EVERGREEN - NATURAL RESOURCES FUND
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PAGE 1
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EVERGREEN NATURAL RESOURCES FUND (FORMERLY KEYSTONE GLOBAL RESOURCES AND
DEVELOPMENT FUND)
Dear Shareholders:
It often seems that when international investment
diversification makes the most intellectual sense, it makes the
least emotional sense.
Like many international and global funds, the Evergreen
Natural Resources Fund has provided positive returns during the
past year. However, the returns for the 12 months that ended on
October 31, 1997 were held back by the market setbacks during
October when several Asian currencies were devalued and local
stock markets suffered severe losses. As a result of both this
volatility and the positive investment environment in the
United States, most domestic equity funds showed superior
returns for the period.
It is easy to see why some mutual fund shareholders might
question the value of investing in an international or global
fund. It just seems more comfortable to be invested in large
U.S. companies, which have been the market leaders for the past
three years.
(Photo of
WILLIAM M. ENNIS
appears here)
WILLIAM M. ENNIS
THE ADVANTAGES OF DIVERSIFICATION
The answer is simple. Over the longer term, international diversification of
part of one's investment portfolio can enhance returns and reduce volatility.
The United States stock market has had a wonderful rally for the past three
years. However, looking at present prices, many investment professionals see
more attractive values in the international markets that have been lagging the
U.S. market. In addition, the very large American companies, whose stocks have
been the best performers, may be less able to increase their future earnings by
the restructuring programs that have been helping them. Meanwhile, companies in
Europe and Japan are just getting started in their cost-cutting programs.
At Evergreen Funds, we encourage you to remain focused on your long-term goals
and to remain disciplined in your personal investment strategies. No one can
confidently say whether next year's market will follow last year's pattern, or
whether trends will reverse themselves so that last year's lagging strategy
becomes next year's winning strategy. We can say, however, that the most likely
winners in the long run are those who consistently follow long-term investment
strategies.
UPCOMING DEVELOPMENTS
In the next few weeks and months, shareholders of Evergreen and Keystone funds
will begin to notice some changes. The Evergreen Keystone Funds are becoming the
Evergreen Funds. On October 31, 1997 Keystone America Funds adopted the name of
Evergreen and in early 1998 the original Keystone Funds will take the Evergreen
name.
We believe that by putting all the funds under the umbrella name of Evergreen
Funds we will be creating a simpler and more cohesive image. Importantly, we
expect to create substantial cost savings for shareholders as a result of
consolidating prospectuses, annual reports, legal registrations and other
materials. It also will be easier for you to find all the funds of the Evergreen
Family, to which you have exchange privileges, under one heading in newspapers
and electronic services.
-- CONTINUED--
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PAGE 2
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EVERGREEN NATURAL RESOURCES FUND
What will not change will be our commitment to provide you with the finest
investment products and shareholder services possible.
If you should have any questions about these changes or other issues affecting
your investments, we encourage you to consult your financial adviser or call
Evergreen Funds at 1-800-343-2898.
Sincerely,
/s/ William M. Ennis
William M. Ennis
MANAGING DIRECTOR
November, 1997
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PAGE 3
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A Discussion With
Your Fund Manager
(Photo of John C. Madden, Jr. appears here)
JOHN C. MADDEN, JR. IS A VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER OF
EVERGREEN NATURAL RESOURCES FUND. A CHARTERED FINANCIAL ANALYST, MR.
MADDEN HAS MORE THAN 30 YEARS OF EXPERIENCE IN INVESTMENT RESEARCH AND
MANAGEMENT, SPECIALIZING IN PRECIOUS METALS, NATURAL RESOURCES, AND
ENERGY. HE HOLDS A B.A. FROM YALE UNIVERSITY.
Q HOW DID THE FUND PERFORM DURING THE YEAR?
A For the twelve-month period which ended October 31, 1997, your Fund produced
the following total returns, unadjusted for sales charges:
Class A shares returned 9.30%.
Class B shares returned 8.55%.
Class C shares returned 8.55%.
The Standard & Poor's 500 Index-- a widely recognized benchmark of stock price
performance-- returned 32.10% for the twelve-month period. The Morgan Stanley
Capital International World Index, representing the performance of stocks from
more than 20 countries including the U.S., returned 17.25% for the twelve-month
period.
We believe your Fund performed reasonably well during a mixed period for
natural resources stocks. Growth in energy stocks was relatively strong, but
metal prices were disappointing, and this major segment of the Fund
underperformed.
Q PLEASE DISCUSS MARKET PERFORMANCE DURING THE TWELVE-MONTH PERIOD.
A It was a positive period for the general stock market, but less favorable for
many companies in the natural resources sector. Strong oil prices throughout
most of the year benefited oil-related companies, which accounted for more than
one-third of your Fund's holdings, but several other sectors underperformed. The
biggest negative factors during the year were the disappointing level of metals
prices, and the sharp declines in the Southeast Asian markets. Although your
Fund had only minimal DIRECT exposure to this region, performance was affected
because of significant INDIRECT involvement.
Q PLEASE GIVE AN EXAMPLE.
A Metal producers, both steel and non-ferrous companies, have been affected by
the economic problems in the region because these countries have generated much
of the demand growth for these materials in recent years. Australian stocks in
particular have retreated, since Southeast Asia was a prime market for their
output of raw materials. Holdings in some other areas, such as Brazil, have also
suffered as the concerns relating to Southeast Asia have spread to other
emerging countries.
Q ARE NATURAL RESOURCES INVESTMENTS STILL A GOOD LONG-TERM VALUE?
A Yes, they are. Despite the recent underperformance by this sector, we continue
to believe that resource stocks in general, and particularly energy stocks, have
a positive long-term outlook and offer a unique way to participate in the
economic growth of developing countries. This also continues to be an area which
offers good opportunities for broad diversification by industry, company size
and country.
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EVERGREEN NATURAL RESOURCES FUND
Q WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD?
A We made significant adjustments to the allocation of the Fund's holdings
during the year, both by sector and by country. We increased the percentage
devoted to the resource area to 78% of the portfolio, up from 72% at the start
of the period, primarily by expanding our energy exposure. The remaining 22% is
allocated to infrastructure stocks. Geographically, your Fund's portfolio held
investments representing nine different countries at the end of the period. Over
the course of the year, we increased our North American holdings from 42% to 67%
of the portfolio, and reduced Latin American and Asian/Pacific exposure almost
by half, to 9% and 11% respectively.
ASSET ALLOCATION
(AS PERCENTAGE OF PORTFOLIO ASSETS)
<TABLE>
<CAPTION>
10/31/97 10/31/96
<S> <C> <C>
- -----------------------------------------------------------
Natural resources and energy stocks 78% 72%
- -----------------------------------------------------------
Infrastructure stocks 22% 28%
- -----------------------------------------------------------
</TABLE>
Q WHAT TYPES OF STOCKS DOES EVERGREEN NATURAL RESOURCES FUND INVEST IN?
A Your Fund seeks capital growth by investing in companies in the natural
resources and energy industries, with secondary emphasis on companies related to
infrastructure development. These include companies in the oil and gas
industries, base metals, iron, steel and precious metals. Infrastructure stocks,
which account for less than 25% of the Fund's portfolio, include such industries
as machinery, telecommunications and construction. We believe both types of
investments offer strong growth potential because they benefit directly from
growing world markets.
Q HOW DO YOU CONTROL THE VOLATILITY ASSOCIATED WITH THESE SECTORS?
A Although these sectors can be volatile, we mitigate a great deal of the
volatility through our relatively conservative investment style. Key components
of this conservative style include maintaining a portfolio that is
well-diversified geographically, and focusing on companies we believe are world
leaders in their industries. We monitor your Fund's holdings closely,
reallocating assets as needed to take advantage of new opportunities created by
changes in world market conditions. We believe this approach provides Fund
investors substantial upside potential while limiting downside risk.
Q PLEASE DESCRIBE SOME OF THE FUND'S HOLDINGS.
A Because the resource business is cyclical, we place a strong emphasis on
companies with positions of market leadership, companies that are low cost
producers of resources or that provide a unique service. In the energy service
field, Schlumberger is a prime example. It is the leading wireline service
company in the world, providing a range of petroleum exploration, drilling and
engineering services unmatched by any other company. This stock has been
especially rewarding for the Fund.
In the mining area, we continue to add to holdings of Alcoa, the leading
integrated aluminum producer in the world and the lowest cost producer of
aluminum. Alcoa has the largest amount of excess capacity in the industry. We
expect good performance from this stock, as this capacity is absorbed over the
next two years.
Q WHAT IS YOUR OUTLOOK?
A Developing nations have been responsible for much of the growth in resource
demand in recent years, so the economic instability in Southeast Asia is likely
to dampen the prospects for natural resources stocks in the near term. However,
we do believe that the problems in Southeast Asia can be solved, and that the
inherent growth of these areas will resume once the economies are on more solid
footing. In this event, resources will again become of critical importance, and
the best companies will prove to be rewarding investments. We continue to
believe that the energy sector, most notably oil, is the
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PAGE 5
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engine of growth for the world's economies. We will continue to favor this
sector, and downplay metals, until market conditions improve.
DIVERSIFICATION BY REGION
AS OF OCTOBER 31, 1997
<TABLE>
<CAPTION>
PERCENTAGE OF
PORTFOLIO ASSETS
<S> <C>
North America 67%
- --------------------------------------------------------------
Latin America 9%
- --------------------------------------------------------------
Asia/Pacific 11%
- --------------------------------------------------------------
Europe 13%
- --------------------------------------------------------------
</TABLE>
TOP 10 HOLDINGS
AS OF OCTOBER 31, 1997
<TABLE>
<CAPTION>
PERCENTAGE OF
STOCK (COUNTRY) INDUSTRY NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------
Diamond Offshore Drilling, Oil Field Services 6.0%
Inc. (U.S.)
- ------------------------------------------------------------------
Schlumberger Ltd. (U.S.) Oil Field Services 5.5%
- ------------------------------------------------------------------
AGCO Corp. (U.S.) Chemical &
Agricultural
Products 4.0%
- ------------------------------------------------------------------
Caterpillar, Inc. (U.S.) Machinery--
Diversified 3.9%
- ------------------------------------------------------------------
Potash Corp. of Saskatchewan, Chemical &
Inc. (Canada) Agricultural
Products 3.9%
- ------------------------------------------------------------------
BJ Services Co., Inc. (U.S.) Oil Field Services 3.5%
- ------------------------------------------------------------------
Tidewater, Inc. (U.S.) Oil Field Services 3.4%
- ------------------------------------------------------------------
Woodside Petroleum Oil/Energy 3.3%
(Australia)
- ------------------------------------------------------------------
Aluminum Company of Amercia Metals & Mining 3.3%
(U.S.)
- ------------------------------------------------------------------
Alcan Aluminum Ltd. (Canada) Metals & Mining 3.2%
- ------------------------------------------------------------------
</TABLE>
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PAGE 6
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EVERGREEN NATURAL RESOURCES FUND
Growth of an Investment
(Graph appears below with the following information:)
Growth of an investment in
Evergreen National Resources Fund, Class A
Initial Investment
(In Thousands)
10/94 $ 9,554
10/95 $ 9,335
10/96 $10,963
10/97 $11,992
A $10,000 investment in Evergreen Natural Resources Fund
Class A made on October 17, 1994 was worth $11,982 on October 31,
1997. Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
HISTORICAL PERFORMANCE AS OF OCTOBER 31, 1997
<S> <C> <C> <C>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------
CUMULATIVE RETURNS
1-Year w/o Sales Charge 9.30% 8.55% 8.55%
1-Year with Sales Charge 4.10% 3.55% 7.55%
Life of Class 19.82% 20.10% 23.10%
AVERAGE ANNUAL RETURNS
1-Year w/o Sales Charge 9.30% 8.55% 8.55%
1-Year with Sales Charge 4.10% 3.55% 7.55%
Life of Class 6.12% 6.20% 7.07%
</TABLE>
INTERNATIONAL INVESTING INVOLVES INCREASED RISK AND VOLATILITY.
(Graph appears below with the following information:)
Comparison of a change in value of $10,000 investment
in Evergreen Natural Resources Fund, the Standard & Poor's 500
Index and the Morgan Stanley Capital International World Index.
10/94 10/95 10/96 10/97
(In Thousands)
Class A Shares $ 9,554 $ 9,335 $10,964 $11,982
CPI $10,007 $10,289 $10,596 $10,784
MSIWI $10,268 $11,051 $12,652 $14,566
S&P 500 $10,208 $12,924 $16,036 $21,184
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholder
investing in different classes. The Standard & Poor's 500 Stock Index and the
Morgan Stanley Capital International World Index are from September 30, 1994.
Class A, Class B and Class C shares began operations on October 17, 1994.
Class A share performance is reported at the current maximum front-end sales
charge of 4.75%.
Class B shares purchased after January 1, 1997 are subject to a contingent
deferred sales charge (CDSC) that declines from 5% to 1% over six years after
the month purchased. Performance assumes that shares were redeemed after the end
of a one-year holding period and reflect the deduction of a 5% CDSC.
Class C shares are subject to a 1% CDSC for 12 months after the month
purchased. Performance assumes that shares were redeemed after the end of a
one-year holding period and reflects the deduction of a 1% CDSC.
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PAGE 7
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SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------------
COMMON STOCKS-- 90.7%
AUSTRALIA-- 11.2%
FINANCE & INSURANCE-- 0.9%
600,000 * First Resources Development
Fund**...................... $ 187,768
------------
IRON & STEEL-- 2.0%
43,787 Broken Hill Proprietary Co.
Ltd......................... 434,184
------------
METALS & MINING-- 2.5%
102,000 North Ltd..................... 267,415
80,022 Western Mining Corp. Ltd...... 284,191
------------
551,606
------------
OIL / ENERGY-- 5.8%
119,800 Santos Ltd.................... 550,991
86,800 Woodside Petroleum............ 733,116
------------
1,284,107
------------
TOTAL AUSTRALIA............... 2,457,665
------------
CANADA-- 18.6%
CHEMICAL & AGRICULTURAL
PRODUCTS-- 3.9%
10,500 Potash Corp. of Saskatchewan,
Inc......................... 857,150
------------
METALS & MINING-- 8.4%
24,700 Alcan Aluminum Ltd............ 701,032
23,300 Inco Ltd...................... 478,264
25,000 * Repadre Corp.................. 124,171
31,200 Teck Corp., Class B........... 542,378
------------
1,845,845
------------
OIL / ENERGY-- 2.9%
25,100 Canadian Occidental Petroleum
Ltd......................... 644,709
------------
OIL FIELD SERVICES-- 3.4%
64,600 * Arakis Energy Corp............ 214,997
30,000 * Seven Seas Petroleum, Inc..... 526,500
------------
741,497
------------
TOTAL CANADA.................. 4,089,201
------------
FINLAND-- 1.6%
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 1.6%
4,000 Nokia Corp., ADR.............. 351,875
------------
FRANCE-- 4.0%
BUILDING PRODUCTS-- 1.1%
3,900 Lafarge S.A................... 243,672
------------
<CAPTION>
SHARES VALUE
<S> <C> <S> <C>
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
FRANCE-- CONTINUED
OIL / ENERGY-- 2.9%
2,500 Societe Nationale Elf
Aquitaine................... $ 309,453
2,944 Total S.A..................... 326,643
------------
636,096
------------
TOTAL FRANCE.................. 879,768
------------
MEXICO-- 2.4%
METALS & MINING-- 2.4%
130,000 Industrias Penoles S.A. de
C.V......................... 515,504
------------
PERU-- 1.9%
METALS & MINING-- 1.9%
47,370 Minas Buenaventura............ 411,761
------------
THAILAND-- 0.0%
MISCELLANEOUS-- 0.0%
14,788 * Siam City Cement, Rights...... 0
------------
UNITED KINGDOM-- 6.0%
IRON & STEEL-- 2.3%
192,000 British Steel PLC............. 508,963
------------
METALS & MINING-- 2.4%
41,539 Rio Tinto PLC................. 535,235
------------
CONGLOMERATES-- 1.3%
171,000 Lonrho PLC.................... 281,158
------------
TOTAL UNITED KINGDOM.......... 1,325,356
------------
UNITED STATES-- 45.0%
BUILDING, CONSTRUCTION & FURNISHINGS-- 1.5%
8,200 Fluor Corp.................... 337,225
------------
CHEMICAL & AGRICULTURAL PRODUCTS-- 4.0%
30,600 AGCO Corp..................... 887,400
------------
FOREST PRODUCTS-- 1.7%
7,600 Weyerhaeuser Co............... 362,900
------------
IRON & STEEL-- 2.4%
10,000 Nucor Corp.................... 522,500
------------
METALS & MINING-- 4.7%
10,000 Aluminum Company of America... 730,000
10,000 Homestake Mining Co........... 123,750
5,000 Newmont Mining Corp........... 175,000
------------
1,028,750
------------
MACHINERY-- DIVERSIFIED-- 5.7%
16,800 Caterpillar, Inc.............. 861,000
7,500 Deere & Company............... 394,687
------------
1,255,687
------------
</TABLE>
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PAGE 8
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EVERGREEN NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
<C> <C> <S> <C>
COMMON STOCKS-- CONTINUED
UNITED STATES-- CONTINUED
OIL / ENERGY-- 3.6%
5,000 Texaco, Inc................... $ 284,688
12,000 Unocal Corp................... 495,000
------------
779,688
------------
OIL FIELD SERVICES-- 21.4%
9,000 * BJ Services Co., Inc.......... 762,750
21,000 Diamond Offshore Drilling,
Inc......................... 1,307,250
11,000 Halliburton Co................ 655,875
13,800 Schlumberger Ltd.............. 1,207,500
11,500 Tidewater, Inc................ 755,406
------------
4,688,781
------------
TOTAL UNITED STATES........... 9,862,931
------------
TOTAL COMMON STOCKS
(COST-- $15,634,293)........ 19,894,061
------------
<CAPTION>
PREFERRED STOCKS-- 4.7%
<C> <C> <S> <C>
BRAZIL-- 4.7%
IRON & STEEL-- 3.4%
5,970,000 * Caemi Mineracao E Metalurgia
SA.......................... 289,714
23,588 Vale do Rio Doce Navegacao
S.A......................... 455,734
------------
745,448
------------
SHARES VALUE
- ---------------------------------------------------------------
PREFERRED STOCKS-- CONTINUED
BRAZIL-- CONTINUED
OIL/ENERGY-- 1.3%
1,580,000 Petrol Brasileiros............ $ 293,800
------------
TOTAL BRAZIL.................. 1,039,248
------------
TOTAL PREFERRED STOCKS
(COST-- $1,020,341)........... 1,039,248
------------
<CAPTION>
PUT OPTIONS PURCHASED-- 0.0%
<C> <C> <S> <C>
AUSTRALIA-- 0.0%
600,000 * First Resources Development
Fund, options, expire
December 1997**............. 5,907
------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL PUT OPTIONS PURCHASED
(COST-- $0)...................... 5,907
-----------
CONVERTIBLE DEBENTURES-- 0.0%
BRAZIL-- 0.0%
23,588 * Vale do Rio Doce 0
Navegacao S.A.**.....
-----------
TOTAL CONVERTIBLE
DEBENTURES
(COST-- $0).......... 0
-----------
TOTAL INVESTMENTS--
(COST $16,654,634)...................... 95.4% 20,939,216
OTHER ASSETS AND
LIABILITIES-- NET....................... 4.6% 999,302
-------- -----------
NET ASSETS................................ 100% $21,938,518
-------- -----------
</TABLE>
* Non-income producing securities.
** Illiquid securities. The total market value of these illiquid securities at
October 31, 1997 is $193,675 (0.01%).
ADR American Depository Receipts.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Buy:
<S> <C> <C> <C> <C>
UNREALIZED
EXCHANGE U.S. VALUE AT IN EXCHANGE APPRECIATION
DATE CONTRACTS TO RECEIVE OCTOBER 31, 1997 FOR U.S. $ (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------------
11/3/97 2,560,355 French Franc $ 443,948 $ 445,822 $ (1,874)
</TABLE>
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Sell:
<S> <C> <C> <C> <C>
CONTRACTS TO DELIVER
- ---------------------------------------------------------------------------------------------------------------------------
1/8/98 3,182,576 Australian Dollar $2,241,903 $2,308,800 $ 66,897
11/5/97 339,485 Australian Dollar 238,743 241,102 2,359
11/5/97 602,945 Australian Dollar 424,021 428,332 4,311
11/5/97 317,643 Brazilian Real 288,125 287,460 (665)
11/3/97 2,560,355 French Franc 443,948 416,000 (27,948)
2/3/98 2,799,223 French Franc 487,950 490,000 2,050
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 9
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FINANCIAL HIGHLIGHTS-- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 7, 1994
SEVEN-MONTH MARCH 31, (COMMENCEMENT OF
PERIOD ENDED ------------------ OPERATIONS) TO
OCTOBER 31, 1997 (D) 1997 1996 MARCH 31, 1995
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE BEGINNING OF PERIOD $ 12.11 $ 10.74 $ 9.02 $10.00
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 (0.04) (0.04) 0(b)
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions 0.44 1.41 1.76 (0.98)
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.47 1.37 1.72 (0.98)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE END OF PERIOD $ 12.58 $ 12.11 $ 10.74 $ 9.02
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A) 3.88% 12.76% 19.07% (9.80%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total Expenses 2.01%(c) 2.40% 2.38% 2.77%(c)
Total Expenses excluding indirectly paid expenses 2.01%(c) 2.39% 2.37% N/A
Net investment income (loss) 0.02%(c) (0.45%) (0.41%) (0.07%)(c)
PORTFOLIO TURNOVER RATE 13% 39% 40% 13%
AVERAGE COMMISSION RATE PAID $ 0.0057 $0.0023 $0.0025 N/A
NET ASSETS, END OF PERIOD (THOUSANDS) $ 3,890 $ 4,462 $ 4,574 $4,890
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excluding applicable sales charges.
(b) Represents less than $0.01 per share.
(c) Annualized.
(d) The Fund changed its fiscal year end from March 31 to October 31, effective
October 31, 1997.
FINANCIAL HIGHLIGHTS-- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 7, 1994
SEVEN-MONTH MARCH 31, (COMMENCEMENT OF
PERIOD ENDED ------------------ OPERATIONS) TO
OCTOBER 31, 1997 (C) 1997 1996 MARCH 31, 1995
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE BEGINNING OF PERIOD $ 11.89 $ 10.62 $ 8.99 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.07) (0.14) (0.13) (0.03)
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions 0.49 1.41 1.76 (0.98)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.42 1.27 1.63 (1.01)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE END OF PERIOD $ 12.31 $ 11.89 $ 10.62 $ 8.99
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A) 3.53% 11.96% 18.13% (10.10%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total Expenses 2.79%(b) 3.16% 3.13% 3.55%(b)
Total Expenses excluding indirectly paid expenses 2.78%(b) 3.15% 3.12% N/A
Net investment loss (0.77%)(b) (1.22%) (1.16%) (0.80%)(b)
PORTFOLIO TURNOVER RATE 13% 39% 40% 13%
AVERAGE COMMISSION RATE PAID $ 0.0057 $0.0023 $0.0025 N/A
NET ASSETS, END OF PERIOD (THOUSANDS) $ 15,333 $17,208 $15,161 $4,688
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excluding applicable sales charges.
(b) Annualized.
(c) The Fund changed its fiscal year end from March 31 to October 31, effective
October 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 10
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EVERGREEN NATURAL RESOURCES FUND
FINANCIAL HIGHLIGHTS-- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 7, 1994
SEVEN-MONTH MARCH 31, (COMMENCEMENT OF
PERIOD ENDED ------------------ OPERATIONS) TO
OCTOBER 31, 1997 (C) 1997 1996 MARCH 31, 1995
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE BEGINNING OF PERIOD $ 11.89 $ 10.62 $ 8.99 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.13) (0.10) (0.10) (0.03)
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions 0.55 1.37 1.73 (0.98)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.42 1.27 1.63 (1.01)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE END OF PERIOD $ 12.31 $ 11.89 $ 10.62 $ 8.99
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A) 3.53% 11.96% 18.13% (10.10%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total Expenses 2.79%(b) 3.13% 3.13% 3.51%(b)
Total Expenses excluding indirectly paid expenses 2.79%(b) 3.12% 3.12% N/A
Net investment loss (0.80%)(b) (1.27%) (1.16%) (0.93%)(b)
PORTFOLIO TURNOVER RATE 13% 39% 40% 13%
AVERAGE COMMISSION RATE PAID $ 0.0057 $0.0023 $0.0025 N/A
NET ASSETS, END OF PERIOD (THOUSANDS) $ 2,716 $ 4,567 $ 2,023 $1,393
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excluding applicable sales charges.
(b) Annualized.
(c) The Fund changed its fiscal year end from March 31 to October 31, effective
October 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 11
- ---------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------
ASSETS
Investments at value (identified
cost-- $16,654,634) $20,939,216
Foreign currency holdings (identified
cost-- $50) 45
Receivable for investments sold 1,467,939
Unrealized appreciation on forward foreign
currency exchange contracts 75,617
Dividends receivable 52,937
Receivable for Fund shares sold 32,256
Deferred organization expense 12,621
Foreign tax reclaim receivable 11,651
Prepaid expenses and other assets 41,824
- ------------------------------------------------------------
Total assets 22,634,106
- ------------------------------------------------------------
LIABILITIES
Due to custodian 301,897
Payable for investments purchased 258,525
Payable for Fund shares redeemed 52,389
Unrealized depreciation on forward foreign
currency exchange contracts 30,487
Due to related parties 22,712
Accrued expenses and other liabilities 29,578
- ------------------------------------------------------------
Total liabilities 695,588
- ------------------------------------------------------------
NET ASSETS $21,938,518
- ------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in-capital $15,306,635
Undistributed net investment income 174,638
Accumulated net realized gain on investments
and foreign currency related transactions 2,134,646
Net unrealized appreciation on investments and
foreign currency related transactions 4,322,599
- ------------------------------------------------------------
Total net assets $21,938,518
- ------------------------------------------------------------
NET ASSET VALUE
Class A Shares
Net assets of ($3,890,106 / 309,171 shares
outstanding) $ 12.58
Offering price (based on sales charge of
4.75%) $ 13.21
Class B Shares
Net assets of ($15,332,633 / 1,245,625
shares outstanding) $ 12.31
Class C Shares
Net assets of ($2,715,779 / 220,686 shares
outstanding) $ 12.31
- ------------------------------------------------------------
</TABLE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SEVEN-MONTH YEAR ENDED
PERIOD ENDED MARCH 31,
OCTOBER 31, 1997 1997
<S> <C> <C>
- -------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of
foreign withholding
tax of $24,953 and
$33,367, respectively) $ 306,683 $ 426,023
Interest 9,204 41,483
- -------------------------------------------------------------
Total income 315,887 467,506
- -------------------------------------------------------------
EXPENSES
Management fee $ 157,633 $ 243,022
Distribution Plan
expenses 137,431 206,046
Transfer agent fees 40,371 86,335
Printing 28,476 30,507
Custodian fees 22,173 46,864
Professional fees 18,074 56,400
Amortization of
organization expense 8,297 13,158
Registration fees 4,489 44,810
Trustees fees 958 0
Other 1,318 5,392
- -------------------------------------------------------------
Total expenses 419,220 732,534
Less: Indirectly paid
expenses (1,263) (3,073 )
- -------------------------------------------------------------
Net expenses 417,957 729,461
- -------------------------------------------------------------
Net investment loss (102,070) (261,955 )
- -------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND
FOREIGN CURRENCY RELATED
TRANSACTIONS
Net realized gain on
investments 2,072,162 1,236,594
Net realized gain (loss)
on foreign currency
related transactions 7,794 (140,097 )
- -------------------------------------------------------------
Net realized gain on
investments and
foreign currency
related transactions 2,079,956 1,096,497
- -------------------------------------------------------------
Net change in unrealized
appreciation
(depreciation) on
investments and
foreign currency
related transactions (835,993) 1,919,418
- -------------------------------------------------------------
Net realized and
unrealized gain on
investments and
foreign currency
related transactions 1,243,963 3,015,915
- -------------------------------------------------------------
Net increase in net
assets resulting from
operations $ 1,141,893 $2,753,960
- -------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 12
- ---------------------------------------------------------
EVERGREEN NATURAL RESOURCES FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SEVEN-MONTH YEAR ENDED MARCH 31,
PERIOD ENDED --------------------------
OCTOBER 31, 1997 1997 1996
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (102,070) $ (261,955) $ (217,769)
Net realized gain on investments and foreign currency related
transactions 2,079,956 1,096,497 131,912
Net change in unrealized appreciation (depreciation) on investments
and foreign currency related transactions (835,993) 1,919,418 3,775,333
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,141,893 2,753,960 3,689,476
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 1,626,365 9,241,182 4,446,012
Payments for shares redeemed (7,066,862) (7,515,475) (7,348,506)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital share
transactions (5,440,497) 1,725,707 (2,902,494)
- ------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (4,298,604) 4,479,667 786,982
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 26,237,122 21,757,455 20,970,473
- ------------------------------------------------------------------------------------------------------------------------
End of period [including undistributed net investment income and
(accumulated net investment loss) as follows:
October 31, 1997-- $174,638
March 31, 1997-- ($33,055)
March 31, 1996-- $3,718] $ 21,938,518 $26,237,122 $21,757,455
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 13
- ---------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Evergreen Natural Resources Fund, formerly Keystone Global Resources and
Development 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 and Class C 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.
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 readily 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 rates include
foreign currency gains and losses
<PAGE>
PAGE 14
- ---------------------------------------------------------
EVERGREEN NATURAL RESOURCES FUND
between trade date and settlement date on investment securities transactions,
foreign currency related transactions and the difference between the amounts of
interest and dividends recorded on the books of the Fund and the amount actually
received and is included in realized gain (loss) on foreign currency related
transactions. 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 which are
accrued as applicable.
F. FEDERAL 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 taxes 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 with
income tax regulations are primarily due to differing treatment of gains and
losses from foreign currency transactions 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.
I. ORGANIZATION Expenses
Organization expenses are amortized to operations over a five-year period on a
straight-line basis. In the event any of the initial shares of the Funds are
redeemed by any
<PAGE>
PAGE 15
- ---------------------------------------------------------
holder during the five-year amortization period, redemption proceeds will be
reduced by any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of the redemption.
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, and Class C. Transactions in shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
SEVEN-MONTH PERIOD --------------------------------------------------
ENDED
OCTOBER 31, 1997 1997 1996
----------------------- ----------------------- -----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
Shares sold 20,364 $ 257,582 99,899 $ 1,149,694 114,080 $ 1,145,130
Shares redeemed (79,574) (1,059,272) (157,432) (1,830,659) (230,445) (2,328,932)
- --------------------------------------------------------------------------------------------------------------------------
Net decrease (59,210) (801,690) (57,533) (680,965) (116,365) (1,183,802)
- --------------------------------------------------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------------------------------------------------
Shares sold 78,508 1,020,278 391,020 4,494,545 263,001 2,628,135
Shares redeemed (279,700) (3,612,501) (371,723) (4,250,880) (469,950) (4,711,542)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (201,192) (2,592,223) 19,297 243,665 (206,949) (2,083,407)
- --------------------------------------------------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------------------------------------------------
Shares sold 27,528 348,505 317,784 3,596,943 65,799 672,747
Shares redeemed (190,823) (2,395,089) (124,231) (1,433,936) (30,391) (308,032)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (163,295) (2,046,584) 193,553 2,163,007 35,408 364,715
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share activity (423,697) $(5,440,497) 155,317 $ 1,725,707 (287,906) $(2,902,494)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities and foreign cash) for the seven-month period ended October
31, 1997 were $3,200,008 and $8,903,057, respectively. On October 31, 1997, the
cost of investments for federal income tax purposes was $16,654,634, gross
unrealized appreciation of investments was $5,791,687 and gross unrealized
depreciation of investments was $1,507,105 resulting in net unrealized
appreciation of $4,284,582 for federal income tax purposes.
4. DISTRIBUTION PLANS
Evergreen Distributors, Inc. ("EDI"), formerly Evergreen Keystone Distributors,
Inc., a wholly-owned subsidiary of The BISYS Group, Inc. ("BISYS") serves as
principal underwriter to the Fund. Prior to December 11, 1996, Evergreen
Investment Service, Inc. ("EIS"), formerly 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, 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,
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.
<PAGE>
PAGE 16
- ---------------------------------------------------------
EVERGREEN NATURAL RESOURCES FUND
During the seven months ended October 31, 1997, amounts paid to EDI pursuant
to each Fund's Class A, Class B and Class C Distribution Plans were $5,959,
$102,986, and $28,486, respectively. During the year ended March 31, 1997,
amounts paid to EDI and/or EIS pursuant to each Fund's Class A, Class B and
Class C Distribution Plans were $11,027, $162,397, and $32,622, respectively.
EDI 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.
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%.
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 EIS
and/or EDI may continue as compensation for services which had been provided
while the Distribution Plan was in effect.
5. INVESTMENT ADVISORY AGREEMENT AND
OTHER AFFILIATED TRANSACTIONS
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, calculated daily and paid monthly, at an annual rate
of 1.00% of the average daily net asset value of the Fund. Keystone has entered
into a Sub-Investment Advisory Agreement with Equitilink International
Management Limited ("EIML"), under which EIML provides Keystone with investment
research and advice and may provide investment supervision or furnish an
investment program for certain assets of the Fund. For its services, EIML
receives from Keystone a monthly fee equal to (1) 20% of Keystone's net fee for
such month for services rendered in a non-discretionary capacity, plus (2) 10%
of Keystone's net fee for such month for services rendered in a discretionary
capacity.
During the seven months ended October 31, 1997, the Fund paid or accrued $894
to Keystone for certain administrative services.
Evergreen Service Company ("ESC"), formerly Evergreen Keystone Service Company
("EKSC"), a wholly-owned subsidiary of Keystone, serves as the transfer and
dividend disbursing agent for the Fund.
BISYS Fund Services, Inc., an affiliate of EDI, serves as the Fund's
sub-administrator. As sub-administrator, BISYS Fund Services, Inc. provides the
officers of the Fund. For this service, BISYS Fund Services, Inc. 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.
7. DISTRIBUTION TO SHAREHOLDERS
A capital gain distribution of $1.25 per share was declared payable on November
24, 1997 to shareholders of record November 20, 1997 for all classes of shares.
This distribution is comprised of long-term capital gains of $1.09 and
short-term capital gains of $0.16 per share. A distribution from net investment
income of $0.13 was declared payable on November 24, 1997 to shareholders of
record November 20, 1997 for all classes of shares. These distributions are not
reflected in the accompanying financial statements.
<PAGE>
PAGE 17
- ---------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES AND SHAREHOLDERS
EVERGREEN NATURAL RESOURCES FUND
We have audited the accompanying statement of assets and liabilities of
Evergreen Natural Resources Fund, (formerly Keystone Global Resources and
Development Fund) including the schedule of investments, as of October 31, 1997,
and the related statements of operations for the seven-month period then ended
and the year ended March 31, 1997, the statements of changes in net assets for
the seven-month period ended October 31, 1997 and each of the years in the
two-year period ended March 31, 1997 and the financial highlights for the
seven-month period ended October 31, 1997 and each of the years in the two-year
period ended March 31, 1997 and the period from October 7, 1994 (Commencement of
Operations) to March 31, 1995. 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 and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 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
Evergreen Natural Resources Fund as of October 31, 1997, the results of its
operations for the seven-month period then ended and the year ended March 31,
1997, the changes in its net assets for the seven-month period ended October 31,
1997 and for each of the years in the two-year period ended March 31, 1997 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
November 26, 1997
<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
This report was prepared primarily for the information of the Fund's
shareholders. It is authorized for distribution if preceded or accompanied by
the Fund's current prospectus. The prospectus contains important information
about the Fund including fees and expenses. Read it carefully before you invest
or send money. For a free prospectus on other Evergreen Funds, contact your
financial adviser or call Evergreen Funds.
<TABLE>
<C> <S>
NOT
FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
EVERGREEN DISTRIBUTOR, INC.
Evergreen is a Service Mark of Evergreen
Investment Services, Inc. Copyright 1997.
</TABLE>
542304
(recycle logo)
EVERGREEN
(Photo Exists in Film ONLY.
Will See on Dylux)
NATURAL
RESOURCES
FUND
(FORMERLY KEYSTONE GLOBAL RESOURCES AND DEVELOPMENT FUND)
(Evergreen logo appears here)
ANNUAL REPORT
OCTOBER 31, 1997
