)
Business Equipment &
Services (1.2%)
80,000 * Equity Corp., International 1,865,000
80,000 G & K Services, Inc., Class A 2,795,000
---------------
4,660,000
---------------
Electrical Equipment &
Services (3.2%)
90,000 * Credence Systems Corp. 4,398,750
61,500 * Electroglas, Inc. 2,087,156
69,000 * General Cable Corp. 2,449,500
50,000 * Kulicke & Soffa Industries, Inc. 2,314,063
25,600 * Lattice Semiconductor Corp. 1,668,000
---------------
12,917,469
---------------
Finance & Insurance (7.3%)
66,200 Capital Re Corp. 4,038,200
39,300 CMAC Investment Corp. 2,107,463
100,000 Dime Community Bancorp, Inc. 2,031,250
117,700 Everen Capital Corp. 4,781,562
160,700 * First Alliance Co. 5,031,919
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (continued)
SEPTEMBER 30, 1997
Shares Value
- ----------- ---------------
70,000 Frontier Insurance Group 2,660,000
61,400 HCC Insurance Holdings, Inc. 1,630,938
50,000 Investors Financial Services Corp. 2,081,250
40,000 Penn America Group, Inc. 818,750
68,600 TCF Financial Corp. 4,008,812
---------------
29,190,144
---------------
Food & Beverage Products
(0.3%)
23,700 * Landrys Seafood Restaurants, Inc. 697,669
15,100 Worthington Foods, Inc. 346,356
---------------
1,044,025
---------------
Healthcare Products &
Services (13.4%)
69,800 Agouron Pharmaceuticals, Inc. 3,354,762
100,500 * Amylin Pharmaceuticals, Inc. 851,109
118,700 * Bioreliance Corporation 3,130,713
93,586 * Concentra Managed Care, Inc. 3,313,529
24,000 * Cyberonics, Inc. 386,250
80,000 * Cytyc Corp. 1,995,000
75,000 * Dura Pharmaceuticals, Inc. 3,285,937
80,000 * Guilford Pharmaceuticals, Inc. 2,345,000
146,737 Health Management Associates, Inc.
Cl. A 4,640,558
160,000 * Idexx Laboratories, Inc. 2,685,000
20,000 * Incyte Pharmacuticals, Inc. 1,679,375
40,000 * Kos Pharmaceuticals, Inc. 1,430,000
139,900 * Lifecore Biomedical, Inc. 2,518,200
111,000 * Neurogen Corp. 2,983,125
276,900 * Norland Medical Systems, Inc. 2,509,406
78,600 * Pediatrix Medical Group, Inc. 3,468,225
147,300 * Perclose, Inc. 3,259,013
56,600 * Spine-Tech, Inc. 2,133,113
60,000 Synopsys, Inc. 2,548,125
73,600 * Total Renal Care Holdings, Inc. 3,680,000
62,500 * Wesley Jessen Visioncare, Inc. 1,789,063
---------------
53,985,503
---------------
Information Services &
Technology (12.4%)
77,800 Asyst Technologies, Inc. 3,454,806
75,000 * Avid Technology, Inc. 2,423,437
13,800 * Brooks Automation, Inc. 529,575
88,400 * Cognex Corp. 2,917,200
112,000 * Computer Products, Inc. 3,356,500
80,300 * Corsair Communications, Inc. 1,701,356
36,400 * Dataworks Corp. 673,400
89,000 * Discreet Logic, Inc. 2,364,063
30,000 * EMC Corp. 1,751,250
43,100 * Intuit, Inc. 1,384,588
31,000 * JD Edwards & Company 1,042,375
58,000 * JDA Software Group, Inc. 2,113,375
20,100 * Manugistics Group, Inc. 716,063
152,500 * Metacreations Software, Inc. 2,258,906
50,000 * Microchip Technology, Inc. 2,265,625
126,500 * Natural Microsystems Corp. 4,791,187
50,000 * Peoplesoft, Inc. 2,984,375
111,000 Project Software & Development,
Inc. 2,559,937
10,200 * Qad, Inc. 188,063
70,000 * Radisys Corp. 3,526,250
78,700 * Splash Technology Holdings, Inc. 3,079,137
90,000 * Vantive Corp. 2,165,625
68,700 * Xylan Corp. 1,517,841
---------------
49,764,934
---------------
Leisure & Tourism (0.7%)
100,000 * Sodak Gaming, Inc. 1,409,375
61,000 * Vail Resorts, Inc. 1,631,750
---------------
3,041,125
---------------
Manufacturing - Distributing
(2.1%)
67,200 BMC Industries, Inc. 2,137,800
100,000 Roper Industries, Inc. 3,375,000
92,100 TriMas Corp. 2,809,050
---------------
8,321,850
---------------
Oil / Energy (1.7%)
100,000 KCS Energy Corp. 2,950,000
13,800 * Nextlink Communications, Inc. 332,925
50,000 * Ocean Energy, Inc. 3,450,000
---------------
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (continued)
SEPTEMBER 30, 1997
Shares Value
- ----------- ---------------
6,732,925
---------------
Oil Field Services (4.2%)
70,000 * Basin Exploration, Inc. 1,176,875
68,400 * BJ Services Co., Inc. 5,078,700
30,000 Devon Energy Corp. 1,320,000
80,000 ENSCO International, Inc. 3,155,000
104,800 * Falcon Drilling, Inc. 3,700,750
65,000 * Newpark Resources, Inc. 2,555,312
---------------
16,986,637
---------------
Other (2.0%)
150,000 * Accident Corp. 4,893,750
18,200 * Budget Group, Inc. 600,600
11,800 * Megabios Corporation 199,125
14,900 Oakwood Homes Corp. 422,788
88,300 * Rental Service Corp. 1,981,231
---------------
8,097,494
---------------
Publishing, Broadcasting &
Entertainment (0.9%)
46,800 Central Newspapers, Inc. 3,474,900
---------------
Retailing & Wholesale (2.5%)
150,000 * Action Performance Cos., Inc. 4,350,000
46,400 * Central Garden & Pet Co. 1,418,100
150,000 * Fritz Comp, Inc. 2,217,187
70,000 Stanhome, Inc. 2,069,375
---------------
10,054,662
---------------
Telecommunication Services
& Equipment (5.8%)
50,000 * Aspect Telecommunications Corp. 1,159,375
85,000 * Concord EFS, Inc. 2,289,688
30,600 International Telecomm Systems, Inc. 852,975
60,000 * Jacor Communications, Inc. 2,649,375
112,200 * Mcleod USA, Inc. 4,421,381
120,000 * Ortel Corp. 2,662,500
24,100 * Premiere Technologies, Inc. 821,659
100,100 * Smartalk Teleservices, Inc. 2,464,963
70,000 * U.S. Cellular Corp. 2,581,250
65,000 * Univision Communications, Inc. 3,526,250
---------------
23,429,416
---------------
Textile & Apparel (0.2%)
23,400 * Stage Stores Inc. 1,006,200
---------------
TOTAL UNITED STATES 232,707,284
===============
TOTAL COMMON STOCKS
(Cost---$292,402,995) $372,749,722
===============
PREFERRED STOCKS (2.6%)
BRAZIL (2.4%)
Electrical Equipment &
Services (0.6%)
47,426,600 Companhia Energetica de Minas
Gerais 2,649,361
---------------
Finance & Insurance (0.2%)
1,044,000 Banco Itau 674,686
---------------
Manufacturing - Distributing
(0.3%)
72,696,030 Embraer-Empresa Brasiliera de
Aeronautica 1,061,692
---------------
Telecommunication Services
& Equipment (1.3%)
1,846,800 Compania Riograndense de
Telecomunica 2,398,792
8,550,900 Telecomunicacoes de Rio de Janiero
SA 1,178,573
5,947,200 Telesponsora Telefonos Sao Paulo 1,813,175
---------------
5,390,540
---------------
TOTAL BRAZIL 9,776,279
===============
UNITED STATES (0.2%)
Other (0.2%)
44,500 CorporateFamily Solutions, Inc. 734,250
---------------
TOTAL PREFERRED STOCKS
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (CONTINUED)
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
(cost --- $7,971,664) $ 10,510,529
================
Principal
Amount Value
REPURCHASE AGREEMENTS (4.5%)
$ 18,006,000 Keystone Joint Repurchase Agreement,
Investments in repurchase agreements,
in a joint trading account purchased
9/30/97, 6.15%, maturity value $18,009,034
(a) (cost, $18,006,000). $ 18,006,000
====================
TOTAL INVESTMENTS
(COST - $318,380,659) (99.8%) 401,266,251
OTHER ASSETS AND LIABILITIES -
NET (0.2%) 671,569
--------------------
NET ASSETS (100%) $ 401,937,820
====================
</TABLE>
* Non-income producing securities.
** Securities that may be resold to "qualified institutional buyers" under
Rule 144A of the Securities Act of 1933. These securities have been
determined to be liquid under guidelines established by the Board of
Directors.
(a) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued interest at
September 30, 1997.
LEGEND OF PORTFOLIO ABBREVIATIONS:
ADR - American Depository Receipts
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS - (continued)
September 30, 1997
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Unrealized
Exchange U.S. Value at In Exchange Appreciation
Date September 30, 1997 for U.S. $ (Depreciation)
- -------------------------------------------------------------------------------------------------------------------------
Forward Foreign Currency Exchange Contracts to Buy:
Contracts to Receive
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/28/97 25,876,528 French Franc $ 4,369,932 $ 4,353,386 $ 16,546
10/28/97 1,688,800,000 Japanese Yen 14,054,315 13,947,803 106,512
10/28/97 8,000,740 German Marks 4,536,866 4,370,079 166,787
11/24/97 7,780,298 German Marks 4,419,416 4,342,896 76,520
10/28/97 9,219,150 Netherlands Guilder 4,640,887 4,469,891 170,996
11/24/97 10,336,806 Netherlands Guilder 5,212,080 5,121,794 90,286
10/28/97 10,096,980 Swiss Franc 6,965,928 6,711,187 254,741
11/24/97 10,120,022 Swiss Franc 7,003,190 6,862,428 140,762
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
- ---------------------------------------------------------------------------------
10/28/97 802,005 Australian Dollar $ 582,600 $ 592,000 $ 9,400
9/18/97 546,000 British Pound 880,425 871,934 (8,491)
10/28/97 59,519,200 French Franc 10,051,381 9,700,000 (351,381)
10/28/97 8,000,740 German Marks 4,536,866 4,400,000 (136,866)
11/24/97 7,780,298 German Marks 4,419,416 4,219,800 (199,616)
10/1/97 5,157,900 Japanese Yen 42,744 42,712 (32)
10/1/97 1,028,328 Japanese Yen 8,522 8,482 (40)
10/1/97 7,858,940 Japanese Yen 65,127 64,822 (305)
10/2/97 2,970,387 Japanese Yen 24,616 24,541 (75)
10/28/97 3,276,416,000 Japanese Yen 27,266,570 28,600,000 1,333,430
10/28/97 9,219,150 Netherlands Guilder 4,640,887 4,500,000 (140,887)
11/24/97 10,336,806 Netherlands Guilder 5,212,080 4,975,000 (237,080)
10/28/97 10,096,980 Swiss Franc 6,965,928 6,800,000 (165,928)
11/24/97 10,120,022 Swiss Franc 7,003,190 6,710,000 (293,190)
</TABLE>
<PAGE>
- --------------------------------------------------------
Keystone Global Opportunities Fund
FINANCIAL HIGHLIGHTS ---- CLASS A SHARES (For a share outstanding throughout
each year)
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value beginning of year $24.56(c) $23.43 $19.42 $18.02 $11.69
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
<S> <C> <C> <C> <C> <C>
Net investment income (loss) (0.17) (0.06) (0.16) (0.04) (0.14)
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions 1.76 1.19 4.17 1.60 6.47
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.59 1.13 4.01 1.56 6.33
- ------------------------------------------------------------------------------------------------------------------------------
Less distributions from
Net investment income 0 0 0 0 0
Net realized gain on investments (1.25) 0 0 (0.16) 0
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.25) 0 0 (0.16) 0
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $24.90 $24.56 $23.43 $19.42 $18.02
- ------------------------------------------------------------------------------------------------------------------------------
Total return(a) 6.95% 4.82% 20.65% 8.74% 54.15%
Ratios/supplemental data
Ratios to average net assets:
Expenses 1.67% 1.62% 1.83% 2.01% 2.84%
Expenses excluding indirectly paid expenses 1.66% 1.60% 1.81% N/A N/A
Expenses excluding fee waivers & expense reimbursements N/A N/A N/A N/A N/A
Net investment income (loss) (0.69%) (0.53%) (0.83%) (0.86%) (1.72%)
Portfolio turnover rate 72% 67% 35% 32% 64%
Average commissions rate paid per share $0.0066 $0.0079 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $113,477 $250,427 $94,679 $71,122 $29,942
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------
Keystone Global Opportunities Fund
FINANCIAL HIGHLIGHTS ---- CLASS A SHARES (For a share outstanding throughout
each year) (continued)
<TABLE>
<CAPTION>
March 16, 1988
(Commencement of
------------------------------------------ Operations) to
1992 1991 1990 1989 September 30, 1988
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value beginning of year $12.89 $9.89 $11.17 $9.77 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
<S> <C> <C> <C> <C> <C>
Net investment income (loss) (0.08) 0.17 0.19 0.09 0.05
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions 0.23 3.06 (1.27) 1.66 (0.28)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.15 3.23 (1.08) 1.75 (0.23)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions from
Net investment income 0 (0.23) (0.12) (0.09) 0
Net realized gain on investments (1.35) 0 (0.08) (0.26) 0
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.35) (0.23) (0.20) (0.35) 0
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $11.69 $12.89 $9.89 $11.17 $9.77
- ---------------------------------------------------------------------------------------------------------------------------------
Total return(a) 1.81% 32.71% (9.65%) 16.94% (1.20%)
Ratios/supplemental data
Ratios to average net assets:
Expenses 2.50% 2.03% 2.00% 2.00% 1.50%(b)
Expenses excluding indirectly paid expenses N/A N/A N/A N/A N/A
Expenses excluding fee waivers & expense reimbursements N/A 3.67% 7.77% 13.06% 5.54%(b)
Net investment income (loss) (0.69%) 1.49% 1.80% 0.86% 1.42%(b)
Portfolio turnover rate 75% 134% 51% 13% 19%
Average commissions rate paid per share N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $10,859 $2,159 $1,519 $1,378 $1,082
- ---------------------------------------------------------------------------------------------------------------------------------
(a) Excluding applicable sales charges.
(b) Annualized.
(c) Calculation based on average shares outstanding during the period.
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
- ---------------------------------------------------------
Keystone Global Opportunities Fund
FINANCIAL HIGHLIGHTS ---- CLASS B SHARES (For a share outstanding throughout
each year)
<TABLE>
<CAPTION>
February 1, 1993
Year Ended September 30, (Date of Initial
---------------------------------------------------- Public Offering) to
1997 1996 1995 1994 September 30, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of year $23.92(c) $23.00 $19.20 $17.95 $14.04
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment loss (0.32) (0.21) (0.25) (0.15) (0.04)
Net realized and unrealized gain on investments and
foreign currency related transactions 1.68 1.13 4.05 1.56 3.95
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.36 0.92 3.80 1.41 3.91
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from
Net realized gain on investments (1.25) 0 0 (0.16) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.25) 0 0 (0.16) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $24.03 $23.92 $23.00 $19.20 $17.95
- ------------------------------------------------------------------------------------------------------------------------------------
Total return(a) 6.14% 4.00% 19.79% 7.93% 27.85%
Ratios/supplemental data
Ratios to average net assets:
Expenses 2.46% 2.40% 2.58% 2.83% 3.35%(b)
Expenses excluding indirectly paid expenses 2.44% 2.38% 2.56% N/A N/A
Net investment loss (1.45%) (1.37%) (1.59%) (1.61%) (1.86%)(b)
Portfolio turnover rate 72% 67% 35% 32% 64%
Average commissions rate paid per share $0.0066 $0.0079 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $238,936 $385,839 $238,320 $131,695 $15,534
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Excluding applicable sales charges.
(b) Annualized.
(c) Calculation based on average shares outstanding during the period.
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
- -----------------------------------------------------------------
Keystone Global Opportunities Fund
FINANCIAL HIGHLIGHTS ---- CLASS C SHARES (For a share outstanding throughout
each year)
<TABLE>
<CAPTION>
February 1, 1993
Year Ended September 30, (Date of Initial
--------------------------------------------------- Public Offering) to
1997 1996 1995 1994 September 30, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of year $23.97(c) $23.04 $19.26 $17.99 $14.04
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment loss (0.33) (0.24) (0.27) (0.15) (0.04)
Net realized and unrealized gain on investments and
foreign currency related transactions 1.68 1.17 4.05 1.58 3.99
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.35 0.93 3.78 1.43 3.95
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from
Net realized gain on investments (1.25) 0 0 (0.16) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.25) 0 0 (0.16) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $24.07 $23.97 $23.04 $19.26 $17.99
- ------------------------------------------------------------------------------------------------------------------------------------
Total return(a) 6.08% 4.04% 19.63% 8.02% 28.13%
Ratios/supplemental data
Ratios to average net assets:
Expenses 2.45% 2.40% 2.58% 2.85% 3.04%(b)
Expenses excluding indirectly paid expenses 2.43% 2.38% 2.56% N/A N/A
Net investment loss (1.48%) (1.38%) (1.59%) (1.62%) (1.55%)(b)
Portfolio turnover rate 72% 67% 35% 32% 64%
Average commissions rate paid per share $0.0066 $0.0079 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $49,524 $124,549 $86,339 $50,535 $6,217
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Excluding applicable sales charges.
(b) Annualized.
(c) Calculation based on average shares outstanding during the period.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -----------------------------------------------------------------
Keystone Global Opportunities Fund
FINANCIAL HIGHLIGHTS ---- CLASS Y SHARES
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
January 13, 1997
(Date of Initial
Public Offering) to
September 30, 1997
- ----------------------------------------------------------------------------------------
<S> <C>
Net asset value beginning of period $23.05
- ----------------------------------------------------------------------------------------
Income from investment operations
Net investment income (0.28)
Net realized and unrealized gain on investments and
foreign currency related transactions 2.47
- ----------------------------------------------------------------------------------------
Total from investment operations 2.19
- ----------------------------------------------------------------------------------------
Less distributions from
Net realized gain on investments 0
- ----------------------------------------------------------------------------------------
Total distributions 0
- ----------------------------------------------------------------------------------------
Net asset value end of period $25.24
- ----------------------------------------------------------------------------------------
Total return 9.50%
Ratios/supplemental data
Ratios to average net assets:
Expenses 1.42%(a)
Expenses excluding indirectly paid expenses 1.42%(a)
Net investment loss (1.22%)(a)
Portfolio turnover rate 72%
Average commissions rate paid per share $0.0066
- ----------------------------------------------------------------------------------------
Net assets end of period (thousands) $0
- ----------------------------------------------------------------------------------------
(a) Annualized.
- ----------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
- ------------------------------------------------------------------
KEYSTONE GLOBAL OPPORTUNITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments at value (identified cost - $318,380,659) $401,266,251
Foreign currency holdings (identified cost - $486,842) 484,850
Cash 650
Receivable for Fund shares sold 2,368,763
Unrealized appreciation on forward foreign currency exchange contracts 2,365,980
Receivable for investments sold 2,111,047
Dividends and interest receivable 332,354
Foreign tax reclaim receivable 180,915
Prepaid expenses and other assets 33,413
- ----------------------------------------------------------------------------------------------------------------------
Total assets 409,144,223
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed 2,552,910
Payable for investments purchased 2,451,679
Unrealized depreciation on forward foreign currency exchange contracts 1,533,891
Due to related parties 314,074
Foreign taxes to be withheld 47,043
Accrued expenses and other liabilities 306,806
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 7,206,403
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS $401,937,820
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in-capital $302,639,005
Accumulated net investment loss (966,557)
Accumulated net realized gain on investments and foreign currency related transactions 16,546,267
Net unrealized appreciation on investments and foreign
currency related transactions 83,719,105
- ----------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $401,937,820
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
CLASS A SHARES
Net assets of ($113,477,420 / 4,556,835 shares outstanding) $24.90
Offering price (based on sales charge of 4.75%) $26.14
CLASS B SHARES
Net assets of ($238,936,130 / 9,942,489 shares outstanding) $24.03
CLASS C SHARES
Net assets of ($49,524,245 / 2,057,099 shares outstanding) $24.07
CLASS Y SHARES
Net assets of ($25 / 1 share outstanding) $25.24
- ----------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Keystone Global Opportunities Fund
STATEMENT OF OPERATIONS
Year Ended September 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment income
<S> <C> <C>
Dividends (net of foreign withholding tax of $624,150) $4,353,325
Interest 959,006
- -----------------------------------------------------------------------------------------------------------------------------
Total income 5,312,331
- -----------------------------------------------------------------------------------------------------------------------------
Expenses
Management fee $5,048,808
Distribution Plan expenses 4,132,784
Transfer agent fees 1,901,832
Custodian fees 449,481
Printing 172,317
Registration fees 156,231
Administrative service fees 73,452
Trustees fees 49,845
Professional fees 35,120
Other 29,633
- -----------------------------------------------------------------------------------------------------------------------------
Total expenses 12,049,503
Less: Indirectly paid expenses (82,148)
- -----------------------------------------------------------------------------------------------------------------------------
Net expenses 11,967,355
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss (6,655,024)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions
Net realized gain on investments 49,817,055
Net realized loss on foreign currency related transactions (23,021,692)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency
related transactions 26,795,363
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments and foreign
currency related transactions (6,946,269)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency related transactions 19,849,094
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $13,194,070
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -----------------------------------------------
Keystone Global Opportunities Fund
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment loss ($6,655,024) ($6,922,836)
Net realized gain on investments and foreign currency
related transactions 26,795,363 40,623,123
Net change in unrealized appreciation (depreciation) on investments
and foreign currency related transactions (6,946,269) (8,332,501)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 13,194,070 25,367,786
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from Net realized gain on investments:
Class A Shares (11,550,719) 0
Class B Shares (19,127,005) 0
Class C Shares (6,057,525) 0
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (36,735,249) 0
- -----------------------------------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold 72,496,510 529,168,793
Net asset value of shares issued in reinvestment of distributions 29,860,344 0
Payments for shares redeemed (437,692,552) (213,060,012)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital share transactions (335,335,698) 316,108,781
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (358,876,877) 341,476,567
- -----------------------------------------------------------------------------------------------------------------------------
Net assets
Beginning of year 760,814,697 419,338,130
- -----------------------------------------------------------------------------------------------------------------------------
End of year [including accumulated net investment loss
as follows - 1997 - ($966,557) and 1996 - ($836,743)] $401,937,820 $760,814,697
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
KEYSTONE GLOBAL OPPORTUNITIES FUND
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Keystone Global Opportunities Fund, (the "Fund") is a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified, open-end management investment company.
The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares
are sold with a maximum front-end sales charge of 4.75%. Class B and C shares
are sold without a front-end sales charge, but pay a higher ongoing distribution
fee than Class A. 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 after January 1, 1997 will
automatically convert to Class A shares after seven years. Class B shares
purchased prior to January 1, 1997 retain their existing conversion rights.
Class C shares are sold subject to a contingent deferred sales charge payable on
shares redeemed within one year after the month of purchase. Class Y shares are
sold at net asset value and are not subject to contingent deferred sales charges
or distribution fees. Class Y shares are sold only to investment advisory
clients of First Union and its affiliates, certain institutional investors or
Class Y shareholders of record of certain other funds managed by First Union and
its affiliates as of December 30, 1994. The Fund's investment objective is
capital growth.
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.
Actual results could differ from these estimates.
A. VALUATION OF SECURITIES
The Fund values investments traded on an established exchange on the basis of
the last sales price on the exchange where primarily traded. The Fund values
securities traded in the over-the-counter market at the mean between the bid and
asked prices. Securities for which market quotations are not available,
including restricted securities, are valued at fair value as determined in good
faith according to 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.
B. REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements. 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, including
accrued interest. The Fund will only enter into repurchase agreements with banks
and other financial institutions which are deemed by the investment advisor to
be creditworthy pursuant to guidelines established by the Board of Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with certain other funds managed by Keystone Investment
Management Company ("Keystone"), 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.
C. FOREIGN CURRENCY
The books and records of the Fund are maintained in United States ("U.S.")
dollars. Foreign currency amounts are translated into U.S. 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
<PAGE>
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions and foreign currency
related transactions and is included in realized gain (loss) on foreign
currency related transactions. Foreign currency gains and losses resulting from
the difference between the amounts of interest and dividends recorded on the
books of the Fund and the amount actually received is reflected in dividend
and interest income. The portion of foreign currency gains and losses related
to fluctuations in exchange rates between the initial purchase trade date 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 are marked-to-market
daily. Realized gains and losses arising from such transactions are included in
net realized gain (loss) on 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 accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date or in the case of some foreign securities, on the date
thereafter when the Fund is made aware of the dividend. Foreign income may be
subject to foreign withholding taxes which are accrued as applicable. Capital
gains realized on some foreign securities are subject to foreign taxes and are
accrued as applicable.
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 will not incur any federal income tax liability since it
is expected to distribute all of its net investment company taxable income and
net taxable capital gains, if any, to its shareholders. The Fund also intends to
avoid any excise tax liability by making the required distributions under the
Code. Accordingly, no provision for federal income or excise tax is required.
G. DISTRIBUTIONS
The Fund distributes net investment income 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. The significant differences between financial statement
amounts available for distributions and distributions made in accordance income
tax regulations are primarily due differing treatment of net operating losses
generated by the Fund.
H. CLASS ALLOCATIONS
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.
<PAGE>
(2.) CAPITAL SHARE TRANSACTIONS
The Fund has an unlimited number of shares of beneficial interest with no par
value authorized. Shares of beneficial interest of the Fund are currently
divided into Class A, Class B, Class C, and Class Y. Transactions in shares of
the Fund were as follows:
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1997 1996
--------------------------------- --------------------------------
CLASS A Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,724,686 40,645,838 11,443,628 279,189,973
Shares issued in
reinvestment of distributions 293,025 6,669,240 0 0
Shares redeemed (7,656,939) (176,796,539) (5,288,523) (132,731,601)
- --------------------------------------------------------------------------------------------------------------
Net increase(decrease) (5,639,228) (129,481,461) 6,155,105 146,458,372
- --------------------------------------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------------------------------------
Shares sold 1,025,563 23,070,741 8,250,300 192,961,888
Shares issued in
reinvestment of distributions 798,355 17,651,626 0 0
Shares redeemed (8,009,248) (177,499,072) (2,485,770) (57,472,755)
- --------------------------------------------------------------------------------------------------------------
Net increase(decrease) (6,185,330) (136,776,705) 5,764,530 135,489,133
- --------------------------------------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------------------------------------
Shares sold 390,436 8,779,908 2,429,734 57,016,932
Shares issued in
reinvestment of distributions 250,089 5,539,478 0 0
Shares redeemed (3,780,382) (83,396,941) (980,684) (22,855,656)
- --------------------------------------------------------------------------------------------------------------
Net increase(decrease) (3,139,857) (69,077,555) (1,449,050) (34,161,276)
- --------------------------------------------------------------------------------------------------------------
CLASS Y January 13, 1997 (Date of
Initial Public Offering)
through September 30, 1997
- --------------------------------------------------------------------------------------------------------------
Shares sold 1 23 0 0
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(3.) SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities and foreign cash) for the year ended September 30, 1997
were $373,517,884 and $734,655,169, respectively. On September 30, 1997, the
cost of investments for federal income tax purposes was $318,481,962, gross
unrealized appreciation of investments was $96,177,617 and gross unrealized
depreciation of investments was $13,393,328 resulting in net unrealized
appreciation of $82,784,289 for federal income tax purposes.
<PAGE>
(4.) DISTRIBUTION PLAN
Evergreen Keystone Distributor, Inc. ("EKD"), a wholly-owned subsidiary of The
BISYS Group, Inc. ("BISYS") serves as principal underwriter to the Fund. Prior
to December 11, 1996, Evergreen Keystone Investment Services, Inc. ("EKIS"), a
wholly-owned subsidiary of Keystone, served as the Fund=s principal underwriter.
The Fund has adopted Distribution Plans for each class of shares, except Class
Y, as allowed by Rule 12b-1 of the 1940 Act. Distribution Plans permit the Fund
to reimburse its principal underwriter for costs related to selling shares of
the Fund and for various other services. These costs, which consist primarily of
commissions and services fees to broker-dealers who sell shares of the fund, are
paid by shareholders through expenses called "Distribution Plan expenses". Each
class, except Class Y, currently pays a service fee equal to 0.25% of the
average daily net asset of the class. Class B and Class C also presently pay
distribution fees equal to 0.75% of the average daily net assets of the Class.
Distribution Plan expenses are calculated daily and paid monthly.
With respect to Class B and Class C shares, the principal underwriter may pay
distribution costs greater than the allowable annual amounts the Fund is
permitted to pay. The Fund may reimburse the principal underwriter for such
excess amounts in later years with annual interest at the prime rate plus 1.00%.
During the year ended September 30, 1997, amounts paid to EKD and/or EKIS
pursuant to each Fund=s Class A, Class B and Class C Distribution Plans were
$371,892, $2,946,506, and $814,386, 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 which had been
provided 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.
Contingent deferred sales charges paid by redeeming shareholders are paid to EKD
or its predecessor.
(5.) INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Keystone Investment Management Company ("Keystone"), a subsidiary of First Union
Corporation ("First Union"), is the investment advisor for the Fund. In return
for providing investment management and administrative services to the Fund, the
Fund pays Keystone a management fee, that is calculated daily and paid monthly.
The management fee is determined by applying percentage rates starting at 1.00%
and declining as net assets increase to 0.75% per annum, to the average daily
net asset value of the Fund.
During the year ended September 30, 1997, the Fund paid or accrued $73,452, to
Keystone for certain administrative services.
Evergreen Keystone Services Company ("EKSC"), a wholly-owned subsidiary of
Keystone, serves as the transfer and dividend disbursing agent for the Fund.
BISYS Fund Services, Inc. ("BISYS"), an affiliate of EKD, serves as the Fund's
sub-administrator. As sub-administrator, BISYS provides the officers of the
Fund. For this service, BISYS is paid a fee by Keystone, which is not a Fund
expense.
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. The
assets deposited with the custodian under this expense offset arrangement could
have been invested in income-producing assets
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Keystone Global Opportunities Fund
We have audited the accompanying statement of assets and liabilities of Keystone
Global Opportunities Fund, including the schedule of investments, as of
September 30, 1997, 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 nine-year period then ended and the period from March 16, 1988 (Commencement
of Operations) to September 30, 1988 for Class A shares, for each of the years
in the four-year period ended September 30, 1997 and for the period from
February 1, 1993 (Date of Initial Public Offering) to September 30, 1993 for
Class B and Class C shares and for the period from January 13, 1997 (Date of
Initial Public Offering) to September 30, 1997 for Class Y 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
September 30, 1997 by correspondence with the custodian and brokers. 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 Global Opportunities Fund as of September 30, 1997, 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
October 31, 1997
